If you’ve been listening to the podcast for a while, you have likely heard me mention Costco before. They do so many things differently than traditional business might suggest is best or profitable, but they have found a way to make it work and their business thrives because of it. In this episode, I’m going to discuss how Costco rivals almost any store or brand, and how they don’t do traditional marketing and advertising. I’ll talk about how they invest back into the community, have a simple code of ethics, reward shareholders, and how having a membership model and plan can work if it’s done right. Costco is the perfect brand for a behavioral economics analysis, because they do things differently, but in a smart, strategic way that makes their unconventional plan a huge success. Today, we learn why Costco is the powerhouse that it is (and what you can implement in your own business - even if your model is completely different). Show Notes: [04:19] Many consider Costco’s biggest rivals to be Walmart / Sam’s Club or Target – but depending on the section of the store…they pretty much compete with everyone: from Amazon, Home Depot and Best Buy to Expedia, Pizza Hut, Les Schwab and your local optometrist. [04:54] They participate in the community and reinvest in the company in a way that creates advocates, which reduces the need for traditional marketing. [05:32] That gets me to the core of Costco – their mission. It seems basic and generic enough, “to continually provide members with quality goods and services at the lowest possible prices.” [06:06] But they differentiate with their Simple Code Of Ethics: Obey the law. Take care of our members. Take care of our employees. Respect our suppliers. And then, reward shareholders. [06:57] The Costco membership model. [08:01] A membership is good for the store because it encourages people to shop there to “get their money’s worth” – this is loss aversion in action. And, this is not just triggered by perceived ownership…you actually have some real ownership because you have paid to be part of the in-crowd. [09:29] Costco has put a lot of work into making it a lifestyle choice. [10:22] Having time to slow down and experience with all the senses puts perceived ownership into overdrive. [10:54] This aversion to losses combines with the scarcity factor to encourage people to buy more. I’m sure items are scarce at Costco to encourage sales, but there is more to it than that. The high turnover of product and high efficiency model of Costco increases their profit margin and allows the whole model to really work. [11:31] They also have a very generous return policy. [13:22] The Costco food court is one of predictable beauty, which as you know is a perfect recipe for building habits. [15:28] And, of course, this increase in sales is made possible by one form of marketing Costco does believe in – free samples. Again, this is loss aversion and reciprocity at work. [17:12] If the item is an exclusive Kirkland Signature item, you know the exact thing isn’t available in other stores. All Kirkland Signature products are carefully researched, tested, hand selected, or custom-created by Costco. They truly live their mission through the whole Kirkland Signature experience – of doing best by their members, employees and suppliers. [20:02] One reason samples increase sales at Costco is because there are not too many choices. [21:28] Happy employees means lower turnover, which reduces expenses. Happy employees also means a better experience for shoppers, which keeps them happy and coming back. And, knowing that you shop at a place that values their employees also makes shoppers feel good. [22:34] Costco also does a lot of work to support their local communities, with a focus on children, education, as well as health and human services for grants and donations. [24:00] Costco works with partners and uses the value of bulk buying with their suppliers. [25:09] It is about knowing profits matter, but they aren’t everything. Squeezing out an extra 50 cents on hot dogs or rotisserie chickens – or allowing for a 16% margin on some products would make a huge impact on shareholder pockets, but it isn’t worth the negative it would cost to the members, who come first. [27:04] No company’s set up is something any other business can copy and paste. [27:29] Costco knows who they are and what their brand is there to do, and every decision they make is so easy because they can tie it back to the mission and code. [29:16] Is being a member of benefit that would work well in your business? Think about the value. [30:43] What do you stand for? Make it clear to yourself, employees, customers, and more. [32:04] Do you make it easy for people to buy from you? Are you encouraging them to get items or is it difficult? Can they get a test or sample? [33:42] Money back guarantees are worth it. [34:00] Should you incorporate a loss leader that benefits people and draws them in? [35:09] Think about the full experience. What can you be doing? [36:33] Everything matters, and it's always important to try things. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Unlocking the Secrets of the Brain @wagsRJ on Twitter Magic of Self Direction by David S Schwartz @BusinessBrosPod on Twitter Rich Dad, Poor Dad by Robert Kiyosaki A More Beautiful Question by Warren Berger Fierce Conversations by Susan Scott Costco’s Mission, Business Model, Strategy & SWOT The Costco Story What is Costco's Mission Statement and Code of Ethics? Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 19. Behavioral Economics Foundations: Herding Episode 45. Overview of Personal Biases Episode 46. Biases Toward Others – Including Groups Episode 23. Behavioral Economics Foundations: Reciprocity Business Strategy Lessons From Costco Business Model Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 28. Behavioral Economics Foundations: The Sense of Touch Episode 26. Behavioral Economics Foundations: The Sense of Taste Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 27. Behavioral Economics Foundations: The Sense of Hearing and Sound Episode 14. Behavioral Economics Foundations: Scarcity 12 of the weirdest returns Costco employees have ever seen! Episode 21. Behavioral Economics Foundations: Habits Episode 22. The Power of Habit Things You Didn’t Know About the Costco Food Court Why Costco Food Courts Have Charged $1.50 for Hot Dogs Since 1985, According to Employees Costco's Great Pricing Strategy and Business Model Costco Builds Nebraska Supply Chain For Its $5 Rotisserie Chickens 5 Things You Didn’t Know About Costco’s Free Samples Episode 5. The Truth About Pricing Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture How Costco Became the Anti-Wal-Mart Costco's Simple Strategy For Outperforming Wal-Mart And Target Donation and Grant Eligibility Guidelines Costco Communities The Top 100 Retailers of 2018 Episode 43. A Guide for You to Create a Brainy Brand Episode 44. Rebrand, Refresh or Reinforce?

This is the second episode in the series on “all the biases” broken up into eight categories. Last week, I told you about all the personal biases (and the rules your brain uses to convince itself it is the most awesome and amazing thing in the world). Today, we are going to talk about all the biases that relate to other people and groups. We will start out with general biases, and then have sections about the biases that apply for people we are similar to and those we are different from. And, in case you are curious, the other six categories of biases we will cover in coming weeks are: memories, future versus present thinking, selective attention, math is hard, lazy brain, and finally novelty and stories. I’m so excited to break those all down for you! And as a reminder, this series is not about digging deep on any one topic, but instead giving you just a little taste of each bias and how you can use it in life and business. Each of these biases will likely get its own episode over time, but this will allow you to learn a little about them, and how they relate to each other, now. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [04:32] Intro to general biases toward other people and groups. [05:28] This first term is probably one you are familiar with: groupthink. This is essentially what happens when people are in groups, and either because they want to have a harmonious experience or not rock the boat…or just the herding mentality of humans, the people within the group start to make bad decisions. These could be irrational or different than what the person would choose to do if left to their own devices, and it is often in an attempt to minimize conflicts. [06:01] One way Amazon combats this is by having a silent start to meetings (and I linked to an article in Inc. about this in the show notes). Essentially, the leader of the meeting has to write a very well-thought out meeting prep document, which is presented at the beginning of the meeting, and everyone will sit and read it silently to themselves. [07:18] Shared information bias can be counterintuitive. [08:03] Bike shedding is when it's easier to talk about a simple topic instead of the one big topic that you should be talking about. [08:29] Be aware of the bandwagon effect in groups. [10:20] It's harder to build the snowball than to keep it moving so you will have more effort on the front end. [10:55] People look better and are more attractive when they're in a group then when they're by themselves. Remember, things are not always what they seem, so don't be intimidated. [11:57] Because of hostile attribution bias you might think that the group will be mean to you. [13:07] Stereotyping is a natural tendency and doesn't have to be hostile. It's expecting someone who's a member of a certain group to have certain characteristics. [15:04] Humans are complex and belong to all sorts of affinity groups that make up our identities. [16:09] The bulk of your perception of any person is based on their group affiliations and a stereotypical bias which may or may not be true or accurate for an individual. [17:52] Implicit association, which is how quickly a word comes to mind or matches with a previous word that was said. That can show how closely they are associated. [20:10] Because of the moral credential effect, if you have tended to not be prejudiced in the past…your likeliness to be prejudiced in the future is actually higher! [21:21] Fundamental attribution error is important to keep in mind when thinking about how we assess the actions and choices of other people. [22:10] When people experience the flip of this – thinking others’ behavior is due to a situation and their own behaviors are more about their personality, it is called extrinsic incentives bias. [23:25] When you make an internal attribution error to the whole group instead of the individuals that make it up, it is called ultimate attribution error. [24:04] When we apply this bias to individuals instead of a group, it is called the halo effect. [25:50] And, my general advice is to be aware of it and try to think of other people as multidimensional, and remember that every group is made up of multiple, multidimensional people. [26:18] PEOPLE LIKE US 00:26:34] Alright, moving on to groups of people like us. In general, we like people who are like us more than people who are not like us. This is called the in-group bias, and people are more likely to give preferential treatment to people who they see as part of their own group, or who they think are like them. [27:57] Another place where in-group bias can come up is when hearing about a victim in a story. Defensive attribution hypothesis occurs when people assign more blame as their similarity to the victim increases – this can be both in physical attributes or situational similarities. [29:25] Anthropocentric thinking is when we use human analogies and thought processes when considering less familiar, non-human things. A common example would be noting that most humans think of death as a negative thing, they apply this same value to non-human entities, even though death is necessary for many ecosystems to thrive. [31:36] This is called anthropomorphism or (as you might remember from school) personification. When we see a dog smiling we think it is happy. [32:27] PEOPLE DIFFERENT FROM US [33:03] Reactive evaluation, which means we will think less of proposals or suggestions that we believe came from an adversary or someone not like us. [35:09] Be aware of these biases and how they impact your experiences every single day. [35:30] Try to identify your biases and see where you are unfairly judging or giving benefits to someone similar to you. [35:55] Let's open our minds and make the world a little less biased and a little more thoughtful shall we? Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Jeannette Castañeda on Twitter Episode 18. Behavioral Economics Foundations: Priming Episode 19. Behavioral Economics Foundations: Herding Episode 45. Overview of Personal Biases 'Silent Start': The Brilliant (and Surprising) Meeting Method I Learned From Amazon's Jeff Bezos Hostile Attribution Bias 21 Things You Didn’t Know About Bronies Brony Herd Census & State of the Herd Report Episode 33. Inside the Texas A&M Human Behavior Lab Dr. Palma from the Texas A&M Human Behavior Lab Moral Credentialing and the Rationalization of Misconduct Susan Boyle Audition HD - FULL Top 10 Professions Dominated by Women University of Phoenix: Red Socks Marketing Myopia Do Dogs Smile? The Science Behind the Looks We Get From a Happy Dog

This is the start of a new series on cognitive biases. To present the series in an organized fashion I found around 200 biases and then categorized them in a way that would be relevant to what we do here on The Brainy Business. I came up with eight categories, and I will go over each bias in the category in a pretty quick succession. A cognitive bias is an error in the way humans think. It's a way that is often not in our best interest. These biases aren't random. They are predictable and that is the basis for behavioral economics. This week we are talking about those personal biases that lead us all to believe we are uniquely talented and awesome…and generally better than everyone else. As you listen to the list, think about yourself – how have you experienced this in your own life? And also think about other people – have you seen this in others? How could you use that bias in the way you message to customers or attract people to your business? Show Notes [10:48] EVERYONE IS UNIQUELY TALENTED Optimism bias: Humans assume they are more likely to have a positive outcome in life compared to other people. [11:28] You want to look at ways you can use optimism bias to your advantage when setting big goals, but your day to day tasks should be more realistic and less than you think you can accomplish. [11:32] Planning fallacy is the tendency to underestimate how long it will take us to complete a task. [12:30] Do you ever find yourself with a list of 10 things you “need to do” today and you only end up getting through two? Understanding planning fallacy can help you do better in setting more realistic tasks (and therefore being happier - and more productive). [12:48] Naive realism is the belief that unlike other people, we see reality exactly as it is. [14:21] Try to be open to the perspectives of others. Your curse of knowledge will make this hard because you know a lot about your area of expertise. [15:01] In order to be successful in life and business, you need to be able to understand the perspectives of other people and how they differ from yours. [16:09] The false consensus effect is our tendency to overestimate how much other people agree with us. [17:41] Illusion of asymmetric insight this is when people think they understand their peers better than those same people understand them. [18:15] If you assume that everyone thinks you don’t understand them as well as they understand you, it could be beneficial to ask them questions that help them explain more about themselves to you. [18:49] Illusion of transparency: people also overestimate their ability to know others, and the ability for others to know them. [19:56] False uniqueness bias is when everybody thinks of themselves and their business as a special snowflake with unique problems unlike anyone else's. [21:17] When you are communicating what you offer, use the Forer effect (also known as the Barnum effect) to your advantage. This could also be seen as the astrology effect or the fortune telling phenomenon: people tend to think statements that are vague and general enough to relate to a large group of people are highly accurate and “exactly them!” [22:42] Generalities can inspire people to take action, so keep that in mind when creating your messaging. [22:57] Illusion of control, which is your tendency to overestimate the influence you have over external events. [25:33] Egocentric bias is when you feel like you do more than the other person and because of our naive cynicism, we also expect other people to have this bias more than ourselves. [26:47] It's important to praise others for their contributions without diminishing your own efforts. [27:28] Social comparison bias: Because of self-preservation and wanting to stand out and be the best, we tend to favor potential candidates whose strengths are not in direct competition with our own. [27:50] Self serving bias, where we want to claim more responsibility for successes than the things we might have failed on. We want all the glory and none of the blame. [28:23] The spotlight effect is the tendency to overestimate the amount that others are focused on our appearance or the things we say or do. [28:53] Because everyone else is the center of their own universe as well, you can relax a little. [30:07] Because of the 3rd person effect everyone believes they're less likely to be influenced by mass marketing than other people. [30:40] A bias blind spot is where we see ourselves as less biased than others and tend to be better at spotting these cognitive biases in others than in ourselves. [31:23] Illusory superiority is where we overestimate our own desirable qualities and underestimate our undesirable qualities. [32:14] Restraint bias: We all think we have more restraint than others and generally overestimating our ability to resist temptations. [32:53] Trait ascription bias: We think others have very predictable personalities, moods and behaviors (that they are more one dimensional) and that we personally are much more dynamic. [35:14] The overconfidence effect: for certain types of questions, people will say they are 99% certain in their answers…but they are actually wrong 40% of the time. [36:24] Pro innovation bias, which is essentially having massive optimism about an invention or innovation. [37:48] REVISING IN HINDSIGHT [38:06] Post purchase rationalization is when people buy on emotion and then persuade themselves it was the right decision. [38:55] Choice supportive bias is where we say retroactively are choices were more informed than they actually were. [39:22] Illusion of external agency, which means we think our personal preferences are based on insightful influences and benevolence. [40:21] Illusion of validity, where we believe our judgments and choices were accurate. [40:43] Conservatism belief revision you would not sufficiently revise your belief. [41:13] Continued influence effect, where you continue to believe misinformation even after it has been corrected. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: The Brainy Business on YouTube Torcom Talk on YouTube @ser_technology on Twitter Ser Tech Webinar Blowing Consumers Minds Using Behavioral Economics Episode 16. Behavioral Economics Foundations: Framing Ser Tech Webcasts Ser Tech Open Lending @thebrainybiz on Twitter @HBLtamu on Twitter Predictably Irrational Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 15: Behavioral Economics Foundations: Availability Episode 34. Behavioral Economics Foundations: Optimism Bias Exploring the "Planning Fallacy": Why People Underestimate Their Task Completion Times Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Episode 14. Behavioral Economics Foundations: Scarcity Five Most Daunting NFL Stadiums for Visiting Teams Scarlett Johansson & Brie Larson Play ‘Who Saves the World? Girls!’ Episode 32. The Overwhelmed Brain and Its Impact on Decision Making The Trouble With Overconfidence Episode 5. The Truth About Pricing

How do you know when it is time to rebrand? I’ve been getting this question a lot by clients and listeners on social media. This inspired me to do this episode on deciding whether to rebrand, refresh or reinforce. Last week, I launched into branding by discussing what makes a brainy brand and how you can use behavioral economics to help make your brand as strong as possible Now it’s time to talk about rebranding, refreshing or reinforcing your brand (including when and why you would do each one). During this episode I am going to talk about the difference between rebranding, a brand refresh and what it means to reinforce your brand…as well as examples of each one with advice to help you decide when you should do each in your own business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes   [05:32] Questions like “Why did you start your business?” and “What is the dream?” are so important for overall brand conversations in companies of any size…but they can be particularly meaningful for small businesses. [06:07] The most common thing I find when I go through this process with clients is that they are not thinking out far enough into the future. They plan what they need to do to make money today instead of planning out a sustainable business for 5, 10 or 20 years in the future. [06:32] When I ask people what the ideal business would look like…they are usually building a completely different business today than what they want to have in 5 years. This is a recipe for being stuck in a business that runs you instead of creating a business and life you love. [08:37] When something is off, customers can feel it and it impacts everything. It could also make business owners who could have been really successful get resentful and not love their business. [09:15] When you get to a point where you need to rethink things many start to ask if they should rebrand. [09:34] When you have a brand that fits your company…one that resonates with customers…everything just clicks. [11:38] REBRANDING means you are changing everything: new name, new logo, new colors, maybe a new target demographic and new focus entirely. [12:36] REFRESH means you are planning to keep a lot of the central pieces of the brand – the name, basic logo and colors, but you are making some tweaks to tighten the message, shift the demographic, or maybe enter a new space. [13:18] REINFORCE is when you still take the time to (hopefully proactively) look at your brand and determine what is working and what isn’t. [14:12] The goal of rebrands and refreshes is to get to a point where you can reinforce. You want a brand that everyone gets and knows and loves. [16:05] New Coke triggered loss aversion in customers with nostalgia and an emotional tie to the brand, which resulted in hoarding, angry phone calls/letters, and fear. [17:38] The rebrand actually made people think of Coke differently and inadvertently put it on a pedestal. Coke now knows that they are solidly in reinforce mode. [20:50] Being too literal is one of the top 5 wording mistakes businesses make. [23:28] Verity Credit Union went through a rebrand 10 years before I led the refresh, where we needed to realign with the values that mattered to the target market. [24:07] Local artists were contracted to show what truth meant to them in whatever medium they used. [26:02] We had an all-staff event where we talked about the research, unveiled the new logo, showed the first four commercials and talked about the future. People were so excited to be part of it. Brand awareness nearly tripled in less than two years. [28:41] When you find a brand that works down to the core and is authentically tied to the vision and goals of the company, you get into a state of flow and that's how you know that you found "it" and can move into the reinforce phase. [30:11] When deciding to rebrand, refresh or reinforce consider 1) everything matters, 2) think bigger, 3) are we asking the right question? and 4) always be thoughtful and strategic. [32:21] Whatever brings you to the “is it time for a rebrand?” question…it is a key moment in time to stop, breathe, take a step back…and think about the bigger picture. [32:48] Too many companies ask “Who are our current customers and what do they want?” Instead, ask this question... [36:32] The next question people tend to ask when looking at a rebrand is, “What can we salvage?” It should not be the goal to keep as much of the old stuff as you can to save money. Instead you should... [41:25] The main thing I want you to remember and think of in your own rebranding is that strong brands, the best ones that get seen and make a difference and stand out from the competition…had to step away from the herding mentality of what “everyone else does” to get there. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 43. A Guide for You to Create a Brainy Brand Dani McDonough Photography Artwork By Dani Episode 4. Questions or Answers Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Post-it Super Sticky Easel Pad The Real Story of New Coke Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 19. Behavioral Economics Foundations: Herding Episode 14. Behavioral Economics Foundations: Scarcity Episode 15: Behavioral Economics Foundations: Availability Episode 41. Behavioral Economics Foundations: The S in NUDGES – Structuring Complex Choices Episode 2. The Top 5 Wording Mistakes Businesses Make Verity Credit Union Boom Creative Verity CU YouTube His Voice Is So Emotional That Even Simon Started To Cry! Real Beauty Productions Cadbury's Gorilla Advert Aug 31st 2007 The Fun Theory 1 – Piano Staircase Initiative | Volkswagen Kristen Bell and Her Cofounders Built a Company to Save Lives. But Growing It Wasn't So Simple The Brainy Business on Facebook

Branding is one of my all time favorite topics. If you are new to the show (in which case, welcome) you may not know that I have an extensive background in this area. I obtained my undergraduate degree in marketing before working at an advertising agency, then started a credit union marketing consultancy and then ran a marketing department at a financial institution for 6 years. While there, I led a brand refresh that nearly tripled awareness in less than two years. This background in branding and marketing has led to the way I implement behavioral economics for my clients and here on the podcast. Recently, I have received a lot of questions about branding – what matters, what is included, and how behavioral economics ties into that…and that’s what we’ll dig into today. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [04:55] A brand is “a type of product made by a particular company under a particular name” or the way ranchers mark their cattle. [05:31] You put your stamp on something to show it is yours (and many people wear those same brands with pride to show they are part of the herd). [05:52] People pay more for brand name items and they even get more value out of them because of expectations and conditioning. [06:56] Marketing and branding are not the same thing. Marketing is all the one-off stuff you do to get your name out there – radio ads, website work, flyers, brochures, and sponsorships. Marketing is reactive. It isn't building something bigger. [07:49] When you create a brand, you have a strategic center everything can relate back to – a touchstone for your company. Any opportunity or new request can be brought back to this foundation to see if it is in alignment. [08:53] Marketing research has long struggled to be considered true research in the same way the sciences are. [09:07] A brainy brand knows what it is trying to achieve and builds quantitative and qualitative research projects to test, learn and grow. [11:19] Examples from Jonah Berger's amazing book Contagious. Such as people wanting Mars bars after hearing about the Mars Rover and being more likely to choose Sprite after writing with a green pen. [13:13] The concept of priming was used when shoppers were shown pictures of dogs that helped prime them to choose Puma shoes. [13:23] Think about the messaging that's coming right before your advertisement. It's important to think about the context of your ads. Priming is really relevant. Make sure that you are associating your brand properly with the right things. [15:47] When creating the brainy brand it was important to me to choose things that were fun but intelligent to draw people in. It's my responsibility to make sure that the messaging is consistent. [16:27] It's important to be strategic and thoughtful about what it is that you are doing for your company. [17:35] There is cookie dough next to the milk, because simple associations win the day. The product is placed where it is more likely to trigger the buyer’s brain. [19:01] Availability is the weight our brains place on one thing based on how easy the item comes to mind. [20:02] A brainy brand knows that everything matters. This is why I truly believe behavioral economics is the future of marketing and branding. [20:18] When you understand how the brain works and all the bazaar ways it makes decisions, it unlocks a powerful space where you can see what a certain word choice or ad placement could do that another would not. [21:12] Brands have personalities just like people…and for good reason. Known personalities create expectation in our brains. [22:18] When you expect someone to act one way and they act completely differently…like their personality has been surgically replaced with that of their opposite…it is unnerving. [22:52] There is always another competitor, a new medium to look into, a new product entering the market. [23:36] A truly brainy brand, one that is laying the foundation of their messaging and who knows who they are and how they would respond…who has a brand personality so well known that it is like a real person…they can react properly to change – and create some of it themselves. [25:32] Method acting is a lot like business branding because they both require a lot of preparation and understanding of things that may never be brought up. [26:39] The best brands – brainy brands – know everything about who their brand is as if it were a person. [27:17] When brands have great personalities, it ties into the associations people have about them. [28:54] Brainy brands need to have everyone on board, rowing the boat in the right direction. [30:03] Behavioral economics and other studies of the brain look into why people do the things they do, and how to use that insight to predict what they might do in the future. I'm so excited to be a part of it. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 19. Behavioral Economics Foundations: Herding Predictably Irrational How Brands Grow Unconventional Wisdom Contagious: Why Things Catch On How to Make Your Content Go Viral Dogs on the Street, Pumas on Your Feet: How Cues in the Environment Influence Product Evaluation and Choice Episode 18. Behavioral Economics Foundations: Priming Episode 15: Behavioral Economics Foundations: Availability Episode 22. The Power of Habit 15 Actors Who Went to Seriously Extreme Measures for a Role HR and Marketing: A Natural Partnership Delivering Happiness

We are digging into Apple’s recent announcements today, with a heavy focus on Apple Card. When Apple made its announcements and Apple Card was included…I knew I needed to create an episode on this topic. Apple made a series of star-studded announcements about their new offerings, which included the announcement of Apple TV+, Apple Arcade, Apple News+ and, of course, Apple Card. An interesting aspect of these announcements is that they didn’t talk about anything that is available yet, and didn’t include any pricing information. In this behavioral economics podcast, I’ll tell you why this was their true genius. It’s different from previous announcements, but they are also taking a huge turn by switching from products to services. As we dig in, I’ll explain where Apple did some really smart things and took a strategic approach to these announcements and their shift in offerings. Plus, tips for you to take away and apply in your own business. Disclosure: Specific details were accurate at time of recording. Policies are subject to change. Find the most current details at Apple.com. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [03:02] When Apple made its announcement, I knew I needed to talk about the Apple Card. In last week's Facebook Live I also let talk of the Apple Card run the discussion a bit. I did tie it back to the topic of loss of version and anchoring and adjustment, though. [04:21] Last week, Apple made a series of star-studded announcements about their new offerings, which included the announcement of Apple TV+, Apple Arcade, Apple News+ and, of course, Apple Card. [04:43] People think it's weird that Apple didn't talk about anything available and didn't disclose any pricing. In reality, this is the true genius behind the announcement. [05:09] It's justified for Apple to make a shift, because they are changing their offerings from products to services. [05:30] People aren't logical. People say they think and will do one thing…but their subconscious will often think different (Apple ad throwback alert!). [06:15] When we look at the announcement from a behavioral economics point of view, we'll see a lot of smart things that your business can use or learn. [07:03] In the episode I will talk about building anticipation and expectations, the delayed pricing strategy, subscription models, framing, herding, how familiarity breeds liking, and the value of celebrities. [07:20] BUILDING ANTICIPATION AND EXPECTATIONS While it has generated a lot of complaints from our logical brains, I would argue one of the smartest things Apple has done is announced all the greatness of the services before they are actually available. [10:39] We thrive on the excitement of anticipation. [11:23] BUT having anticipation creates loss aversion and perceived ownership, which also means you are much more likely to feel the need to experience the treat at the end or to at least test it out and see how it meets or exceeds your expectations. [11:51] Being top of mind is key in influencing buying behavior. [13:06] Far too many organizations wait to announce a launch until it is actually launching. In reality, people need time to get really excited about things. [13:41] High expectations are okay (as long as the actual release isn’t a total fail), because studies show that the brain gets what it expects. [14:44] Building expectations of greatness means people will expect this thing to be good – and we expect it to be really REALLY good if they went out of their normal strategy to announce it before it was ready. [15:12] THE DELAYED PRICING STRATEGY The truth about pricing is price never about the price.  Everything that comes before the price matters much more. [15:36] Creating value is about framing and anticipation…which Apple is taking time to let ruminate before the pricing is announced. [16:27] HERDING This also allows for herding behavior to be triggered earlier than it would otherwise as people start talking about the products. [18:30] HOW FAMILIARITY BREEDS LIKING Speaking of herding behavior…our brains don’t just herd behind others…we also do a sort of self-herding, and “get in line behind ourselves.” [20:46] THE VALUE OF CELEBRITY Our brains love celebrities and we associate all their qualities with the brand of Apple directly now. [21:44] HABITS AND SUBSCRIPTIONS Apple is jumping on the subscription train. [24:57] Apple Arcade is an aggregator of games: all you can play, across all your Apple devices, with NO ads and a commitment to privacy. [25:21] FRAMING People have said what they want. Apple is framing their new offerings with the things that people have said they want. [25:38] Apple Card is a framing story more than anything. [25:57] A lot of the functions and features being touted in Apple Card already exist. [26:12] Apple asked a better question to uncover what people care about, and then (here’s the kicker) they found a way to frame the product and message so it is within those parameters. [28:12] Why haven't other banking institutions offered "no fees ever"? They are too close to the situation. [29:48] The rates on Apple Card (13.24% - 24.24%) are reasonable for a rewards card. [30:47] There is no fee for late payments, but late payments accrue additional interest. [32:31] Apple was able to look at a product with fresh eyes and shape their offering in a way that gives people what they want. [33:57] Look at framing your products to be most appealing – and then look at how you are framing the message of communicating that across the organization and to customers. [34:34] INCENTIVES Another thing Apple Card is doing really, really well is their cash back offering. [36:07] The most important thing they have done from a behavioral economics sense is bringing the reward as close to the trigger as possible. [36:29] Instant payouts mean lots and lots of positive associations with the card. [37:36] If you give benefits of any kind back to your customers, how can you make it real, tangible, and as close to the behavior you want repeated as possible? [40:23] Framing matters – how the product is framed and the message around that product. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Episode 36. Behavioral Economics Foundations: The N in NUDGES – iNcentives Episode 37. Behavioral Economics Foundations: the U in NUDGES – Understanding Mapping Episode 38. Behavioral Economics Foundations: The D in NUDGES – Defaults Episode 39. Behavioral Economics Foundations: The E in NUDGES – Expect Error Episode 40. Behavioral Economics Foundations: The G in NUDGES – Giving Feedback Episode 41. Behavioral Economics Foundations: The S in NUDGES – Structuring Complex Choices Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Shopping, Dopamine, and Anticipation Sapolsky on Dopamine: Not About Pleasure, But Its Anticipation Steve Jobs Introducing The iPhone At MacWorld 2007 Apple's 'Show Time' Event Was Really Weird – Here's Why Introducing Apple News+ Everything you love about News. Plus. Introducing Apple TV+ Episode 2. The Top 5 Wording Mistakes Businesses Make Episode 20. Behavioral Economics Foundations: Defaults Episode 21. Behavioral Economics Foundations: Habits How Brands Grow: What Marketers Don't Know Episode 15: Behavioral Economics Foundations: Availability Dogs on the Street, Pumas on Your Feet: How Cues in the Environment Influence Product Evaluation and Choice Episode 18. Behavioral Economics Foundations: Priming Episode 5. The Truth About Pricing Episode 8. What is Value? Episode 19. Behavioral Economics Foundations: Herding Episode 14. Behavioral Economics Foundations: Scarcity Predictably Irrational Episode 32. The Overwhelmed Brain and Its Impact on Decision Making ‘Subscription Fatigue’: Nearly Half of U.S. Consumers Frustrated by Streaming Explosion, Study Finds Apple Arcade Episode 16. Behavioral Economics Foundations: Framing Apple Card Episode 4. Questions or Answers How Payday Loans Work

This is the end of our series on nudges and choice architecture – we started with an introduction to the concept in episode 35 and have worked our way through all the aspects of the NUDGES acronym: incentives, understanding mapping, defaults, giving feedback, expecting error and now wrapping it up with structuring complex choices. Be sure and download your free worksheets on all of the aspects of nudges by becoming a subscriber. In this behavioral economics podcast, I talk about structuring complex choices. I also revisit mapping and the five steps to understanding mapping, because it is the foundation of complex choices. This episode is also our final application of the air conditioning example. I also dig into several other examples to illustrate this concept and how it all ties into ways to make your business better. Show Notes [02:41] Mapping is the foundation for complex choices. Thaler and Sunstein describe a mapping as “the relation between choice and welfare” and use a simple example of choosing a flavor of ice cream. [03:16] Some tasks like choosing an ice cream flavor are easy. Others are more difficult. The path from the choice to the outcome is called a mapping. [04:25] The task of the choice architect (that’s you) is to set up a system that helps make the map as clear and easy to use as possible. [04:37] The five steps I created and identified in understanding mapping were: 1) encourage thoughtful review and open-mindedness, 2) break it down, 3) make it relatable, 4) help them get there and 5) call to action. [05:12] When you get into a more complex choice, there is a need for filtering and removing options. [07:12] The compensatory strategy works for easier choices or choices with less options, but not with more complex choices. Instead, you need what is called elimination by aspects. [07:32] By choosing a few aspects that matter, you use those to narrow the field. [08:47] When you eliminate everything over a certain arbitrary line, you could miss something that is just outside the parameters. This is the risk we take with elimination by aspects and the constant battle of complex choices. [09:25] The internet has given us tons of resources to help simplify our complex choices. [09:57] A presort can help us when looking at a menu. This way we can eliminate the options that we don't care about. [11:20] When people are presented with too many options they don't buy. We get overwhelmed with too many choices. [14:16] We only see a lot of choices as a benefit when they are properly handled such as going to a toast restaurant with all of the spreads and toppings categorized. [14:52] Cold Stone Creamery uses a form of anchoring and adjustment to help with their complex choice options. [15:41] Showing how aspects can come together can help people make a more complex choice. It can help them eliminate things they know they don’t want when they are properly categorized. When looking at your own business, it is important to recognize if you have an inherently complex choice or if you are needlessly creating a complex choice. [15:50] The final air conditioning example. Complex choices can be made unnecessarily complex. Our AC choice became more complex because we needed to upgrade the heater. [18:34] It's important to present the options in a way that doesn't talk you or your customer out of business. [19:06] Don't be afraid of silence with complex choices, because people need time to process. [19:25] Using behavioral economics in business is much more than messaging, branding, sales, or any single aspect. To incorporate it properly, it's important to know all of the concepts and how they work together. [21:40] A paint color example where using swatches makes the color choice much easier than names or numbers. [23:50] A fun exercise where I give names of companies and how their methods could be applied to your business. [24:03] This technique will help you shake things up and get out of your comfort zone. [25:09] An example using The Knotted Wood. [25:48] Try to look at the cursory decision and ask if you are trying to solve the problem in the right way. [26:00] Companies that do a great job structuring complex choices. [30:17] Remember to think about ways you can reduce complexity as well as how you might add complexity to your business. [30:41] Seven episodes felt like a TON to put into a series, so thank you for those of you who have tuned in for the whole thing - and for letting me know how much you enjoyed it. [31:08] All businesses are based on choice. It's your job to structure those choices in the best way possible, using a map so the customers know what is in their best interest, aligning the incentives to set up a default – and give feedback along the way for all those errors you expect people to make. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Nudge: Improving Decisions About Health, Wealth, and Happiness Choice Architecture Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Episode 36. Behavioral Economics Foundations: The N in NUDGES – iNcentives Episode 37. Behavioral Economics Foundations: the U in NUDGES – Understanding Mapping Episode 38. Behavioral Economics Foundations: The D in NUDGES – Defaults Episode 39. Behavioral Economics Foundations: The E in NUDGES – Expect Error Episode 40. Behavioral Economics Foundations: The G in NUDGES – Giving Feedback Elimination by Aspects: A Theory of Choice Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Episode 12. Behavioral Economics Foundations: Relativity Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Episode 4. Questions or Answers The Knotted Wood Coca-Cola Freestyle

We are getting close to wrapping up our series on NUDGES today – and if you have been following along each week you know we went a little out of order and did the E in nudges last week – expecting error, and are now coming back to G for giving feedback. This combines with incentives, understanding mapping and defaults (which we have covered already starting off the series in episode with an introduction to nudges in episode 35. Next week will wrap it all up with structuring complex choices…and then we will move on to our next topic (and it is one I am really excited about – you are going to love episode 42 to be sure). In this behavioral economics podcast, I talk about the importance of feedback, and why it lets us know if we are doing a good or a bad job. I give several real life examples involving cars, banking, our continued HVAC example, and some fun gadgets that help us conserve energy or be better weekend painters. I talk about the importance of visual cues and incorporating all of the senses and how the concepts in this series can be used to improve your business.   Show Notes [03:19] Last week I talked about errors people make on things like getting their oil changed or replacing the filter on the refrigerator. The light that comes on to alert you it is time to take care of this task, is essentially the feedback mechanism or the little nudge. [03:51] Choose your feedback wisely, when there is too much people start to ignore the alerts. [04:48] This is where understanding mapping is really important. When you understand the best outcome for the chooser you can properly structure the choice architecture. [06:24] There are a combination of concepts at play along with the nudges and choice architecture, including optimism bias, and time discounting. [09:33] A speed sign with flashing lights is feedback from an expected error. Something that has been created based on the way the brain actually makes decisions to help make the roads a little safer. [11:27] Remember, vision takes place in the brain. Our brains take in all those pieces of data and put them together with alerts and tasks based on rules of thumb. [13:03] The HVAC company could have a system that would notify customers when it’s time to schedule their maintenance. And, because it has smart technology, it could be created to do the work for them. [15:57] The nudge the company could put in place (which is using a combination of feedback and loss aversion) is to strategically create their sales process to encourage the person to make their decision that day. [17:34] Like the wedding dress store, the HVAC company could give discounts if the customer purchases on the same day of the sales call. [19:48] Simple things can make a big difference. Examples are our phone cameras clicking, and website links changing color. [22:29] I think it is important to note here that a lack of a negative does not necessarily lead to a positive feeling. [24:07] Feedback allows people to know they are doing a good job – or where they are going astray. [26:12] Wouldn’t it have been nice if you had a little feedback during the process? This is exactly why the geniuses at Glidden created a ceiling paint that goes on pink and dries white. [28:22] Color coding is really helpful for our visual brains. The episode on color theory is coming soon – I promise, but know that our subconscious picks up on the colors and knows what it should be striving for (green is good, red is bad). An example on helping people use less energy. [28:46] How can your business incorporate the senses – color, pressure, scent, or sound to provide feedback to your customers to nudge them into better behavior? [29:16] Feedback can also be useful when things take a while and there are a lot of steps happening behind the scenes. Domino's Pizza Tracker gives helpful feedback. [31:01] Feedback is appreciated and can help your customers to quell an anxiety they may not be able to articulate beforehand. [31:45] Timers without a tracker make people wonder if they did something wrong. [32:12] If someone is stressing about all that stuff, they are not paying attention or retaining anything from your advertisement, so you should provide that little bit of feedback. [33:19] Using feedback with credit cards. Is there a way to provide feedback and a nudge for those who would have issues without inconveniencing those who do not need the nudge? [34:43] The point of feedback is to get as close to the action as possible. [37:24] Using money in a jar as feedback of progress and an incentive to keep moving forward. Also using loss aversion by losing that money if you miss a day. [37:33] You can use this trick for any goal. How could you use a tactic like this with your employees or customers? [38:29] Take a look at your company, customers, and the products or services you offer for opportunities to provide feedback. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Nudge: Improving Decisions About Health, Wealth, and Happiness Choice Architecture Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Episode 36. Behavioral Economics Foundations: The N in NUDGES – iNcentives Episode 37. Behavioral Economics Foundations: the U in NUDGES – Understanding Mapping Episode 38. Behavioral Economics Foundations: The D in NUDGES – Defaults Episode 39. Behavioral Economics Foundations: The E in NUDGES – Expect Error Episode 34. Behavioral Economics Foundations: Optimism Bias Episode 15: Behavioral Economics Foundations: Availability Measuring the LSD Effect: 36 Percent Improvement Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 25. Behavioral Economics Foundations: The Sense of Smell Glidden® Pink to White Ceiling Paint Nissan ECO-Pedal THE ENERGY ORB: Visualize Electricity Consumption! Episode 26. Behavioral Economics Foundations: The Sense of Taste Episode 27. Behavioral Economics Foundations: The Sense of Hearing and Sound Episode 28. Behavioral Economics Foundations: The Sense of Touch Domino’s Track Your Order stickK

This behavioral economics podcast is another foundations episode where we discuss the E in NUDGES: expect error. I think this might be my favorite of all the types of nudges. This is really the reason we need nudges at all – and why choice architecture even exists. Choice architecture takes a lot of time, effort and strategy to do well and having a background in nudging is essential to helping your customers and employees make good choices. If we humans did not make errors, we would not need help in making decisions. We would be able to evaluate all the possible options and make an informed decision every time. Because we don’t and can’t…we need choice architecture. And it is all built on expecting those errors to properly build in nudges. In this episode, I talk about different types of errors with real life examples and how to apply this information to your life and business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [05:02] If humans didn't make errors, then we wouldn't need help making decisions. [05:16] We need choice architecture, because we don't evaluate all of the possible options and make the most informed decision every time. [05:36] When it comes to errors – we can expect humans to err on nearly anything. No matter how brilliant someone is, they will still make errors throughout their lives. [06:01] Quote from Nudge: “Beethoven wrote his ninth symphony while he was deaf, yet he would frequently misplace his house keys. How can people be simultaneously so smart and so dumb?” This is what makes us human. [06:42] Errors come in many fashions – as I said it can be as simple as forgetting your keys or leaving the card in the ATM. These are actually part of a subcategory of error called postcompletion error. [06:57] Postcompletion errors occur whenever we have a task to do, and once it is partially done, we mentally check it off the to do list. [08:41] The list of potential errors is truly endless. [08:59] The dinging noise your car makes when you don't have your seat belt on is a nudge, because manufacturers expect you to make an error at some point. [09:24] Check engine and filter lights are also nudges. [10:31] Try to incorporate all of the senses when creating a nudge. [10:52] Any time something is not consistent enough to become a habit (check out episodes 21 and 22 if you need a refresher) it is a prime candidate for error. [11:15] Consistency is key in business. [11:35] A good example of this is taking medicine every day at a consistent time. [13:06] Subscription models are really useful when an error is expected. They help the customer do what they are supposed to do, and it gives the business a built in reason to follow up and stay top-of-mind. [13:33] In the case of an air conditioning unit…it is important to have the ducts cleaned on a regular maintenance schedule. [14:16] I would recommend regular check ins with their customers – on more than just maintenance tips. That way, you can check in more than just once every three years (which is longer than you want to go if you want to remain top of mind). [15:24] People want heat when it is cold and AC when it is hot (this is availability bias – episode 15). [15:33] Send an annual check in or reminder in the fall and spring. The AC company could also create some type of certification program to prove that the unit has received recommended maintenance. This could help when selling a home and realtors could also be partners. [16:42] You get all this benefit from a little strategic foresight and understanding of when people will make errors, so you can step in and be the solution. [16:56] In any company, there are bound to be tons of places where people will make errors – both employees and customers. Dig deeper and look for more opportunities to solve errors before they happen. [18:28] Staff at the Ritz-Carlton have the ability to make things right for customers without having to ask for permission. [20:06] When you are trying to anticipate errors to nudge, you should be looking all over the company – not just at customers, but employee processes as well. [21:39] Busy or overwhelmed brain, which we talked about in episode 32. This is where postcompletion error comes in. [22:21] Our conscious brain can only focus on so much and the subconscious is making the vast majority of our decisions using rules of thumb (as you know – this is the basis for behavioral economics). When we get busy, we become overwhelmed and have more errors than usual. [22:34] Things that aren't habits are easily forgotten, but habits also get forgotten. Try to be present in the moment or nudge your team or employees to remember. [23:19] Too many nudges can become one more thing to not pay attention to. Try to get into the mindset of your customer or staff. [24:10] Things like auto-pay and subscriptions can be helpful nudges. [24:51] Stop trying to change the behavioral errors and force people into a system that doesn’t work. Instead look at what you can be adding into the process to make it easier. [26:15] Changing the nozzles for different drugs and anesthesia helped reduce common errors. Checklists in hospitals are also good reminders. [27:06] A busy brain and commonly repeated tasks are a breeding ground for errors. [28:37] Any time you say someone “should” be able to do this or “they know better” or if you have multitasking staffers…they are prime candidates for nudges. [29:09] Products to solve a problem. Customers are willing to pay for a solution to a problem that helps them avoid making an error. [32:59] Gmail has come up with some clever nudges such as asking if you have an attachment if you write the word “attachment” in the text of your message and there is nothing attached, and putting ignored emails back at the top of the inbox. [33:32] The next category involves understanding a hot state and a cold state. When someone is in a cold state, it is easy to say they will do something (or not do something) but then when they are in their hot state…it is a lot harder to stick to the commitment. [34:10] Find things that can be done in a cold state to prevent behaviors from happening in a hot state. [35:32] Programs like Save More Tomorrow have been used to increase the amount someone will pay into to their retirement using a precommitment. [36:30] Staying top-of-mind and why consistency is key in business. [37:13] It's important to stay consistent with your business and have regular touch points with your potential customers. Put your customers in a drip campaign and send out your newsletter on a regular basis so it becomes part of their routine. [38:12] Remember, people make mistakes and it is your company’s job to find a way to make it easier for them to use your product or service. You cannot expect your customer to do that for you. [38:54] Follow your customers to see how they interact with the product provided. [39:59] Pourable laundry soap spouts are a result of observational research. [40:31] Look at your company or product for errors that take place and ways to place a nudge as a reminder. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Nudge: Improving Decisions About Health, Wealth, and Happiness Choice & Architecture The Chicago School of Professional Psychology Behavioral Economics Postgraduate Degree Programs Episode 21. Behavioral Economics Foundations: Habits Episode 22. The Power of Habit Episode 34. Behavioral Economics Foundations: Optimism Bias Episode 23. Behavioral Economics Foundations: Reciprocity Episode 15: Behavioral Economics Foundations: Availability The Ritz-Carlton Leadership Center Episode 4. Questions or Answers Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Silpat Macaron Baking Mat Clocky Episode 34. Behavioral Economics Foundations: Optimism Bias Be on time with the Procrastinator’s Clock Save More Tomorrow™: Using Behavioral Economics to Increase Employee Saving Episode 3. Do Lead Magnets Work and Do You Need One? RecurPost  

This week marks the halfway point in our episodes on the types of NUDGES. We have already covered incentives and understanding mapping. Today, is all about defaults within choice architecture. When you think about choice and defaults, you may think it only applies when there is a preselected option on a list, but this is not the case. In every choice there is always a default. In many cases, the default is to do nothing…and that is still a choice, which is important for many choice architects to remember. I won’t be talking too much about what a default is, but I will talk about how what I’m calling “implied defaults” can be incredibly helpful when they are used strategically. I’ll also talk about how customers appreciate them and how they can benefit the company using them. In this behavioral economics podcast, I also go over how defaults can apply to the air conditioning example I have been using and how this concept can be applied to your company or service and how it can even help you save money. CLICK HERE FOR YOUR FREE DOWNLOAD Show Notes [03:03] In every choice there is always a default. In many cases, the default is to do nothing…and that is still a choice, which is important for many choice architects to remember. [03:32] When you are constructing a choice for someone, it is important to remember what their default is and how status quo bias will influence the default. [04:19] Air conditioning example. The default is to do nothing. [05:09] The company should make it easier for their customer to overcome this default hurdle. [07:34] The unit size we need is based on things that are already known…but they choose not to mention any numbers at all until you are deep into the process. [07:43] This is a mistake because first, there is no anchor. When there isn't an anchor the anchor is zero. This is a terrible place to start. [08:12] Sticker shock is created when people actually hear the cost. [09:24] When thinking about defaults in choices, it is important to realize that each complete choice can be broken down into a bunch of mini choices, and each one has its own default. [09:58] When the choice is presented, it can be properly worded to help nudge to a different default than nothing. [10:50] The default when quoting pricing for AC could and should be for the monthly payment of a loan instead of the bulk cost. [12:05] I give an example of where I move the default option in the offer from “not getting air conditioning” (the true default) to getting AC on a 24 month loan (the implied default). This is the power of framing. [13:09] How does a company choose and understand what they should use as their default? [13:28] Understanding incentives and how they impact the business is very important when choosing a default. [16:55] Carrie Clarke of Next Level Coaching does a great job framing with, “The ROI on coaching is 700% and you will reach your goals 9 times faster than trying to do it alone.” [18:28] Printing receipts is an example where defaults can cost a business money. [19:52] The city of Tulsa, Oklahoma reportedly switched all their printers to default to double-sided printing, which they estimated saved them more than $41,000 a year in unnecessary expense. [20:39] Our default as humans is often to eat food in front of us and mindless eating can be a problem. If the default plate is smaller, you will put less on the plate and often realize you are full earlier. [21:51] Not defaulting to adding straws and napkins to orders can reduce waste. [22:24] An Amazon subscription example, which used a default. [26:01] Think about your business. Do you have a product or service that people buy regularly? [26:38] An opt in versus opt out can have a huge impact on choice. [28:05] Where do you have opt ins versus opt outs in your business? Are there any features people have to opt in for that would actually be best for them and increase your profitability? [30:13] Think about what your customers want and what will benefit them and what's going to benefit the business before you set up that default. [31:03] GAP insurance is usually an add on which is a hard sell. The advice I would give is to bundle it with the initial quote and clients can opt out if they want. [33:46] Defaults are a powerful and very simple nudge to apply. When used responsibly, defaults are great and often appreciated by customers. [36:27] Implied defaults can be incredibly helpful when they are used strategically. Customers appreciate them and they can benefit the company using them. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Nudge: Improving Decisions About Health, Wealth, and Happiness Episode 36. Behavioral Economics Foundations: The N in NUDGES – iNcentives Episode 37. Behavioral Economics Foundations: the U in NUDGES – Understanding Mapping Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Episode 20. Behavioral Economics Foundations: Defaults Episode 16. Behavioral Economics Foundations: Framing Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Only 39% of Americans Have Enough Savings to Cover a $1,000 Emergency Episode 19. Behavioral Economics Foundations: Herding Next Level Coaching Consulting Episode 18. Behavioral Economics Foundations: Priming Seattle Becomes First U.s. City to Ban Plastic Utensils and Straws License Fees Raise $1.4m for Parks Episode 9. Behavioral Economics Foundations: Loss Aversion

Last week, I kicked off the different types of nudges and how they apply to choice architecture with incentives. The word NUDGES is an acronym for the categories of nudging, and we are breaking those down episode by episode over six weeks to showcase different aspects of choice architecture and nudging. Now that we tackled incentives last week, we will jump into understanding mapping – both what in the world that means...and how to use it to your best advantage in your business. In this behavioral economics podcast, I share how nudges and my 5 Steps for Mapping can be used in your business to encourage the buying process. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [02:56] Thaler and Sunstein describe a mapping as “the relation between choice and welfare” and use a simple example of choosing a flavor of ice cream in one of their papers on choice architecture. [03:30] At its core, the path from the choice and its outcome is called a mapping. [03:50] For ice cream, you have some mapping in your brain that let you know which flavors you would enjoy the most. [04:20] It's more difficult to see the mapping with more complex choices. [04:49] Their paper uses the options of surgery, radiation, or watchful waiting with a cancer diagnosis. Comparing the options weighs a longer life against negative side effects. [05:45] In spite of this, most patients decide which course to choose at the very first meeting when they are given the diagnosis. The option they choose also depends strongly on the type of doctor they see. [06:44] My five steps for a choice architect to make the mapping as clear as possible: 1) encourage thoughtful review and open-mindedness, 2) break it down, 3) make it relatable, 4) help them get there, and 5) call to action. [07:25] With big decisions it's important to understand your biases. [08:21] It's important for doctors as the choice architects to understand the way they are framing the options. [09:29] Our brains put more weight on the default or what we hear about first. [10:02] The best choice architect should know that a person shouldn't make a decision when they are highly emotional. [11:06] Breaking it down. If you want to make a map, it's important understand all of the options available. [12:41] That way you can anticipate the questions a potential customer (or patient or client) will have, the things they need to know, and guide them to the right recommendation. [13:11] Make it relatable using simple rules of thumb. [13:56] Use the customer's language and an example that they can relate back to. [15:16] Find the thing that customers care the most about. [15:50] The way you build your choice architecture is to think about how your customers will determine what to buy. What is the primary reason they are buying? [16:06] What do your customers need to know or hear, and what rule of thumb will make the choice simple and easy to make? [16:51] Once you know what your customers need, they still may require a little sample to get there. Incorporating the senses can help them make a decision. [17:44] Your call-to-action is the final step - it is important because it helps the chooser realize it is an appropriate time to stop analyzing and consider making a choice. [18:41] It's also important to prime all throughout the interaction. [19:15] To encourage thoughtful review, an air conditioning company should know that the customer has other options. [20:11] Frame the cost in a relatable way. [21:49] Relating their mindset to the right point is your “taste test” when they can’t have a physical sample. [22:23] Ask for the sale...and then stop and wait. [23:52] If you use a script, understand the intent behind the script and know the content by heart in order to have a true conversation. [24:12] Price is never about price. It's about all of the things leading up to the price. [25:42] Here are some basic mapping examples (because the final installment of the series – the “S” in nudges – is for structuring complex choices). [26:29] Using a menu to break options down into manageable chunks. Well worded descriptions help you evaluate if the item is something that you would like. [28:10] One well chosen word can make your brain want to read the description. [30:00] Our subconscious brain can take in a lot of information and glosses over a lot of things. [31:03] These menu descriptions include some taste words as well as relativity, anchoring and adjustment, and framing. [31:55] A nail salon example. [33:47] Adding more may seem like a benefit, but when it doesn’t have a useful map so the chooser can compare, adding more options can cause a lot more harm than good. [34:47] When creating a product website, consider what you present from the mind of the customer (think back to the menu example). [36:30] With a service website keep in mind the concept of incentives. [38:00] How our brain sees miles per gallon wrong, and why gallons per mile is better (yes, they are different). [39:54] How can you put numbers out there that are easier for people to understand and see the value? [40:05] Thaler and Sunstein recommend a system called “RECAP” which stands for Record, Evaluate, Compare Alternative Prices. [41:24] What if movies did not have trailers or descriptions? Trailers help you map the available movies and decide what you want to see. [42:45] Commercials take advantage of mirror neurons in the customer’s brain by showing someone else using the product, tasting it, picking it out from a menu or off a shelf. [44:54] The visual is best for the subconscious. [45:09] Any type of company – whether you sell physical products or a service – can use a guarantee of some kind. [45:58] Simple Tip You Can Use Immediately: use a call out or title like “Most popular” or “top choice” or “best value” – know, of course, that you are responsible in your business to ensure that it true. [46:45] Remember, the intent of a nudge is to help people make the best decision, but they must maintain free choice. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Nudge: Improving Decisions About Health, Wealth, and Happiness Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Episode 36. Behavioral Economics Foundations: The N in NUDGES – iNcentives Choice Architecture Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Episode 19. Behavioral Economics Foundations: Herding Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 16. Behavioral Economics Foundations: Framing Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 26. Behavioral Economics Foundations: The Sense of Taste Episode 27. Behavioral Economics Foundations: The Sense of Hearing and Sound Episode 28. Behavioral Economics Foundations: The Sense of Touch Episode 18. Behavioral Economics Foundations: Priming Nikki Rausch of Sales Maven Episode 5. The Truth About Pricing Ruth’s Chris Dinner Menu Episode 12. Behavioral Economics Foundations: Relativity Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Episode 2. The Top 5 Wording Mistakes Businesses Make Nudges Episode 31. Mirror Neurons 1995 Breyer's Ice Cream Commercial

The word NUDGES is an acronym for the categories of nudging, and we are breaking those down episode by episode over the next six weeks to showcase different aspects of choice architecture and nudging. Today, we are starting with the N of nudges…which is for innnnnnncentives. This episode will explain what iNcentives mean when it comes to nudges, I will reference some excerpts from Nudge by Richard Thaler and Cass Sunstein, as well as some of their research papers. The goal of this behavioral economics podcast will be to help you think about how to offer incentives and nudge your clients to look at things differently while using nudges in your business.   CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [03:21] You are a choice architect if you present options to people and indirectly influence their choices – this is everything from where you place food in the line in the cafeteria to an opt in form on a website to doctors presenting treatment options. [04:23] A nudge is something that helps someone make a choice. This is everything from the order things are on a list of choices to the wording used to them, and yes, incentives. [04:51] Supply and demand fluctuate in predictable ways and are like two opposing forces in an intricate dance. [05:12] Proper incentives can help to encourage sales when you understand how they work. [05:14] The tricky thing about incentives is that they are never one sided and our lazy brains don’t tend to think about all the proper aspects of the choice presented. [05:51] Good choice architects understand how to structure the nudges and architecture to do what is best for their business. [06:02] Ask these questions to figure out what all the incentives are and how they work together: Who uses? Who chooses?  Who pays? Who profits? [07:17] I am going to use the example of air conditioning as a constant throughout the series. [08:36] My husband and I bought a house that didn't have air conditioning installed. The builder gave us the option of adding air conditioning whenever we wanted. We decided to test out a Seattle summer and see if it was really needed. [09:08] After one super hot summer, we decided to get the air conditioning. [09:19] We had someone come to the house and do the evaluation for air conditioning. I learned the standard formula based on the square footage of the house, the number of vents, etc. [09:52] You think the choice is, “Do you want air conditioning or not?” Yes or no. Of course…it’s not really that simple, which is why this air conditioning example will be featured throughout the series. [10:28] For the air conditioning example, the person who uses is me/my husband. [10:57] Who chooses is my husband and I, but the choice is much more complex than meets the eye... [11:31] When cooling our home, we actually have many options such as using fans, staying in hotels, or filling our bathtubs with ice. There are also multiple companies to choose from once we decide we want air conditioning. [12:16] Who pays is my husband and I (note, payment is not always monetary). [12:45] The company that sells the air conditioning units (and their employee making the sale) are the ones who profit (as well as their manufacturers). There are different levels of profit. [13:57] I know there is markup on the items and I am paying for the convenience of not having to invent and build air conditioning. [14:42] What happens when there are conflicting incentives? [15:57] After we agreed to purchase the air conditioning, we were asked if we wanted a wifi enabled unit. [16:31] Wifi enabled allows you to adjust the temperature using your phone. [17:42] When finding this out my main question was, “Why would anyone NOT want this?” [17:55] It's also the same price as the unit without wifi. This got me thinking about what I would advise this company if they were a client of mine. [18:07] Why is it the same cost to the consumer? And why wasn’t that choice communicated better? Where was the nudge? [19:32] Do I want my choice made by a guy who was influenced by his commission? (NO) [19:44] This happens all the time because of conflicting incentives. [19:53] The advice I would give this company is to align the incentives to find the win-win-win scenario. [21:13] If it was necessary to increase the price for the wifi enabled model, it should be the default option (the price you start with) and then let the person take away wifi if they don’t want it. This is your choice architecture. [21:37] Now the question becomes, “Do you want the wifi enabled unit or not?” versus “Do you want AC or not?” This simple nudge and shift in the architecture completely changes the question in the mind of the consumer (for a way that is favorable for the business). [22:18] Sometimes as a company, you need to take a step back to understand what is worth paying for. [24:18] Salience, or saying something is salient, is the way an item “stands out” from other items. [24:44] The consequences of a choice are salient means that the chooser is aware of the consequences of each choice. [25:06] It's important to always ask and try to understand if the person making the choice is aware of all the incentives, consequences, and dynamics of that choice. [27:08] How can you make the choice and its repercussions more salient for the chooser? [30:07] It's an easier choice to make when things are broken down in a way that your brain can understand. [30:30] Being in sales is being a full-time choice architect. [30:41] Understanding all the incentives involved and how they interact with each other can help ensure the choice that is best for everyone gets nudged. [31:12] An example of incentives and salience when buying a car. [33:43] The way a choice feels can impact the choice a human makes. [34:43] Think about what you want to bring your customers attention to. Examples for gyms, soda, television and more. [40:28] Surge pricing and energy usage. This may teach people to use less energy, but it's not as salient as it could be. [42:58] US Healthcare example. The way the information is presented affects the choice, and it may be too complex for anyone to choose correctly (stay tuned for this to come up again in our episode on structuring complex choices - the S in nudges). [46:42] Think about your own business and what you are selling to your customers – whether it is a product or a service. What do they need to know and have salient to make a good choice? Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Nudge: Improving Decisions About Health, Wealth, and Happiness Choice Architecture Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 14. Behavioral Economics Foundations: Scarcity What is Capitalism? Episode 12. Behavioral Economics Foundations: Relativity Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Episode 5. The Truth About Pricing Episode 17. Unlocking the Power of Numbers Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Episode 8. What is Value? Episode 16. Behavioral Economics Foundations: Framing The Brainy Business on Facebook

Nudges and choice architecture are complex and advanced topics. During my master's program, I had an entire course on choice architecture, so I'm going to break down this foundational topic into a series. Today's behavioral economics podcast is an introduction to nudges and choice architecture. In each episode, I’ll share the concept and then give real life examples to illustrate that concept.You’re a choice architect whether you realize it or not, and honestly whether you want to be or not. So, it is best to understand the concepts. Don’t you owe it to the people you are presenting choices to? Wouldn’t you want someone in your same position to help you to make the best possible choice? This series is going to help you so much in your life and business both when you are making choices and when you are constructing them for others. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [03:29] In its most core definition, a nudge is a gentle touch or tap. [04:37] An example of nudges in a school cafeteria where rearranging the food items impacted their consumption by 25%. A prominent position can increase consumption by 25% and a less prominent position can decrease consumption by 25%. [06:55] An excerpt from Nudge which outlines the dilemma of where how to structure the food in the cafeteria: 1. Arrange the food to make the students best off, all things considered. 2. Choose the food order at random. 3. Try to arrange the food to get the kids to pick the same foods they would choose on their own. 4. Maximize the sales of the items from the suppliers that are willing to offer the largest bribes. 5. Maximize profits, period. [07:50] Option 1 has obvious appeal, yet it does seem a bit intrusive. [08:25] Option 2, arranging the food at random, could be considered fair-minded and principled. [08:55] Option 3 might seem to be an honorable attempt to avoid intrusion (but the test shows why this is flawed). [09:44] Option 4 might appeal to a corrupt person in the job (not us). [10:02] Option 5 has some appeal, especially if we think the best cafeteria is the one that makes the most money. [10:22] What would you choose? How would you choose? This, is the burden of the choice architect. Many of you are already choice architects and you might not even realize it. [11:15] There are many parallels between choice architecture and more traditional forms of architecture. A crucial parallel is that there is no such thing as a “neutral” design. [12:33] Small and apparently insignificant details can have major impacts on people’s behavior. A good rule of thumb (as you have heard me say many, many times before) is to assume that “everything matters” [13:16] A choice architect must choose a particular arrangement of the food options for lunch (or whatever choice they are facilitating) and by doing so we can influence what people eat. We can nudge. [13:39] “A nudge is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding options or significantly changing their economic incentives." [14:15] Some of the key takeaways from the paraphrased explanation are: 1. Everything matters 2. There are no neutral options 3. You cannot avoid being a choice architect – any format is influencing the choices, so it is best to be informed 4. Nudges can help simplify complex choices and help illogical humans make good choices 5. Nudges are not mandates – they need to be easily avoidable to still count as a nudge. [15:02] Choice architecture and nudges are very closely tied – but they are not the same thing. [15:12] A choice architect is someone who indirectly influences the choices of other people. The choice architecture is the mechanism you use to facilitate the choices. [15:26] A nudge is something you would use to influence the decision. [16:21] An example of the concepts using an HR department: You want to structure choices on a form to help encourage employees to contribute to their retirement account. [18:21] The first item on the list will have the most weight on the brain. It's best to put the recommendation first (a nudge). [19:28] Different wording has different results. Consider saying something like: “Experts recommend contributing 15% of your salary to a 401k, how much would you like to allocate?” (and how it differs from other verbiage) [19:49] This example includes framing, priming, and anchoring and adjustment. [23:39] For your options, you can include several positive options (which start with the word “yes”) and then one “no” option at the bottom. These nudgy options remind the user of the expert recommendations. You can also prime them to contribute at a later time. [24:21] Options on online sign-up forms. [26:56] When used subtly, nudges are very effective. [29:25] Choice architecture is used in all sorts of decisions – from retirement plans to choosing a flight for your next trip. [29:49] Proper choice architecture and nudges can increase profitability on menus, help people to save more for retirement, decrease infection rates and deaths at hospitals, increase organ donations, get more money for public parks, help people to use less energy, and more. [30:20] In this series, I will be outlining choice architecture and the different types of nudges. I will introduce the topic and then give you practical examples. [31:24] There are six categories of NUDGES: iNcentives, Understand mappings, Defaults, Give feedback, Expect error, and Structure complex choices. [33:46] Can nudges be used outside of choice architecture or can you have choice architecture without a nudge? Not really...for example, even if you don't put effort into creating a nudge, there is always a default. So, it is best to be informed and think strategically. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 33. Inside the Texas A&M Human Behavior Lab From Cashews to Nudges: The Evolution of Behavioral Economics Nudge: Improving Decisions About Health, Wealth, and Happiness Choice Architecture Episode 20. Behavioral Economics Foundations: Defaults Episode 16. Behavioral Economics Foundations: Framing Episode 18. Behavioral Economics Foundations: Priming Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 32. The Overwhelmed Brain and Its Impact on Decision Making The Most Ridiculous Loss Aversion Example

Today’s behavioral economics foundations episode is all about the optimism bias. I hope you’ve got your rose colored glasses, because here we go! This is one of those topics that has a name that makes it seem like you MIGHT know what it is…but you potentially don’t know for sure…and you probably don’t realize how much it impacts you and your customers every day. So, what is optimism bias? Essentially, this is our tendency to overweight the likelihood good things will happen to us, and underestimate the likelihood bad things will happen to us. This episode explores why we think this way and how understanding optimism bias can be used to improve our businesses. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes   [05:25] OPTIMISM BIAS - This is one of those topics that has a name that makes it seem like you MIGHT know what it is…but you potentially don’t know for sure…and you probably don’t realize how much it impacts you and your customers every day. [05:31] This is our tendency to overweight the likelihood good things will happen to us, and underestimate the likelihood bad things will happen to us. [06:34] It is important to note that optimism bias is not the same as being an optimist. And, if you consider yourself to be a pessimist or a realist…it doesn’t mean that you are not impacted by the optimism bias. It just might impact you a little bit differently. [07:08] Marriage is a great example of optimism bias. In spite divorce statistics, no one thinks that they are going to get divorced when they get married. [07:57] According to the CDC, 1 in every 4 deaths is due to heart disease, claiming 610,000 lives each year. Do you think the statistic will affect you? Your spouse? Parents? Close friends? Probably not. [08:36] We also think our children are uniquely talented and skilled – that they will grow up to change the world and do amazing things. [09:30] Tali Sharot said, “We are optimistic about ourselves. We are optimistic about our kids. We are optimistic about our families…but we are not so optimistic about the guy sitting next to us. And we are somewhat pessimistic about the fate of families in general and the fate of our country.” [10:08] Optimism bias means that deep down, ingrained in our DNA, we believe that we have a unique ability to do better and be better than everyone else. [10:40] Think about yourself and how you rank compared to the rest of the population in your ability to get along with others. Attractiveness? Honesty? Driving ability? Most people will rank themselves in the top quarter of the population on abilities and characteristics. (Even though that is impossible.) [13:16] Optimism bias is believing that you are uniquely going to do better than the odds. [14:01] What my social media followers said they were most interested in concerning optimism bias. [14:51] The first question is the over/under. At least 80% of us are impacted by optimism bias (but I say it hits everyone at least once in their lives). [15:36] For all the entrepreneurs listening – we are likely to be the serious optimism biasers of the world. We believe we can launch or create something no one ever has. [16:00] The “low expectations” theory - debunked. Turns out people with high expectations are happier than those with low expectations. [16:32] When someone with high expectations succeeds, they tie that back to their own abilities and traits. [16:55] When people with high expectations fail a test they think that they'll do better next time. [17:05] People with low expectations think if they fail it's because of something they are lacking. [17:26] Optimism and success are not just related – success is built on optimism. [18:06] People who use optimism and the optimism bias, who have high expectations, are happier. [18:23] However, optimism bias can cause people to make bad decisions and take bigger risk than they should. [19:21] Another way the optimism bias shows up in business is when we estimate how long something will take. [21:06] Why do we make to-do list with so many tasks that we'll never get through them? It's because our brains are anticipating the rewards after, and we are uniquely capable of getting those things done. [22:10] BIG TAKEAWAY: Let optimism bias guide your goals and dreams. Whatever those big goals are, fill them up with as much optimism bias as you can muster, because confidence will get you there. [23:22] Set corporate goals with optimism bias, but set realistic tasks for your staff. [26:16] My interview with Karla Starr, author of Can You Learn To Be Lucky? [27:28] When people treat you well you develop a stronger sense of self. (Examples from Sarah Palin and Brad Pitt.) [29:37] If you live as a confident person and think things will go well for you, (often) they will. [31:42] Formative years can instill how you believe about yourself. [33:09] Use optimism bias to your advantage to help you be lucky in life and business. [36:26] Join my Facebook live chat with Karla on February 13th - and ask your questions live! [41:16] Businesses will fall on either the light or dark side of this bias - and they need to market/message completely differently. Consider which side your business is on: light or dark? Make sure optimism bias works for you instead of against you. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 33. Behavioral Economics Foundations: Human Behavior Lab Super Bowl Commercials 2019: A Behavioral Economics Review Nicole Bandes.Virtual A Team on Instagram Virtual A TeamExploring the Causes of Comparative Optimism The Optimism Bias Episode 30. Booms and Busts Heart Disease Facts When Harry Met Sally... | "The Wagon Wheel Coffee Table" Emotional reactions to achievement outcomes: Is it really best to expect the worst? Episode 13. Adjusting Your Mindset Episode 22. The Power of Habit Understanding the Optimism Bias Next Level Coach Can You Learn to Be Lucky?: Why Some People Seem to Win More Often Than Others Karla Starr The Brainy Biz Facebook Live Events

I recently took a trip down to College Station, Texas to visit the Human Behavior Lab at Texas A&M University – which is (at the time of recording) the largest human behavior lab in the world. Today’s behavioral economics podcast gives you an inside look at what happens inside of a laboratory like this. In this episode, I interview Dr. Marco Palma to find out what really goes on and answer questions like how do they actually take these concepts from behavioral economics and study them to impact real businesses? What sort of equipment do they use? How do they know what is going on in the brain and more. I hope you enjoy this sneak peek into what really goes on behind the scenes at a Human Behavior Lab.   Show Notes [04:11] The lab has sensors that helps them understand human behavior and what drives the emotions. [04:34] We are heavily influenced by our emotions, and in some cases, don't even realize it. [04:59] Some of the equipment they use includes facial expression readers which can correlate movements in the face with emotions. [05:19] They also have the capability of looking directly into your brain. They can measure stress signals like respiration and heart rates. [05:38] They are trying to understand and measure the motivations behind behavioral economics. [06:03] They also want to test results in the real world. [06:15] The virtual room is a mock grocery store which allows for testing with real products. [07:00] Experiments are conducted in a controlled laboratory environment and in the real world to understand the complexities. [07:27] They use eye-tracking hardware created by Tobii. They can also combine this with an EEG device and have all the hardware in a very small backpack so the subject is mobile. [08:18] The global leader that makes it easy to synchronize multiple devices at the same time is iMotions. [09:19] These new tools have really advanced the pace of discoveries that they can make. [10:02] They're interested in emulating what drives attention. When they know what people are paying attention to the message can be created in a way that will be noticed. [11:18] This is also useful for judging the effectiveness of a website and product placement in a store or display. [11:54]  Everything matters. Often small things that we don't think will matter can make a huge impact. [13:15] We are often guilty of making messages that are overly complex. We want the message to be perceived as simply as possible and to clearly communicate the benefits. [13:56] Menu optimization includes maximizing benefits and minimizing cost. Anchoring can be used for pricing on menus. Work done with eye tracking shows how people actually search for information. These clues can tell you where to place your anchors. [16:16] We use rapid eye movements and digest a lot of information in a very fast manner. [18:00] These devices can track 600 data points per second. Collecting data allows us to make inferences about behavior. [20:15] The foundation of what they do in the lab comes back to establishing causality. [21:52] They control for every detail to establish causality. [22:25] In 2019, they are interested in looking at self control. [22:52] By February 1st, 80% of Americans will have given up on their goals. [23:22] Small changes are much more sustainable than large drastic changes. [23:57] They are also going to look at cheating and lying. They are looking at what drives people to cheat for themselves and for other people. [24:41] What drives the behavior based on the assumption that large corporations or the government aren't being hurt by cheating? [24:52] They are also going to look at what drives people to be more generous. They're going to look at drivers for giving. Also at things like matching funds and fundraising campaigns. [26:15] They are also looking into competition and what drives high-achieving individuals. [27:23] They are trying to find ways to promote competition particularly for women. [29:12] Dr. Palma also wants to mention all of the work that they are doing with food. The way we interact with food is paramount to everything that we do. [29:46] Part of the obesity epidemic in this country has been driven by the access to food. They are trying to find a way to help people make better choices without telling them what to do. [30:14] It's interesting to understand the way that our brains are wired and how we can change that. [30:31] Our survival depended on finding sugar, because it meant that we were able to store calories. The reward pattern for ingesting sugar is the same as the reward pattern for taking drugs. [31:43] We owe it to ourselves and to society to recognize how we can overcome these phenomenons. [32:49] It's important to place this research into the hands of entrepreneurs who are doing important work. [33:58] We can now predict brain activity with 84% accuracy about whether someone will buy something or not. This shows the power of research. [34:36] My current and potential clients who are interested in doing a study to make their brand messaging more effective can work in tandem with myself and the Human Behavior Lab. Interested? Send me an email - [email protected]. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life Human Behavior Lab Website Human Behavior Lab on Facebook Human Behavior Lab on Instagram @HBLtamu on Twitter Self-control: Knowledge or perishable resource? iMotions on Facebook iMotions Biometric Research Tobii Website The Brainy Business on YouTube The Brainy Business on Instagram The Brainy Business on Facebook Episode 29. Resolutions and Keeping Commitments Episode 5. The Truth About Pricing [email protected]

What happens when our brains get overwhelmed? What is the impact on decision making? Today’s behavioral economics podcast is going to focus on these foundational topics. Businesses always ask people to take some sort of action (buy this, click here, download that). It’s a good idea to be careful not to overwhelm your potential customer. An overwhelmed brain will move on and file your business in the “maybe I’ll look at this later” pile. A real life business example of taking care not to overwhelm a potential customer (or in this case listener) is these show notes. I take extra time and expense to have everything laid out in an easy to understand way with all of the related links and studies available for you. That way you can relax and enjoy the show, and if you ever want to learn more or check out the links, you know they will be here waiting for you. I also give more real life and business examples of overwhelm and how it affects the brain and your business. CLICK THE IMAGE FOR YOUR FREE DOWNLOAD! Show Notes [03:32] OVERWHELMED BRAIN [03:46] I have extensive show notes for every episode, because I want to make it as easy as possible for you to relax, listen to the podcast and still have the resources available (so you don’t have to fill up your brain with the one thing you are trying to remember). [04:57] This is the same reason my strategy sessions are done on Zoom and recorded. I want my clients to be able to be in the moment. [05:50] This is another testament to NUDGES and expecting error. I do not expect that someone will remember every little tidbit they want to from every conversation we have. [06:07] There are two errors here – 1) the inability to remember what was discussed because there is a lot and 2) the inability to really focus in the moment because the conscious brain can only devote so much. [06:32] To combat both of those things, I have show notes and videos to help relieve some of that pressure. [07:14] CHOCOLATE CAKE STUDY [07:45] Participants in a study were asked to memorize a two-digit or a seven-digit number. Participants with the two-digit number were more likely to choose a healthy snack when offered. Those with the seven-digit number? They were more likely to choose chocolate cake. [08:34] Our subconscious brains can process 11 million bits of information per second. Our conscious brain can only do about 40 bits. [08:43] When your conscious brain is focusing on something, it tunes everything else out. [09:01] With your conscious brain occupied, the subconscious is tasked with taking the wheel. It is now running the show. [09:17] Our brains are fueled by rewards like dopamine. [10:23] Just think of all the times your conscious brain is able to get overwhelmed. [10:36] One subconscious rule of thumb is to ignore things that are too complicated. [12:53] Dan Ariely provides a great example of this in his book, The Upside of Irrationality, where giving people an opportunity for a large bonus (5 months salary) severely lessened their ability to perform on somewhat easy tasks. [13:18] The amazing computers in our heads are very easy to bog down. [13:50] POVERTY AND COGNITIVE ABILITY [13:58] Studies have found that those in poverty have reduced cognitive abilities. [14:54] This definitely gets at the core of why it can be hard to break a pattern when you are in it. [15:03] SNOWBALL VERSUS BATTERY [15:15] If your brain is overwhelmed…you will probably reach the point of fatigue much faster than you would if you were in a relaxed state. [16:20] POST COMPLETION ERROR [17:47] I travel quite a bit, but when I am packing for important trips, I tend to do a lot of running through lists in my head, “iPad – check, good shoes – check, toothbrush – check” you know what I mean. This creates an overwhelmed brain. [18:50] Why do we sometimes forget to bring our purse or wallet to work? Or drive away without putting the lid back on the gas tank? This is called post-completion error, and it happens when we complete some or most of a task, and our brain marks the whole thing as “done.” [20:23] Your brain holds more weight and importance on things you write down, so having a physical list you can check off can help really mark it as complete in your brain. [20:39] I am going to have a sticky note method to help nudge me about the laundry (so I don’t leave damp clothes in the wash all day and have a funky smelling family!) [21:20] Three questions: How could you help yourself in your work and personal life by relieving some of the overwhelm from your conscious brain? How can you be a resource to your customers to help them relieve some of their overwhelm? How often are you overwhelming your current or potential customers? Here is a 5-step way to avoid overwhelm... [23:53] 1. Write things down – this is like my checklist for packing. [24:52] 2. Do one thing at a time – multitasking is a myth and a path to productive procrastination. [27:38] 3. Make it a pattern (habit) – if there are things you need to do consistently and don’t want to have plagued by overwhelm, turn them into habits. [29:28] 4. Which brings me to the next point…have a goal – hopefully you have already set your 1 to 3 goals for the year after listening to the resolutions episode. [32:41] 5. The final tip is to incorporate constant check ins and breathing points – both for yourself and with customers. Download your free worksheet to help you work through these five steps for yourself and with customers. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 31. Mirror Neurons Guru’Guay on Instagram Guru'Guay on Facebook Heart and Mind in Conflict: the Interplay of Affect and Cognition in Consumer Decision Making Episode 21. Behavioral Economics Foundations: Habits Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell The Upside of Irrationality: The Unexpected Benefits of Defying Logic Poverty Impedes Cognitive Function Episode 29. Resolutions and Keeping Commitments How Writing To-Do Lists Helps Your Brain (Whether Or Not You Finish Them) Fierce Conversations: Achieving Success at Work and in Life One Conversation at a Time Episode 23. Behavioral Economics Foundations: Reciprocity The Brainy Business on Facebook

Mirror neurons are the topic of today’s behavioral economics podcast. We are really going to get into what they are, how they work and why they matter in any business. Mirror neurons are the key to empathy and our ability to learn from observing others instead of only by doing things ourselves. Mirror neurons have done some amazing things for all of humanity – first of which is our ability to learn by observation and second is our ability to empathize. In this episode I explain the accidental discovery of mirror neurons, and talk about learning by observation, our other senses, facial expressions and empathy. I also include a lot of additional resources for further learning and explain how this knowledge can be applied to any business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [03:52] Mirror neurons are the key to empathy and our ability to learn from observing others instead of only by doing things ourselves. [04:21] Mirror neurons were discovered in the early 1990s. The whole thing happened by accident when scientists noticed that a monkey's brain lit up when one of the researchers walked into the lab eating an ice cream cone. [06:32] We humans have mirror neurons as well, and they greatly impact our lives everyday. [06:47] Mirror neurons have done some amazing things for all of humanity – first of which is our ability to learn by observation and second is our ability to empathize. [06:55] We humans tend to take for granted how quickly and easily we learn things simply by watching others. This isn't something every species can do. [07:46] Without mirror neurons, life as we know it would not exist. [08:08] Mirror neurons are how the species learned to hunt, gather, farm, build homes, and all the skills we use every day. [08:26] The collective intelligence of the species grows very quickly as one person learns to do something because others can watch and have their brain behave as if it has already done it once before. [08:45] We each have 100 billion neurons in our brains and each of those has 1,000 to 10,000 contacts with other neurons forming associations. [09:36] Mirror neurons are actually found in one spot in the brain – in the frontal lobes. The front of the brain is also home to our ordinary motor control neurons. [10:51] A study found that the mirror neurons were more active when the context was included – meaning both intentions and actions matter and relate for mirror neurons. [11:03] Mirror neurons will not respond to random, meaningless gestures – it has been found that they are specially connected to respond to actions with clear goals. [11:46] The processing of the senses actually happens in the brain. Because our brains bring context, interpretation and analysis to everything we experience…it turns out they don’t really know the difference between what is physically in front of us, versus on tv, or a print ad, spoken into our ears or read in text. [12:54] Mirror neurons are what allow us to experience drinking spoiled milk when we see someone else do it. [13:55] Seeing things is the best way to trigger mirror neurons, but the other senses will trigger them, as well. [14:10] When someone smiles at you, your brain brain reacts as if you are smiling too. [14:32] You don't have to be consciously aware of what's happening, you just do it. [15:29] The response of mirror neurons is quick, intense, and automatic. [15:44] Mirror neurons may well be at the core of how we understand the actions of others and empathize with them. Without mirror neurons, we would probably not have any awareness of the actions, intentions and emotions of others. [17:38] All that separates us from other people and experiencing the same things they are experiencing at every moment they are within our proximity…is our skin. [17:53] This is why people with phantom limb syndrome can be helped by watching someone else get a massage. [19:45] Mirror neuron therapy helped a couple whose baby had a stroke at 10 days old regain body control on his left side. I've linked to the touching TED Talk. [21:16] BUSINESS APPLICATIONS - Video is effective. When you can show someone taking the action you want your customers to take, it makes it easier for them to follow suit. [22:54] Any time you can get someone to see another person experiencing your product, it is good. HOWEVER you need to be very careful of the facial expressions and all the slightest nuances of the person in the video. [24:44] If the subconscious can fill in the gaps when presented with a few images…that is important for using mirror neurons. [25:07] Our mirror neurons allow us to relate to what is being displayed in the pictures and we fill in the gaps to make sense of what we are supposed to do. [25:33] A well produced story with all the RIGHT details is better than a drawn-out, verbose explanation any day. [25:46] Great storytellers can hold conversations well. Our brains allow us to experience the words in the story as if we are participating ourselves. [25:57] Include action words and partner them with matching gestures to help the audience come along with you. [26:29] When you can activate mirror neurons, you are helping the individual to familiarize themselves with your brand, story, product or process. [26:57] Be aware of your actions and facial expressions even when you aren't speaking. [27:25] Smile genuinely, be interested, and be inviting whenever you're in a room with people. [28:14] To attract positive customers, you may need to try a shift within yourself. [30:30] An experiment was done with an honesty snack box at a workplace. They tried different images and the one with eyes on it encouraged people to put more money in than those with flowers. [32:20] Showing your potential customer someone using the product in the same way you want them to is a great way to activate mirror neurons because it combines an action with intention. [33:20] Consider the actions and intentions to use mirror neurons to the best of your ability. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 29. Resolutions and Keeping Commitments Episode 30. Booms and Busts Episode 26. Behavioral Economics Foundations: The Sense of Taste Unlock the Mystery: Behavioral Economics with Melina Palmer Rachel Antonia The Mind's Mirror The University of Parma The Neurons That Shaped Civilization Grasping the Intentions of Others with One's Own Mirror Neuron System What's So Special about Mirror Neurons? Mirror Neurons And Their Role In Marketing Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 27. Behavioral Economics Foundations: The Sense of Hearing and Sound Episode 28. Behavioral Economics Foundations: The Sense of Touch Both of Us Disgusted in My Insula The Common Neural Basis of Seeing and Feeling Disgust The Mirror Neuron Revolution: Explaining What Makes Humans Social A Touching Sight: SII/PV Activation during the Observation and Experience of Touch In Our Baby’s Illness, a Life Lesson 'Big Brother' Eyes Encourage Honesty, Study Shows The Brainy Business Facebook Page @thebrainybiz

This behavioral economics podcast is about the psychology behind economic booms and busts. The first big bubble on record happened almost 400 years ago and there have been countless since then…so why haven’t we learned to avoid them? Why do we keep falling into the same traps over and over again? This is where the “behavioral” part of behavioral economics comes into play. This episode is relevant today because of the current status of the stock market, which had a tumultuous 2018 to say the least, as well as the recent rise and fall of cryptocurrency.  In this episode, I will cover optimism bias, overconfidence, herd mentality, time discounting, and emotions like envy and excitement. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [04:04] TULIP EXAMPLE - One of the earliest known bubbles happened in the late 1630s when Tulipmania struck Holland. [04:43] WHAT CAUSES BUBBLES - When excessive demand for an item drives the price up so it is far above the intrinsic value, it forms a bubble. [05:11] When the general population realizes that the prices are over inflated, everyone tries to get out at once causing a crash. [05:42] BEANIE BABIES - the beanie baby bubble took place about 20 years ago. [05:56] The genius strategy of retiring beanie babies, creating scarcity and increasing their value dramatically happened more by accident than anything else. [07:15] Ty changed the framing message by telling buyers that Lovie the lamb had been retired not that it was a supply issue. [07:30] Disappointed buyers were suddenly delighted at the prospect that Lovie might be worth more than what they originally paid. [07:42] Warner then begin intentionally retiring Beanie Babies. [08:56] Four women in Chicago who saw the potential of buying retired Beanie Babies actually started the craze. [09:16] As excitement caught on, Beanie Baby prices began to rise. [09:55] The entire bubble lasted five years. [11:30] Just like the Tulips, it all came crashing down. A retirement was announced in 1999 and prices remained stable. A release of 24 new beanies on that same day was overwhelming to investors and sales began to decline. [13:23] The first concept in the brain that contributes to forming bubbles is our bias toward optimism. A bias toward optimism is what makes people underestimate the chances that we will be in a car accident or get diagnosed with cancer relative to other people. [14:08] On the flip side, we may say that winning the lottery is a one in a million shot…but we still think WE have a good chance of winning. [15:01] We have a hard time not imagining what it would be like and our optimism bias tells us “that could be me!” which combines with perceived ownership and makes you feel like it is worth the small risk to play. This is the concept of availability, which was the topic of episode 15. [15:43] The anticipation releases dopamine and gets your brain excited about the opportunities. This creates a quick feedback loop, which gets people caught up in the hype of the bubble. [16:12] OVERCONFIDENCE - Consider something people say “can never fail” as a red flag. [17:27] HERD MENTALITY - We also get swept up in the hype because of our herd mentality, which was the focus of episode 19. [18:21] When an animal is part of a herd, it is best to simply follow everyone else. [19:16] Do your own research, don’t get swept up in the hype of others in the herd. [20:03] Our brains believe “it is better to be conventionally wrong than unconventionally right.” [22:33] Once something hits the mainstream and “everyone knows” it is a hot buy…it is probably past the point where you should have bought in. [24:01] TIME DISCOUNTING - We are programmed to see the immediate benefits and risks, and disproportionately weight them against future benefits and risks. [26:16] Value fluctuates, and it is easy to feel as if you “had” the money and dream about all the things you could do with it, but in many cases that is simply on paper. [27:56] Because our brains claim ownership over things very quickly, it is difficult to not get emotionally invested in the highs and the lows. [28:27] EMOTIONS - With bubbles, booms and busts, we let our emotions get the better of us and we quickly become our own worst enemies. [29:55] WHAT TO DO - If someone comes to you with an investment that seems too good to be true, it probably is. Consider going against the herd and finding new opportunities. [30:19] Self-confirmation bias is where we have a tendency to confirm our own beliefs. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: What Causes Economic Bubbles? - Prateek Singh Episode 14. Behavioral Economics Foundations: Scarcity Episode 18. Behavioral Economics Foundations: Priming Episode 16. Behavioral Economics Foundations: Framing How the Beanie Baby Craze Was Concocted — Then Crashed Family Ruined By $100K Beanie Babies 'Investment' The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute Exploring the Causes of Comparative Optimism Episode 12. Behavioral Economics Foundations: Relativity Lifetime Risk of Developing or Dying From Cancer It's Math: Why You Should Never Play The Lottery Episode 15: Behavioral Economics Foundations: Availability How the Bitcoin Bubble Will Pop 5 Contributing Factors in Housing Market Crash Episode 19. Behavioral Economics Foundations: Herding Obvious Investments Are Often the Worst Possible Choices Episode 29. Resolutions and Keeping Commitments Dow Jones - 100 Year Historical Chart Don’t Be Your Own Worst Enemy When Investing The Dark Side of the '90s Beanie Baby Craze Stock Market Crash of 1929

I would like to wish you all a Happy New Year! This is the first behavioral economics podcast episode of 2019. Like so many of you, December is a time of reflection for me, and planning for the year ahead. I do like the “fresh start” that comes with a new year, new quarter, new month, new client or new project…but what happens when the newness wears off? Why is it so hard to keep our resolutions even when we have the best of intentions? That is what this episode is all about. I am going to dig into 5 ways we have all been approaching resolutions wrong, and give you the strategy you need to change that in 2019 once and for all. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [07:38] What do you think about resolutions? Personally, I have never been a big fan. [08:18] I have never enjoyed investing time in things that will fail. The subconscious brain makes 99% of your decisions. It makes those decisions based on proven rules of thumb which it has found to work over your lifetime or our genetic evolution as a species. [08:44] When you say you want to change something you can have the best of intentions, but there’s a reason resolutions are easier said than done. [09:28] Our brains are constantly looking for rewards and many of the things that we find rewarding are the things that we want to change. [10:32] TIME DISCOUNTING - I call this the “Monday effect.” Have you ever said you would start something “on Monday”? Then…in what seems like minutes instead of hours…the alarm goes off. Where did the motivation go? Why do you feel like a completely different person today than you did last night? [13:07] Maybe tomorrow is a better day to start. Then tomorrow never really comes either. This is time discounting. [13:31] Studies have found that when you talk or think about your future self…the brain lights up as if it were talking about a completely different person! [14:20] “Future you” is actually a different person than you. [14:37] The problem comes when I wake up on Monday morning and it is time to face the music. “Oh, you mean I need to do that stuff?” [15:02] Time discounting compounds with overconfidence and optimism to make a perfect storm against change. We overestimate how good we will be at something. We also underestimate how long it will take to accomplish something. And overestimate how our outcomes will be compared to other people's outcomes. [15:50] Making your future self “real” to you so that you see yourself in the commitment can make a difference. [16:21] People saved more for retirement if they were shown a picture of themselves that looked like they had aged 10 or 20 years. [16:55] 1. When you are making the commitments, ask yourself if the plan is realistic. Think about this in terms of yourself right now. [17:19] 2. When you feel like you want to hit the proverbial snooze button (and you will) remember the commitment you made and why it is important. [17:43] 3. When making your commitment, make it something you can turn into an “I don’t” statement. [18:20] ANTICIPATED REGRET/COUNTERFACTUAL THINKING [18:25] Anticipation of regret is a huge reason people delay taking an action. [19:11] One reason regret is so powerful is because of counterfactual thinking. This is easier known as “what if” or “if only” thinking. [20:28] Your brain will combine the best features of unselected (and heavily evaluated) items into a “super choice” (which doesn’t really exist) to make you feel even worse. In this example, your brain creates a super safe, awesomely stylish car that you “could have had if only you hadn’t picked the stupid good deal” car. [20:41] Our brains want the immediate gains and benefits of “now” instead of waiting for something that is good for us in the future. [21:32] To make your resolutions stick, watch out for anticipated regret and all the times you start to think about “what ifs” and “if only’s” that aren’t leading to your goal. [21:52] Before you pick your resolution, be sure it is something you really want and are willing to make a change for. Think about why it matters and come to terms with the things you are going to give up in order to get it. [22:33] WILLPOWER (BATTERY VERSUS SNOWBALL) [22:40] There has been debate over the years as to how willpower and self control are created and maintained over time. [23:05] New research out of Texas A&M University’s Human Behavior Lab has found that it is actually BOTH – a battery and a snowball. [26:59] When you try to commit to too much and come in too hard and too fast, you are setting yourself up to fail. [27:27] Setting yourself up with too many goals and tasks is also a recipe for failure. You can’t focus on so many things at once. [27:48] What is the one thing that will change your business next year, and how can you put all your effort toward meeting that one goal? [28:40] Advice from Warren Buffett: Write down your top 25 goals for your life and business. Circle the top 5 most important goals. What happens to 6-25? They become your “avoid at all costs” list. [30:30] Not having a clear focus and narrowing down your purpose is why we lack self-control and have a hard time making changes. [31:18] You have to learn to say no. You need to make sacrifices. It will be hard, but it will be worth it if you pick the right things to focus on. [31:29] SMALL STEPS AND NUDGES [31:44] You only get to move one step at a time. All change – from weight loss to massive business success – comes one small step at a time. [32:06] If you make your list of 25 and narrow it down to a top 5, I am telling you to bring that down to a top 1 to 3 MAX for your resolution or big business goal for 2019. [35:42] You will not have a flawless path, there is trial and error. You may expect a snowball and get a battery. [36:10] Expecting error (part of Richard Thaler’s acronym NUDGES) is why the car dings at you when you forget to put on your seatbelt. [36:41] Make a list of all the spots where you might be likely to slip for those top three goals you have set – your 2019 resolutions. [37:54] If you have a resolution around more effective networking, set goals before you go for how many connections you are going to make - and schedule time in advance to follow up. [38:20] BE THOUGHTFUL [38:47] If you focus on something, and everyone else knows it is important to you, if it is the thing you live and breathe and are 100% of the time, you will move forward. [39:30] You need to limit the focus and think about the small steps you can take to BE thoughtful about this one thing (or three things). [41:06] How can you help your customers have more realistic goals they can achieve and feel good about? [41:51] Does your lead magnet speak to these goals people will focus on and give them an immediate win? Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 23. Behavioral Economics Foundations: Reciprocity Episode 16. Behavioral Economics Foundations: Framing Episode 21. Behavioral Economics Foundations: Habits Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Business Coach for Women Episode 3. Do Lead Magnets Work and Do You Need One? Sales Maven Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 5. The Truth About Pricing Episode 2. The Top 5 Wording Mistakes Businesses Make Episode 1. Unlocking the Secrets of the Brain The Brainy Business on Facebook @thebrainybiz on Twitter The Brainy Biz on Instagram The Brainy Business YouTube Episode 15: Behavioral Economics Foundations: Availability Impulsivity and Cigarette Smoking: Delay Discounting in Current, Never, and Ex-Smokers Time Discounting and Time Preference: A Critical Review Golden Eggs and Hyperbolic Discounting Simpler: The Future of Government Exploring the "planning Fallacy": Why People Underestimate Their Task Completion Times The Trouble With Overconfidence Exploring the Causes of Comparative Optimism Episode 13. Adjusting Your Mindset The Functional Theory of Counterfactual Thinking Regret Aversion and False Reference Points in Residential Real Estate Self-control: Knowledge or Perishable Resource? Human Behavior Lab Texas A&M Human Behavior Laboratory Now Open for Business Research on How Self-control Works Could Help You Stick With New Year’s Resolutions Heart and Mind in Conflict: the Interplay of Affect and Cognition in Consumer Decision Making This Story About Warren Buffett and His Long-time Pilot Is an Important Lesson About What Separates Extraordinarily Successful People from Everyone Else Nudge: Improving Decisions About Health, Wealth, and Happiness Blissfully Healthy - Coach Emmie Perez

This behavioral economics podcast episode is the final installment of my series on the five senses. We’ve already talked about sight, smell, taste and hearing. Today, we dig into the sense of touch. Touch is one of the topics that I’m the most excited to share with you. Touch is directly connected to buying behavior in a way that is fascinating to behold. We value things more once we have touched them, and the triad of the endowment effect, perceived ownership and loss aversion are triggered directly by touch, which I will get into during the episode. I talk about how touch works and share scientific studies and real life examples that will help illustrate how this fascinating sense can be incorporated into your business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [07:32] Touch is directly connected to buying behavior in a way that's fascinating to behold. [08:23] Touch is directly linked to emotional language. [09:05] We can get along without most of our other senses. It's not the same with touch. [09:59] Our sense of touch and having contact with others is important for development throughout life. [10:45] Touch is the social glue that binds us all together. [11:17] Touch is important for the development of people and societies. [12:07] Developing emotionally makes one more receptive to touch. [12:44] The wisdom of Dr. Seuss. [13:33] Our skin has many nerve endings. These nerve endings have different jobs. Fingertips have nerve endings for pressure, and that is why they can read braille. [15:27] If I asked you if water was hot or cold your answer would depend. As with the truth about pricing (where it isn’t really about the price) – it’s not about the water and its temperature, it’s about everything leading up to the touch and temperature that matters. [15:52] Nerve endings are different than emotional touch and sensation. [17:13] Emotion and touch are very closely linked, and we form bonds with the way things feel. [17:42] TEAMWORK - Human contact is important to our development throughout our lives. [18:04] Touch has been shown to impact the overall effectiveness of teams. [19:01] Waitresses who touch the arm of a patron in a platonic way (whether they are male or female) have been shown to get more tips. [19:40] Providing comforting touch is part of who we are as humans and it impacts our relationships and how we do business. [19:52] Use touch with caution and make sure you are always incorporating appropriate touch. [20:32] Whether we realize it or not, the texture of the paper an item is printed on says a lot to our subconscious about the business as a whole. [21:47] That first impression is everything and could be impacting every decision from that point forward. Invest in high quality materials that reflect your brand and message. [22:38] If you want to show you are out of the box there are many options – I have gotten wooden and metal business cards and they definitely say something about the person who gives them to me. [22:54] Think about everything that is physically touched. They all say something about your brand. [23:54] Merely touching an item greatly increases the ownership over that item. [24:29] Our brains want us to reach out and touch things. [25:28] Smart companies know that touch increases purchases. [25:58] Far too many stores neglect the power of the dressing room with poorly-lit, messy dressing rooms. [26:34] A personal shopper is a very easy way to experience the clothing and decide what you like. People would buy more if every store experience was like this. [28:04] Advice from What Not to Wear. Color, pattern, texture, and shine should be incorporated into every outfit. [28:21] Texture matters because we can see what something might feel like with our eyes. This creates visual interest and appeal. [29:51] Similar to the paper you print things on, texture and the power of touch are actually a big influence on how people perceive you…even if they will never touch your outfit. [30:24] We can emotionally “feel” something with our eyes, and it helps us to make decisions about the person in front of us. [30:39] The feel of a piece makes a big impact on purchase behavior. [31:28] Think about your packaging also. [31:54] The power of touch without touch - the benefits of envisioning yourself touching an object or an image of an object. [33:31] Well-chosen words can make your brain trigger its texture centers so you are responding as if you were touching it – triggering perceived ownership, loss aversion, and an increased likelihood of buying. [33:48] The truth of the matter is this – touch – whether it is actually happening in your hands or simply in your mind, impacts sales. [35:24] BRAND - Brands need to think about the way they make people feel and how that ties in with their overall experience. [36:00] The materials you choose for everything you do – from physical products to chairs in the lobby and business cards, postcards and letterhead all impact the perception (and likelihood of buying). [36:58] All the senses are impacting our lives much more than we realize. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 26. Behavioral Economics Foundations: The Sense of Taste Episode 27. Behavioral Economics Foundations: The Sense of Hearing and Sound Episode 23. Behavioral Economics Foundations: Reciprocity Episode 2. The Top 5 Wording Mistakes Businesses Make Episode 5. The Truth About Pricing Episode 9. Behavioral Economics Foundations: Loss Aversion The Science of Touching and Feeling | David Linden | TEDxUNC Grinch's Heart Grows Sense of Touch Episode 12. Behavioral Economics Foundations: Relativity New Study: When NBA Players Touch Teammates More, They and Their Teams Play Better Tactile Communication, Cooperation, and Performance: An Ethological Study of the NBA The Effect of Mere Touch on Perceived Ownership Episode 21. Behavioral Economics Foundations: Habits Visual Perception of Texture of Textiles The Effect of Mere Touch on Perceived Ownership

We have already covered the sense of sight, smell, and taste. Today’s behavioral economics podcast is all about the sense of hearing and sound. As a vocalist, avid music lover and podcaster, sound and the sense of hearing is very near and dear my heart. I talk about the basics of hearing and how the brain interprets signals from the ear. Then we move on to sounds, and the signals that sounds can send to our brains. Similar to the sense of smell, sound can have a huge impact on what the brain perceives. I share some fun studies and articles that involve music, pop culture, branding, and I even play some some branding sounds for you to guess. As always, everything ties back to how you can use sounds to make your business more appealing to your target market. CLICK THE IMAGE FOR YOUR FREE DOWNLOAD! Show Notes [04:48] Sound is basically just air. It hits the outside of our ears, which help to determine where a sound is coming from as sound waves bounce off of them. [05:00] The ear canal then works like an amplifier on the way to the eardrum. [05:12] The eardrum works like a physical drum by turning the air that hits it into a physical vibration which pass along to the tiny bones of the inner ear. [05:28] This causes the fluid of the inner ear to slosh around, stimulating tiny “hairs’ in the ear which move molecules around and send signals to the brain to be interpreted as sound. [05:43] This is also what controls equilibrium and allows you to stand up and know the difference between what’s up and down. [06:12] The cochlea translates sounds into electrical pulses and sends them to our brain. [07:09] Vibration of sound waves is at the core of sound and what we hear. [07:49] Your body takes in a stimulus that needs to be interpreted by the brain to actually mean anything to you. [08:27] Hearing has a similar ability to distract and take over everything the same way that smell does. [08:49] A good smell can flag your brain in a positive way, and a bad smell can do the opposite. [09:48] Sound has a similar impact on our ability to perform. [11:48] Music is amazing and powerful. [12:30] Every culture on Earth has been found to have some type of musical component. [13:18] We truly are uniquely able to understand and create music and it impacts more than just our ears. [13:41] Studies have shown that our bodies physically react to music in amazing ways. A quick tempo in a song will make our hearts beat faster. [14:03] The body actually changes when music is played, which is pretty amazing. If you want to get pumped up before an important call – choose a great song. [14:37] The easiest way to turn any sound into music is to repeat it. [15:20] Our brains love repetition. Familiarity is favored and music is all about repeating. [15:51] Music impacts our brains differently than words and it can actually help people to heal. [16:49] Studies have shown that restaurants playing faster music can turn more clientele than those who play slower music. [17:39] Understanding how you make money can make it easy to pull the right levers. [18:51] Studies have shown that stores need to carefully select music that matches the brand to encourage shoppers to stay in a store longer. [19:18] Locations that played music that was a better fit increased time in a store by 22 minutes! [19:51] The emotion of the music can impact the way the consumer feels about the brand they are interacting with. [20:42] Everything leading up to the sale or conversation or price or item being sold matters more than the price or item itself. Everything matters. [21:13] JINGLES: Sounds have a strong connection to memory, emotion and behavior and jingles associate brands into our brains in a different way than images or words alone. [24:02] Sounds make or break movies. They say if you are ever watching a movie and get too scared to put it on mute. It completely changes the experience. [25:28] People truly can hear whether you're smiling or not (even if they can’t see you), and it makes a difference with how they interact with you. [26:17] The study I have linked to found that the way a number is sounded out can impact the way the price is perceived – as being big or small – more than the mere number does alone. They did this by testing out the way words are formed – vowels and consonants to determine what is a “big” sound versus a small sound. [28:05] This study found that “bigger” associations in the phonetics translated to a bigger price in the brain. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 26. Behavioral Economics Foundations: The Sense of Taste How Do We Hear? Hearing & Balance: Crash Course A&P #17 Episode 5. The Truth About Pricing Episode 6. How To Sell From The Stage Episode 7. Change Management (It’s Still Not About The Cookie) Episode 8. What is Value? Beats by Dre goes ‘Above the Noise’ with Olympic athletes in latest campaign Beats by Dre x Colin Kaepernick Hear What You Want Commercial Explained Ed Sheeran - Shape Of You - Loop Pedal Version Atmospherics as a Marketing Tool The Effects of Background Music on Consumer Responses in a High-end Supermarket The Impact of Music on Consumers' Reactions to Waiting for Services Episode 18. Behavioral Economics Foundations: Priming 10 Iconic Horror Theme Songs Are Emotionally Different with a Major Key Change Mrs Doubtfire Recut as a Horror Movie The Shining (happy version) Small Sounds, Big Deals: Phonetic Symbolism Effects in Pricing

Today marks the halfway point in our series on the five senses – we have already talked about sight and smell…and today we are digging into taste. Smell and taste are closely linked so be sure and listen to last week's episode about the sense of smell. Both taste and smell use chemical receptors to the brain, and are our more primitive senses. Smell is directly tied to the emotional center of the brain and also closely bonded to our memories. Taste is not as strong in that department, but it still has more of a link than some of the other senses. In this episode, I talk about parts of the sense of smell that are closely tied to taste. We dig into mirror neurons for the first time. In case you don't know, I explain what anosmia is and tie everything into ways to increase and improve your business. Show Notes [09:25] Smell and taste are closely linked together. Both use chemical receptors in the brain and are more primitive senses. [09:50] Taste and smell are closely linked (unless you have anosmia a condition where someone loses their sense of smell). [11:02] People who lose their sense of smell also lose the majority of their sense of taste. Why? Because taste is actually 80% smell! [11:53] Your olfactory bulbs are bringing in the molecules that help you distinguish between all those scents to help you have a better sense of what you are tasting (and tying that to memories and emotions). [12:41] Our tongue’s 10,000 taste buds can basically distinguish between a few categories of flavors – salty, sweet, sour, bitter and umami (which is sort of a savory flavor). [13:11] The tongue’s taste receptors basically know if something is salty or sweet, but can’t tell the difference between the flavor of a tortilla chip or a pickle. The nose is required for that. [13:36] We can actually taste all flavors at any area on the tongue (and some of the rest of our mouth as well). [13:48] Taste is actually strongest around the edge of your tongue. [13:59] “Spicy” is not a taste - it is a pain receptor. [14:23] The little bumps you can SEE on your tongue are NOT your tastebuds! Those are called fungiform papillae and the taste buds are down between those bumps. [15:02] The tongue absorbs molecules from the foods we eat and sends a signal to the brain, which then determines what category it falls into. [16:25] MIRROR NEURONS These are basically what allow us to “feel” what others feel. [17:21] The story of how scientists accidentally discovered mirror neurons in a lab in 1991. [18:56] MIRROR NEURONS AND BRANDING [19:44] Cleaning products used to have the face of Mr. Yuck on them. [20:44] Using food and the sense of taste can quickly backfire on you because of mirror neurons. [22:06] If you ARE selling food – good news! You can trigger mirror neurons all the time and use them to your advantage. [22:28] Studies have shown that taste relies on all the other senses to create a full experience. [22:39] Sight is important. If you have ever watched a tasting challenge on the food network you know that being able to see the food makes a difference. The expectation of what is coming to them impacts the taste. [24:07] Some studies have shown that taste tests for orange juice varied based on color alone. [24:28] Think about eating a potato chip, or celery or popcorn. If you can’t hear the sound of chewing it – that satisfactory crunch – does it impact your perception of taste? You bet it does! [25:33] Touch includes the feel in your hands as well as texture and temperature. These all impact taste. [26:15] When it comes to taste – all the senses are involved because of the way they are processed in the brain. [26:31] Our brains get what they expect. [27:26] Don’t judge a book by its cover? Unfortunately, we do every day – which is one more reason brands matter. [30:37] We know taste is greatly impacted by all the senses. [31:32] When it comes to advertising the taste of something – incorporate all the senses if you can. [34:01] The words you choose, images, smells, flavors, sounds, and everything else matters. [34:52] Everything leading up to the interactions with your brand matters more than what you are selling, the price – and the taste if you have one. [35:11] So always, always be strategic and thoughtful in everything you do. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell Filene Laura Peterson on Instagram Copy That Pops Allison Melody on Instagram Food Heals Podcast on Instagram Business Bros Podcast on Instagram @BusinessBrosPod on Twitter 64: Unlock the Mystery: Behavioral Economics with Melina Palmer Bogdan Rosu Podcast with Melina Palmer of The Brainy Business Taste & Smell: Crash Course A&P #16 What is Taste? How does our sense of taste work? Confusing Tastes and Smells: How Odours can Influence the Perception of Sweet and Sour Tastes The Buying Brain: Secrets for Selling to the Subconscious Mind The Effects of Advertising Copy on Sensory Thoughts and Perceived Taste Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions Coke Won the Cola Wars Because Great Taste Takes More Than a Single Sip Episode 21. Behavioral Economics Foundations: Habits Episode 22. The Power of Habit Episode 5. The Truth About Pricing Episode 18. Behavioral Economics Foundations: Priming

This behavioral economics podcast continues our series about the five senses. Last week, I talked about the sense of sight. This week I’m talking about the sense of smell. No matter what type of business you have, these episodes will apply to you. The senses are all powerful and create memories the brain uses to make decisions, and decision making is a big part of successful business. Understanding how our brains use past experience to interpret the world around us is super important when it comes to understanding how to integrate stimuli from our senses in business. We have all experienced a certain scent bringing back a memory. Today, I talk about the sense of smell and how awareness of it can help make your business better. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [09:48] The sense of smell is made up of olfactory bulbs, which are part of the limbic system. [10:06] The sense of smell is one of our oldest senses, and it connects directly to memories and emotions. [10:17] It's one of the first senses we use as infants, and it ties to certain emotions and memories by the time that we are five years old. [10:43] Our sense of smell developed through evolution to help our species survive. We can detect danger through our sense of smell, and we can find our children in the dark. [11:35] Molecules of items separate from the item in question (like bread baking) and those little pieces travel into our noses and are read by our olfactory epithelium (which are like the taste buds of our nose), sending a direct message to the brain. [11:55] Sight, sound and touch do NOT have this connection, so they are not as closely linked to memories or emotions. [12:19] Adult humans can distinguish between approximately 10,000 unique odors using 40 million different olfactory receptor neurons. [12:54] Because it has a direct route to the limbic system, certain scents can trigger fight or flight while others bring up vivid memories and others can make your mouth water. [13:27] Scent is also linked to physical attraction and our noses are trained to like people who are dissimilar to ourselves. [14:46] Smell is linked to where, when and why – thus the power of memories and really taking us back. [16:24] Being able to understand how these memories are formed and how to create positive associations can help with your business and customers. [16:47] Most of our scent memories are formed when we are around the age of five. [19:59] Scent marketing and scent logos are a thing. [22:02] Melina shares a story of how smelling Lush products made her hungry for P.F. Chang's food. [22:53] ScentAir made grocery store sales go up by 7%. 83% of shoe shoppers preferred a floral scented room when shopping and valued the shoes at a higher price. [23:40] An experiment with scented slot machines. Casinos have branded scents. A gas station was able to increase coffee sales by 300% with coffee scented air. [25:08] Rosemary essential oil made test subjects perform tasks faster. [25:23] People can remember a scent and its related memory with 65% accuracy after 12 months. [25:47] An inhaled vanilla aroma decreased anxiety for 63% of MRI patients. [26:42] If you have a physical location, the scent you infuse makes a huge difference and you want to make sure it ties in with your goals. [27:38] There are companies who are experts on scent branding. You can actually hire them to help you choose a scent for your business. [28:53] Scents are used to create an experience, and it will be a different experience for each business. [30:10] Bad scents can impact behavior and make it difficult to focus on anything else. [31:10] Our world and the way we think about it impacts everything we do. Our memories – and particular scents – can trigger emotions. [32:05] Even showing a picture of someone smelling something can trigger mirror neurons. [34:01] If you don’t sell food and you don’t have a physical location, it is still important to know the power of scent. You can use the power of sent to prime memories. Just be smart and intentional about it or things can backfire. [36:43] Next week on episode 26 we are diving into the sense of taste. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 24. Behavioral Economics Foundations: Sense of Sight A Fresh Wave of Marketing: An Intentional Approach to Marketing for Visionary CEOs Casey Gromer on Instagram Virtual A Team The Buying Brain 2-Minute Neuroscience: Limbic System How Do We Smell? - Rose Eveleth The Power of Scent Hippocampal Projections to the Anterior Olfactory Nucleus Differentially Convey Spatiotemporal Information During Episodic Odour Memory The Neuroscience of Smell Memories Linked to Place and Time Smells Ring Bells: How Smell Triggers Memories and Emotions How Does Scent Drive Human Behavior? Fragrant Flashbacks Perfume Directory Episode 18. Behavioral Economics Foundations: Priming Let Them Sniff, Customers Will Buy More The Science of Smell: How Retailers Can Use Scent Marketing to Influence Shoppers Good Smells are Good Marketing: How to Use Scent to Your Advantage Making Sense of the Hotel Guestroom The Impact of Ambient Scent on Evaluation, Attention, and Memory for Familiar and Unfamiliar Brands Smells Like Psychology The Smell of Commerce: How Companies Use Scents to Sell Their Products The Science of Sensory Marketing Productivity Hack Of The Week: Use Aromatherapy To Improve Your Work Inside the Invisible but Influential World of Scent Branding The Art of Scent Marketing

Did you know that the sense of sight has a huge impact on your business? About a quarter of our brains are involved in visual processing. This behavioral economics podcast is all about the sense of sight. I share the surprising truth about what percentage of the body’s sense receptors are in the eyes and why our subconscious is so visual and the impact that has on our businesses. This is the beginning of a series on the five senses – beginning with sight and moving through sound, touch, taste and smell (not necessarily in that order). I am starting with sight because it is the most powerful of our senses by far and the things I am going to share with you in this episode are going to just blow your mind. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [14:48] There is so much more to know thank you think about the sense of sight and how it absolutely impacts your business. [15:23] I'm beginning with sight, because it's the most impactful. About a quarter of our brains are involved with visual processing. [16:05] About 70% of the body's sense receptors are in our eyes. This is why our subconscious is so visual. [17:11] Is vision in your eyes or in your brain? [17:24] The sense of SIGHT takes place in the eyes. It is all the little bits of information coming into them. But Vision? Vision does not actually happen in your eyes. VISION is in your BRAIN and is much more complex than simple sight. [17:56] Vision is actually built on expectations in the brain based on past experience. [18:39] The sense of sight is bringing in a lot of stimuli it can’t actually interact with – light, color, contrast – in a big flood of information all the time. The process of INTERPRETING that information is a task for the brain. [20:30] When we present our product data for our business, people's brains will fill in the gaps and tie things together. [21:47] Inside the retina are photoreceptors – perhaps you have heard of the rods and cones in your eye. They are shaped differently (hence their different names) because they do different things: rods are sensitive to dark versus light and cones are sensitive to color. [22:57] Color Illusions can trick the brain into thinking that it sees a different color. [24:30] FOCUS Our eyes interpret information with the highest resolution in the middle. [26:19] Impressionistic paintings were styled because of diseases in the eye. Monet's early work was full of blues and purples that were absent in later work. Brush strokes became thicker, because he had cataracts. [28:07] Degas developed retinal disease at the age of 36, and he could not be in intense light. [28:38] When we see a Monet or a Degas you still know what the images are. Our brains piece together what they are looking at based on prior experience. [29:33] Our brains are actually conditioned to see and pick out faces. This can either be to see predators, or understand allies. [30:14] Being able to focus forward is what creates our depth perception. This is why optical illusions and a drawing on a flat sheet of paper can look three-dimensional to us. [31:47] Binocular disparity is this state of two eyes pointing in the same direction from slightly different spots (test it by looking at objects through different eyes and watch how they appear to move). [33:03] With 3D images one side is red and the other side is blue (cyan). With 3D glasses, one side takes in each color making things appear three-dimensional. [36:02] Our brains are constantly scanning and interpreting information. We scan the world around us three times every second. [37:02] This is why priming impacts behavior and ads have impact on people even though they say they don't watch them. [37:42] Our brains take things in but don't alert the conscious brain unless there's a reason to. [38:17] Remember vision is in our brains. We have evolved so we can focus on one thing while constantly scanning our environment. [38:45] Saccades are why things like flip books work – our brain weaves together a stream of basically still images and connects the missing pieces. [40:24] When the actor on camera is supposed to be watching something go from one side of the shot to another, they need to actually watch someone (or something) go from one side to the other so the camera doesn’t pick up their eyes darting all over the place. [41:52] Our brains need to deploy selective attention to only flag the conscious brain of what matters. [46:58] What is reality? Do we all live in the same reality? Or is my reality different from yours? [48:20] Miscommunications come up often because we are unwilling to believe that our way is not the only way and that multiple people and perspectives can still be right. [49:18] Our brains can often attach meaning to all sorts of things when they aren’t there. [51:26] Our brain mostly thinks in images and emotions and processes them constantly and basically instantaneously. [52:00] When it comes to your brand and business it is worth investing in great images. DO NOT use clip art or stretch out images to fit a size so that your logo or a person’s face is stretched out. The brain picks up on the discrepancy immediately and assumes you are amateur. [53:39] You can say MORE with a lot LESS if you have a strong and strategic image with a lot less WORDS. [54:58] Basically, everything has too much copy. We need to decide the ONE THING to focus on and then put everything into that effort. [56:51] Our life is a string of memories – including the way we interact with brands. Brands are memories. And because the memory is heavily composed of visuals and emotions – the visuals you choose to use will impact how people think of you, your business, and your brand. [59:26] Be intentional about what people see when you create a video or when they walk into your store or place of business. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Estate Planning Mom on Instagram BizChix on Instagram Britt Joiner on Instagram The Knotted Wood @theBrainyBiz on Facebook Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment The Buying Brain The Science Behind the Dress Colour Illusion Optical Illusions Show How We See | Beau Lotto Seeing the World as it Isn't | Daniel Simons | TEDxUIUC Eye Diseases Changed Great Painters' Vision of Their Work Later in Their Lives How 3D Glasses Work How Does This Work? Stare at the Red Dot and See the Woman in Full Color on the Wall How Do Our Brains Reconstruct the Visual World? Episode 18. Behavioral Economics Foundations: Priming Episode 15: Behavioral Economics Foundations: Availability How Vision Works Prefontaine Selective Attention Test The Invisible Gorilla: How Our Intuitions Deceive Us

Reciprocity is the perfect topic to talk about this time of year. Today’s behavioral economics podcast is another foundations episode, and it’s all about reciprocity. I explain how our brains process gift giving and why we often give reciprocal gifts of higher value than the original gift. I talk about how reciprocity can be used in your business and how it relates to generating leads. I also share insights into Sheldon's theory of reciprocity on one of my favorite shows The Big Bang Theory. I talk about how our subconscious really feels about gift giving, three ways to use reciprocity in your business, and more. Show Notes [10:07] Ways to use reciprocity in your business. [10:23] Reciprocity is what happens when someone gives you something (whether you wanted it or not, whether you really value it or not) and you feel obligated to give them something in return. [11:37] One thing I really appreciate about The Big Bang Theory (and Sheldon in general) is how they apply complex scientific concepts in ways that they are funny and relatable (although a little extreme of course) [12:22] Sheldon says, "I know you think you’re being generous, but the foundation of gift-giving is reciprocity. You haven’t given me a gift, you’ve given me an obligation." [13:22] In reality, our brains overestimate the value of the gifts we're given and overcompensate. [13:47] Tips go up when customers are given a mint with their check. The gift of kindness and a little effort goes a long way. [16:50] The subconscious feels obligated to pay back for gifts it receives and it often gives back more than it received. [17:10] Reciprocity presents itself in many ways. I'm going to talk about three main categories: the free gift, the small ask on the path to something bigger, and the big ask to get something more realistic. [17:22] The free gift is like mints or a lead magnet or the free content I put out on my blog and podcast. [19:15] The Brainy Business is about providing strategy to make messaging more effective and impactful. I've had many listeners reach out to me about partnering after listening to my show. If you’re interested, I’d love to hear from you too! [20:20] Free samples are also great for things that are a little obscure. Samples have another benefit of dopamine release with anticipation. [22:56] The free gift of a sample for something that people might be hesitant about trying (but you know is amazing) is a great double whammy of reciprocity and the dopamine release with anticipation. [23:06] Reciprocity and free gifts are often used when asking for donations. [25:35] Some other examples of “free gifts” are sales or discounts. Sales and discounts need to be offered strategically and not as a crutch. [28:02] I share a quick story of how giving out gum made my high school life a little bit easier. [29:46] My friend Nikki Rausch, Your Sales Maven, has written several books on relationship selling and she speaks on this around the country. One of her tips is to be of service to other people. [30:39] A small ask to get something bigger. Giving someone a button and a yard sign is more likely to influence them to vote for you then just asking for the vote. This is because of the escalation of commitment. [33:06] When asking for a donation cold turkey, there's a good chance they will say no. Asking someone like a store owner to put a small sign in the window will actually influence them to donate to you. [34:34] This is because of the “foot-in-the-door” technique which creates a small shift in the way a person thinks. [35:26] This is also why loss-leaders work in business. [37:19] You start with a BIG (and somewhat ridiculous or unreasonable) ask to make the thing you actually want to ask for seem more reasonable and appealing. [39:27] An example of using a big ask to get volunteers on a college campus. [42:41] One obvious place to use this is in negotiations of any kind. This concept of reciprocity is why you hear concepts like “give and take” or that people are expected to “meet halfway.” [43:46] An example from money coach Mikelann Valterra on how to pick a “resentment number” when pricing client work or bidding projects. [46:44] I have always been one to reward people who ask for things (my own version of reciprocity). It takes a little something extra to step away from the norm and ask for something outside the status quo. [48:52] So here is a GIFT FOR YOU: Anyone who commits to six strategy sessions before the end of the year, instead of $499 a piece, they will be $450 – so you will save almost $300. And you get priority space on my calendar, which fills up pretty fast these days. [49:23] If you commit by the end of the year to 12 strategy sessions in 2019, I will do them for $400 apiece. That means you will save almost $1200! That is two free strategy sessions plus some gravy cash in your pocket. Interested? Let’s chat. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Jen Mueller Casey Gromer Episode 3. Do Lead Magnets Work and Do You Need One? Natalie Eckdahl A Fresh Wave of Marketing: An Intentional Approach to Marketing for Visionary CEOs Sweetening the Till: The Use of Candy to Increase Restaurant Tipping Poll Reveals Who Are the Best, Worst Tippers Episode 19. Behavioral Economics Foundations: Herding Episode 9. Behavioral Economics Foundations: Loss Aversion Nikki Rausch The power of yard signs II: Escalation of commitment Compliance Without Pressure: the Foot-in-the-door Technique Episode 12. Behavioral Economics Foundations: Relativity Reciprocal Concessions Procedure for Inducing Compliance:The Door-in-the-Face Technique Episode 16. Behavioral Economics Foundations: Framing Episode 18. Behavioral Economics Foundations: Priming Need to Set Rates? Find Your “Resentment Number” Episode 20. Behavioral Economics Foundations: Defaults The Knotted Wood

This behavioral economics podcast is building on the most recent foundations episodes to really dig into the power of habit. Last week I really went deep into what habits are and how they work. Today, I am going to share a bunch of examples of ways businesses use habits to their advantage (and how you can too!) I talk about how advent calendars can actually build anticipation and release dopamine. I also discuss clever ways that Starbucks keeps customers coming back. I talk about how 95% of purchases are habitual and how this habit formation can be combined with reciprocity and loss aversion. I give several examples from big companies and my personal life. Then I break it all down so you can apply the same principles to your business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [11:36] Last week on episode 21, you learned all about what makes habits so powerful and the best way to form a new habit (either for yourself or in business). [12:11] Advent calendars are a staple of the holiday season. [12:59] Some big manufacturers have found a way to boost their sales before the holidays (and probably increase the likelihood that their bigger toys will be the focus of the big day). [14:10] A LEGO City Advent Calendar will generate interest in Legos all the way up until the holiday. [14:35] The excitement about what is going to be inside, and getting to see the next one...building anticipation... That is where the real enjoyment is for the brain. Once it has opened the box? Dopamine release stops. [15:15] You are also creating a habit of opening a gift every day! The brain wants to keep getting those small toys for the dopamine. [15:55] Is there something your business could do to incorporate advent calendars with your clients or customers? [16:52] The Starbucks app helps create the habit of coming back. They have also Incorporated loss aversion and integrated the power of habit into their app. [18:05] Be careful what lines you cross when it comes to knowing your customer, you may be inadvertently offending some people (like their set up that I can only get bonus stars by buying items I am allergic to). [18:57] They've also done the same thing with their treat receipts. Where you can get a discount in the afternoon. [19:26] Scarcity can become a habit if it is ingrained in who you are. Costco shoppers have the ingrained mindset that they better buy now because the item won't be there the next time they visit.   [20:33] 95% of purchases are habitual. [21:15] Daily active users are important for apps. You get bonuses each day in a row that you play. This is a combination of reciprocity, loss aversion, and habit - and it works very well. Our brains love it. [22:53] The most common “problems” solved by habits (the reward in the brain) are STRESS and BOREDOM. [24:48] KIT KAT was having a sales slump. They paired Kit Kats in the consumers’ mind as something that goes along with their break. Tying in with coffee and breaks made it so when people think “coffee” they think “Kit Kat”. [26:42] Availability was also used in this campaign. [27:29] McDonald's hired a research team to increase milkshake sales. They discovered that people were hiring the milkshake to prevent their boredom on the way to work. [30:40] The research found out what was causing the habit and then made it really easy for more people to take up the habit. [31:06] You have to ask the right questions to get the right answers. [31:42] If you find people using your product in a way that you didn't intend, that creates a new opportunity to market. [32:17] The cycle of habits. You want to use the cue/reward part of the habit cycle, not the craving/response part. [33:14] “If you lived here, you’d be home by now,” is a genius marketing and a good way to break the habit cycle and try to form a new reward option. [34:23] Payment habits. Every time you pay the mortgage and don’t look for another provider, you are habitually rebuying that loan. [35:07] Breaking the payment into very regular, small amounts, makes it easier to keep paying and doesn’t flag the brain negatively. [36:50] You get a renewal notice and your premiums have gone up a little bit. Suddenly that large yearly payment is something that prompts you to shop around for more affordable services. [37:41] Being on auto pay is easy and becomes a habit. [39:10] If you work on appointments, you should encourage a regular day and time for people to come in. People like to feel like they are important. [41:16] A pre-scheduled appointment can become an EXPERIENCE that you will pay more for. [42:38] When you can make it a habit and preschedule for people, it makes it less likely that they will break that cycle. [44:09] “Be seen to the point people don’t remember the space without you.” Jen Mueller of Talk Sporty To Me [44:43] Many people including my friend Debbie Page say that the key to networking is showing up. [45:53] Engage with people on social media and selflessly share their content. This can make your name a cue for rewards. [46:51] Be consistent if you want to be part of people's habits. The human brain likes repetition and reliability. [48:47] I knew I had to have a weekly podcast in order to make it a habit. [50:53] Consistency is a huge key to habit and now you know why – your brain expects it and is looking for those cues. [EXCITING ANNOUNCEMENT!] How to Launch an Amazing Podcast (using behavioral economics) online course is coming soon! Want to be on the list (possibly even a beta tester)? Email me - [email protected] with the subject line “Podcast Course” for more details. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Web Your Brand Carol Morgan Cox BizChix RESET Your Mindset: Silence Your Inner Mean Girl Natalie Eckdahl Episode 21. Behavioral Economics Foundations: Habits LEGO City Advent Calendar Episode 2. The Top 5 Wording Mistakes Businesses Make 21 great Advent calendar ideas for Christmas 2018 Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 14. Behavioral Economics Foundations: Scarcity Revival and Growth of an Iconic Brand Episode 15: Behavioral Economics Foundations: Availability Clay Christensen’s Milkshake Marketing Marketing, Milkshakes and Understanding Your Customers Episode 20. Behavioral Economics Foundations: Defaults Episode 17. Unlocking the Power of Numbers Return of the weekly salon visit Episode 8. What is Value? Jen Mueller Debbie Page Episode 19. Behavioral Economics Foundations: Herding

Habits are much more powerful than most of us realize. This behavioral economics podcast is about habits and habitual buying. It is another one of my behavioral economics foundations podcasts. When a lot of us think of habits, we focus on bad habits, but we actually have more good habits than bad. Our subconscious does about 99% of the brain’s processing and this applies to habits and buying habits. I am going to break this down for you to make sure it is super applicable for your business – including the different strategies you should use if you are the market leader versus someone trying to break in. They are very different! I also talk about how businesses make the mistake of focusing on what’s new instead of the habitual buying habits, and how you can use buying habits to improve your business and marketing. CLICK THE IMAGE FOR YOUR FREE DOWNLOAD! Show Notes [09:00] The subconscious brain does about 99% of the brain’s processing. [09:41] If 99% of decisions are made using these automatic rules, based on the way things have been done in the past and what has worked…clearly a lot of the buying decisions you (and your customers) make must be done automatically. [11:01] Even with infrequent purchases, the place you go and look is based on habit. [11:50] An association in the brain that triggered an action (or a desire to take an action). That is essentially all a habit is. [12:17] The human brain essentially works on many, many associations. [13:29] Your brain sorts through tons of information and concepts – all the things it is NOT looking for until it finds what it is looking for. [14:49] In reality, 95% of all buying decisions are HABITUAL. Far too many companies and brands are focusing on the 5% - the “new” and “different” and “getting people to consciously make a decision and change” than working on being in the 95% of habitual purchases. [16:33] What is a habit? The official definition is “a settled or regular tendency or practice, especially one that is hard to give up” [18:23] Maltz, a plastic surgeon in the 1950s noticed it took about 21 days for his patients to get used to their new noses. [18:48] His book Psycho-Cybernetics said, “These, and many other commonly observed phenomena tend to show that it requires a minimum of about 21 days for an old mental image to dissolve and a new one to jell.” [19:15] NOTE: He said a minimum of about 21 days. [20:28] Our brains have a habit of using the 21 days as a reference even though there's a mountain of evidence against it. [20:54] We have been attacking habits wrong. [21:55] A 2009 study from The European Journal of Social Psychology found the average number of days it took to form a habit (in their case it was eating fruit at lunch or running 15 minutes a day) was 66. [22:17] This is where framing can kill you. You hear an average and think great that's the number. [22:40] There are more questions that you need to ask. Such as what was the range of days when coming up with that average. The range for this study was 18 to 254 days. [24:57] Essentially, all habits are made up of four phases: Cue, Craving, Response, and Reward. [25:41] The human brain is driven by rewards. [26:24] A cue is a signal to the brain that there is a reward around. And that instantly leads to a craving. [26:50] Cravings can be hard to ignore. It can quickly become all your conscious brain can focus on. [27:03] When you give in to the craving and the brain gets the reward, you have a double whammy because you have just reinforced the original cue to make it even more powerful the next time. [27:42] The thing we have done WRONG in addressing habits in the past is to try and change the response. [27:59] If you want to change a habit or start a new one, the CUE and REWARD phases are where it’s at. [28:44] To help stop doing something you need to find the cues that encourage you to do it. [29:27] Cues have been found to fall into one of five categories: Location, Time, Emotional State, Other People, and An Immediately Preceding Action. [29:53] List the ques of each category by asking yourself questions. [31:00] We actually aren't craving the thing we think we are craving but the reward that it provides. [32:16] Ask what the reward is that your brain is seeking. [36:22] “No, I can’t drink soda…” Or, the very subtle difference of, “No, I don’t drink soda.” [37:38] “I can’t” is not your choice. It is instead a restriction. “I don’t” is empowering. This was your choice. It affirms the choice you made and makes you feel determined, full of willpower. [40:09] By turning off notifications and eliminating the cue, I can work longer and be more productive. [42:19] You don't want to mess with people who habitually buy your product. You can create cues with product placement. [44:04] It's possible to lose a habitual buyer by offering them more choices and triggering them to think about other brands. [45:47] Brand leaders shouldn't do too much to rock the boat. [46:36] Jones soda has a large cult following by being unique. They also interjected themselves during a cue like at a sports game. When you aren't the market leader you have to try harder and put in some hustle to break the buying cycle. [48:40] It's important to consider your customers habits when building out your strategies. [49:20] Next week is about the Power of Habit and how you can use it to your advantage in your business. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 1. Unlocking the Secrets of the Brain Episode 15: Behavioral Economics Foundations: Availability Three Purchase States How Long Does it Actually Take to Form a New Habit? (Backed by Science) Psycho-Cybernetics, A New Way to Get More Living Out of Life How Are Habits Formed: Modelling Habit Formation in the Real World Episode 16. Behavioral Economics Foundations: Framing How Long Does it Really Take to Break a Habit? The Power of Habit: Why We Do What We Do in Life and Business Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones 5 Ways To Change A Habit Episode 19. Behavioral Economics Foundations: Herding The Amazing Power of 'I Don't' vs. 'I Can't' Episode 20. Behavioral Economics Foundations: Defaults Listen and Subscribe on YouTube

This behavioral economics foundations podcast episode is about defaults.Today’s episode on defaults is going to absolutely blow your mind. You may think you know how defaults work, but you will not believe how they impact you, your business, and really everything. It’s amazing. You probably don’t realize it, but defaults are everywhere. Basically, every choice has a default. Think of the default as what happens if you do nothing – or if your customer does nothing. More often than not, when presented with a series of options people will go with the default. Listen in to learn how critical it is to consider the default option, complexities of choice architecture, and more. Show Notes [16:44] You probably think you already know all you need to know about defaults, but I'm going to blow your mind today. [17:26] Every choice has a default. Doing nothing is a default. People often go with the default, and this is connected to status quo bias. [18:32] People are more likely to keep things the way they are – maintaining the status quo and not take an action to change things. [18:56] In business when you are presenting options it is CRITICAL that you consider what is the default and what will be more likely to be chosen. [19:09] This is getting into Choice Architecture, which will be the focus of a series of episodes as it is very complex – I had a whole class dedicated to the topic of Choice Architecture in my master’s program. [19:37] Defaults are the way our brains really showcase just how lazy they are. This is where all the “should’s” of the world come to die. [20:41] An example of default retirement savings. Options 1 and 2 leave defaults that are consistent with past behavior instead of considering the future. [23:29] Option 3 is have people commit when they are in a cold state to commit some of their future earnings to retirement. This is an easy commitment for the brain to make because of time discounting. People are also less likely to opt out than they would be to opt in. [24:27] 78% of people opted to use this program when it was offered to them. [25:33] This is a really creative solution that could be applied in many other areas to help people to have better lives. [26:04] Too many programs and approaches are trying to get people to change their natural tendencies. [26:26] When push comes to shove the subconscious is the one making the decisions. [26:53] You can’t tell your subconscious to not be subject to defaults and status quo bias. [27:37] An example of defaults and how they impact you. This one comes from Kahneman’s Thinking, Fast and Slow. [28:35] If you make a bet and come up wrong, but everyone else did too, you are much less likely to be ridiculed than if you went against the herd and made a losing bet no one else made? [31:15] If people make a choice and step away from the status quo (the doing nothing) and lose…they feel increased regret. [32:02] In your business, is it the default for your customers to do business with you? Or are you asking them to change their behavior to buy? [32:40] Consider subscription services to anything in the world. The act of turning off the auto-renewal or canceling the subscription would require taking an action. [34:37] Setting up automatic payments for mortgages, insurance and auto loans are defaults that benefit everyone. [35:20] Make it easy for people to opt out if they want to. [36:02] Most people will not put in the effort to cancel, but you want to make it so they don’t WANT to cancel. [36:17] What sort of service can you provide that includes a regular, automatic payment to you as the default? Is there a way to make buying from you the default? [37:58] Most people use the default settings on their computers. It's better to be able to go with the recommendations of the people who built the thing. They know how it works best and if anything doesn’t suit your style you can always change it, right? [42:18] A badly placed default can make people want to get out of everything and completely change their habits. [43:01] The ethics of choice and defaults. There is a lot of debate in behavioral economics about the right way to use defaults and choice architecture. [43:12] Is it our responsibility to help people with a well-placed default? [43:45] You want to make it so people still have a choice. Make sure people aren't harmed if they go with the default and give them the option to choose something else. [44:31] Add in some sensible defaults if you have a complicated product or service. Most people will choose a pre-selected option. [45:00] What is presented first is also more likely to be chosen. [45:19] People now need to make a choice to opt into overdraft protection. This goes against the status quo bias and most people won't do it even though it is in their best interest. [46:18] How do you choose what is best for most people? [46:57] 95% of people support organ donation but only 43% are signed up as donors. You have to opt-in to be a donor and that is why there is such a small sign up percentage. [47:27] Some states are thinking about switching to presumed consent. This would mean you would have to opt out. [48:31] For your business, remember that you have many defaults impacting your customers and how they interact with you. [50:51] When you look at your business, how can you use defaults to benefit your company and your customers? [52:22] Next week on episode 21 we are going to talk about one of the concepts I hinted at in this episode – habitual buying. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Britt Joiner on Instagram @interacter on Twitter Episode 1. Unlocking the Secrets of the Brain @edxonline on Twitter Episode 2. The Top 5 Wording Mistakes Businesses Make Memories Worth Telling Alice Kuder Real Estate Caffeinated Communications Studio First Class Life Solutions Why this not that? Understanding Consumer Behavior - with Melina Palmer Five Star Professional Laura Brodniak Amber Peterson on Instagram Flour & Girl on Instagram Episode 19. Behavioral Economics Foundations: Herding Episode 7. Change Management (It’s Still Not About The Cookie) Anomalies The Endowment Effect, Loss Aversion, and Status Quo Bias Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving Episode 9. Behavioral Economics Foundations: Loss Aversion Thinking, Fast and Slow Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Organ Donation Statistics To Solve Organ Shortage, States Consider ‘opt-out’ Organ Donation Laws

Herding is the topic of today’s behavioral economics podcast foundations episode. This concept is similar to the way animals herd and for many of the same reasons. For safety, being in the center of the herd offers protection from predators. There is also an assumption that if everyone is running in the same direction they must know where they are going. My husband and I just got back from a trip to London, where I observed examples of herding, the subconscious versus conscious brain, and how a nudge can remind us to do what we need to. (I will talk expand on nudges in my upcoming foundations of choice architecture series). During this episode I will give examples of how to use herding to your advantage in business, and how herding can go terribly wrong.   Show Notes: [06:23] Crossing the street in London is an example of the subconscious brain versus the conscious. Cars come from you on the right. London gives tourists a nudge by painting “look right” and “look left” at the intersections. [08:10] In behavioral economics we expect people to make errors, there's just too much going on for the brain at one time. A little nudge can help us when we anticipate an error. [18:19] Humans herd in the same way as other species – including wasps and schools of guppies – for much of the same reasons. [18:43] It's beneficial to be as close to the center of the herd as you can. [19:30] running the same way as everyone else is another concept of herding. A great example of this is watching groups of people cross the street at a busy intersection. [22:01] One of the reasons our species has adopted herding is because it helps us learn by observation. [23:26] The childhood discomfort of not doing what everyone else is doing is fueled by our basic instinct of herding. [24:29] In addition to safety, herding is a key way that we learn. Learning by observation is critical to our survival and growth. [25:48] Choosing a full restaurant as opposed to one that is completely empty is an example of herding. [26:55] Seeding a tip jar with money is another example of herding. [27:35] Museums in London had giant jars of cash encouraging people to donate. [29:09] Herding mentality is more likely to come out when people feel vulnerable or unsure of themselves. [30:58] Herding behavior can come into play with finances and when your reputation is on the line. [33:02] Studies have shown that up to 75% of participants will give an answer they KNOW IS WRONG to go with the group. [33:27] It takes strong will and conscious focus to be willing to go against the group and it is even more difficult when those people are like you. [34:45] Herding is one reason that things go viral. [35:57] In finances, people being afraid to go against the cumulative advice of the herd is one reason why markets crash and bubbles burst. [37:46] Crypto is absolutely impacted by the herd mentality – we see people make millions and feel more optimistic we can have that same fate if we act fast! This is also incorporating the concept of availability. [39:08] Don't let herd mentality force you into making a bad decision. Turn on your conscious brain when you feel the anxiety building. [39:44] An example how you could use herding and the power of numbers to get hotel guests to reuse their towels. [41:52] People like to be part of the group. This is increased when the people are comparable and more similar to you. [42:54] Any time you can provide reassurance through numbers, it will increase the chances of people buying. [43:39] Herding and the ice bucket challenge. People participated because it was less painful to do it than to be ridiculed for not doing so. [45:20] Being in a group makes us feel safe and happy because of this release of oxytocin. [45:57] Helping leaders build a following. Recognize the power of existing affinities. Encourage the formation of new affinities. Fight the herd instinct in yourself. [48:55] Derek Severs How to Start a Movement is one of my favorite Ted Talks. [51:38] Social media is rife with herd mentality. Most people do not want to stand out by leaving a comment. [53:53] The feeling of getting comments and shares on social media can release oxytocin. [54:37] You can use herd mentality as an advantage in business by being generous with your social likes and shares - an example of a challenge I am currently participating in.   Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.   Links and Resources: Dramatic Incompetence and the True Story of an NFL Tie The Making of Harry Potter Harry Potter and the Cursed Child Episode 1. Unlocking the Secrets of the Brain Nudge: Improving Decisions About Health, Wealth, and Happiness Debbie Page Business Bros Podcast Human Herding: How People are Like Guppies The Unwisdom of Crowds Herding, social influence and economic decision-making: socio-psychological and neuroscientific analyses Herd behavior in consumers' adoption of online reviews Which restaurant should I choose? Herd behavior in the restaurant industry Episode 17. Unlocking the Power of Numbers Watch These Awkward Elevator Rides From an Old Episode of Candid Camera Herding Behavior in Social Media Networks in China Herd Instinct Warren Buffett explains one thing people still don't understand about bitcoin Herding behavior in cryptocurrency markets Episode 15: Behavioral Economics Foundations: Availability Science Of Persuasion Episode 16. Behavioral Economics Foundations: Framing Oxytocin The Brain and the Herd Mentality How to Start a Movement Derek Sivers Debbie Page Instagram Debbie Page FacebookLynn Reifert InstagramLynn Reifert Facebook Six-Word Lessons to Take the Fear out of Mortgages Debby Mycroft InstagramDebby Mycroft Facebook Nicole Bandes Instagram Nicole Bandes Facebook Jennifer Findlay InstagramJennifer Findlay Facebook

Our brains can be primed to lean toward a thought or word or number. Today’s behavioral economics podcast is another foundations episode, and it is all about priming. I share examples of how easy it is to trick the brain into thinking and answering something wrong with just a little priming. When primed, your subconscious remembers it recently heard a number, or a statistic or something and that influences the next assumptions it makes – even if they are not even remotely related. I share examples of priming, research and studies related to priming, and examples of how you can use this concept to grow your business and profits. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [09:28] I share a rhyme and a question that shows an example of priming. Rhyming can be one way to prime the brain. [11:11] Our brains will hear a number and then adjust up or down from there. This is another example of priming. Especially, when done intentionally like the examples I gave in Episode 11. [11:34] Our brains are lazy and incredibly busy, so they take shortcuts all the time. [11:48] Our subconscious brains need to make snap decisions. When primed, our brain will make assumptions based on the previous word or number that it has heard. [12:18] I was giving a presentation to a group of female entrepreneurs (something I do a lot!). I asked everyone to think of the last 2 digits of their social security number. Then assign a value to the necklace I was wearing. Those with lower number socials assigned lower values, and higher numbers assigned higher values. This is the power of priming, the root of anchoring and adjustment. [14:10] A priming example, where sales of Snicker bars were increased just by using the number 18. [14:39] Limiting the number of cans of soup that someone can buy actually primes them to buy more. [14:57] Priming can also be done with words. A priming example where students primed with words about elderly people actually took longer to walk to the elevator. [17:30] They also did a study with rude and polite words. People primed with the rude words were much more impatient and likely to interrupt. [19:17] A stereotyping example of priming. Priming people with words from a certain stereotype can actually affect the results on a math test. [21:19] Prime yourself for success. If you doubt visualization, think how easily the brain can be primed. [21:55] The power of visualization. There is a reason why Olympians train their brains as well as their bodies. [22:48] Mental training may be even more important than physical training. [22:59] The steps the visualization. [23:01] 1. Know what you want. Ask yourself what you would like to see if nothing was holding you back? [23:15] 2. Describe your vision in detail. [23:28] 3. Start visualizing and create the emotions. [23:41] 4. Take daily actions. [23:58] 5. Have grit and persevere. [24:27] Priming with physical objects. Participants in a study were asked to hold a cup of either hot or cold coffee. People who held the iced coffee actually rated the person in the story as being much “colder” than the hot coffee participants rated them. [26:03] Participants in another study were more likely to clean up crumbs after a snack when there is a faint hint of cleaning products in the air. [27:09] Several studies have been done where certain objects or smells will affect people's behavior. [27:48] The takeaway from all of these studies is that everything we do and say matters. Whatever was said or done right before we do or say something also matters. [28:34] You can't control everything, but it is worth looking into the things that you can control. [29:25] Remember, what comes first matters much more than the price itself. [30:25] With these priming examples, small things and a few simple words can make a huge difference. [30:54] If you find people are always rude when they talk with you. Or treat you like you are cold and distant. It could be a bad prime. [31:25] A study where participants were shown a flash of a logo for an imperceptible 30 milliseconds. Participants shown the Apple logo were more creative than participants shown the IBM logo. [32:15] Participants shown a Disney logo were much more honest than participants who saw the logo for E! [32:23] Have you ever heard people say you become like the people you spend the most time with? Or that you should dress for the job you want? Or that you should “fake it till you make it”? [32:36] It seems there really is some truth to that. You are priming your brain to take on the traits of those outside influences. [32:55] Prime your brain in a way that you want to be approaching your day in your life and business. [33:14] Notice how quickly a brand is noticed. Ask what the traits of your brand are? [34:21] These things may not register on a conscious level, but they have an impact, even if people don't realize it. [35:03] Marketing and advertising takes dedication and focus; consistent presence and messaging to break through the clutter. [36:51] Book your strategy session for a free consultation call now. [37:52] On episode 19, I am going to dig into the foundations of herding – so get ready for some more amazing studies. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 4 Questions or Answers Business Bros Podcast Tax Tribe Podcast The 10 Behavioral Economics Concepts You Need To Know and How to Apply Them Episode 11 Behavioral Economics Foundations: Anchoring and Adjustment An Anchoring and Adjustment Model of Purchase Quantity Decisions Automaticity of Social Behavior: Direct Effects of Trait Construct and Stereotype Activation on Action Stereotype Susceptibility: Identity Salience and Shifts in Quantitative Performance “Math is Hard!” the Effect of Gender Priming on Women’s Attitudes New To Visualization? Here Are 5 Steps To Get You Started Here's The Trick Olympic Athletes Use To Achieve Their Goals Who’s Minding the Mind? Material priming: The influence of mundane physical objects on situational construal and competitive behavioral choice Apple's Logo Makes You More Creative Than IBM's

I take framing one step further and talk about the power of numbers in today’s episode. This behavioral economics podcast will be a break from our foundation episodes. I get in to some of my most frequently asked questions (including ending prices in 99 or 97). I also talk about pricing strategies like using random or “interesting” numbers. I share research, examples, and how you can apply framing using numbers in your business.   Before I dig in, I want to thank Justin from 52 Card Media, Jesse from Cinematic Syndicate, and Jennifer of Jennifer Findlay Portraits for making the website look so awesome. I have also transitioned to a new YouTube Channel and all the full episodes of this podcast are on it. Feel free to subscribe and share it with your friends.   Show Notes [09:17] Last week was all about the concept of framing. Today, we take that concept one step further by unlocking the power of numbers in your business. [09:45] The way you say something is often more important than what you're actually saying. This ties back to loss aversion (which was the focus of episode 9) - remember framing something as a loss makes people twice as likely to take action than when it is framed as a gain. [11:21] I talked a little bit about pricing and Episode 5. All of the things leading up to the price matter more than the number itself.[12:16] Is it really better to end something in 99 than rounding up to the nearest dollar? Should my prices end in 99 or 97? Should I have a random, but interesting number like 456.78?[12:55] It's (generally) better to round down in the 99 versus one dollar question. This works because you're bringing down the first whole digit number. 599 looks better than 600. [14:24] Consistency is key. If you list your prices and have them one on top of the next, and they say, 399, 499, 999 and 2500 it is just weird. [16:27] The great debate of 99 versus 97 (or even 95). Any of them are typically better than the rounded 0 because of the first digit difference. [18:21] The LAST question on pricing is about using totally random and sometimes “interesting” numbers. This would mean instead of pricing something for $4,600 or 4,599 you would price it at $4,567.89 (so when you look at it the number reads 456789.) [19:09] Making someone stop and say “what?” can be good if you're trying to disrupt the buying cycle. [20:50] Journal of Consumer Research study called “This Number Just Feels Right” states that luxury pricing or other things bought on emotion (like a bottle of champagne) sold better when it was priced at $40.00 instead of $39.72 or $40.28. [22:01] In another study on the pricing of a camera, participants favored the rounded prices (leisure/luxury/emotional purchase) and the non-rounded prices when they thought it was for a class project (function or looking for a deal). [22:32] Bringing it back to FRAMING: the mindset that someone is in when they are going to buy from you matters. [23:26] Confidence helps you sell and encourages people to buy. [24:08] Statistics and numbers can be very persuasive when presented properly. They can also be negatively persuasive when presented wrong. [25:16] Numbers help your brain value things and make comparisons. Which helps it to make a decision without flagging your conscious brain. [26:22] Look for numbers in your business. People like to be part of the group and that is a big reason why framing in numbers matters. [27:51] We make assumptions based on the numbers we see. [28:49] Statistics like this work because people want to be like everyone else. [29:39] To know what works best, you need to try different types of numbers. [30:18] Four out of five has a better context in the brain than 78%. [32:24] “Most” sounds better than 50%. You can also try to flip the framing the other way. [33:42] Find a number in your business and look at all the different ways to present it. Let me know what works best for you. [40:30] Episode 18, is back to behavioral economics foundations – when we will talk about priming. You won’t want to miss it! BE thoughtful. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: 52 Card Media Cinematic Syndicate Jennifer Findlay Portraits Katie Goulet Website Design on Instagram Sagar Jadhav on Instagram Episode 4 Questions or Answers Episode 9 Behavioral Economics Foundations: Loss Aversion Episode 5 The Truth About Pricing The Psychological Difference Between $12.00 and $11.67 The Buying Brain: Secrets for Selling to the Subconscious Mind This Number Just Feels Right Episode 16 Behavioral Economics Foundations: Framing Episode 8 What is Value? Episode 13 Adjusting Your Mindset Episode 12 Behavioral Economics Foundations: Relativity Find Me Gluten Free Biz Chix Episode 10 On Air Strategy Planning Session with Mariel Court CoastHills Credit Union

Framing is one of my favorite behavioral economics podcast topics. In the past few weeks, I have covered foundational topics like loss aversion, anchoring & adjustment, relativity, scarcity, and availability. Today, I talk about one of my favorite concepts which is framing. Before digging in, I’d like to give a shout out to Lara Currie who left a stellar Apple podcast review and invited me to be on her podcast Difficult Happens. Our subconscious brain evaluates everything very quickly and uses assumptions to make decisions. If you think of this in the context of framing, this is the reason an inexpensive print will look expensive in a nice frame and cheap when taped to the wall. Framing also works hand-in-hand with the concept of loss of version. If you frame something as a loss someone is more likely to take action on it than if it were framed as a gain. In this episode, I dive into how our brains interpret framing and how these concepts can be applied to your business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [12:21] An easy way to think about framing is thinking about how a beautiful frame impacts a picture compared to no frame at all, or a cheap looking frame. [13:53] Think about a poster on your wall stuck up with tape as compared to a nice print in a beautiful frame. [14:44] Why does the frame matter? It's because our brain processes everything very quickly and uses assumptions to make decisions. A well-placed aesthetic means it must be a high quality piece. [16:24] Children's artwork put in a frame looks like amazing beautiful art. [16:52] To our brains, what we say is not as important as how we say it. [17:18] Our brains process nonverbal communication. All of this other stuff makes a huge difference. [17:40] The nail salon example from episode two was an example of being too literal. They had an outdated sign that sent a negative message to our subconscious brains. They were able to turn this negative into a positive just by changing the wording. [21:34] Framing is at the heart of the concept of loss aversion, which was the focus of episode 9. [21:48] Framing something as a loss is more likely to get someone to take an action than framing it as a gain. [21:59] The motivation of a loss is twice as powerful as the motivation of a gain. This is also called Prospect Theory. [22:58] Examples of framing coming into play. A food labeled as 90% fat free is more attractive than one labeled as 10% fat. [23:22] This is actually saying the same thing, but the way it is framed or what we hear makes one option sound better than the other. [24:09] Last week, I talked about the US open. Saying “Serena lost” has a different connotation than saying “Osaka won.” [24:52] The frame of our story and our experiences shapes the world that we live in. Framing is about what we say and who we say it to. [25:47] When talking to clients, I focus on “considering the ripples.” [27:36] Tversky did a test on his colleagues at Harvard medical school, having them read statistics about two treatment options for lung cancer – surgery or radiation. [28:35] People choose options that are framed in a positive light. [29:26] One other fantastic example of framing from Tversky and Kahneman is called the “Asian disease problem.” [31:42] The principal in this story is called OPTIMISM BIAS, and it will be a topic of a future podcast. [32:22] The three different categories of framing: Risky choice, attribute framing, and goal framing. [34:18] . Have you ever heard commercials for Chevron with Techron? We assume that Techron is something valuable, but it's actually a name that Chevron made up. [35:33] Think back to episode 11 on Anchoring and Adjustment, when I asked you if there are more or less than 10,000 emperor penguins in Antarctica. The same way your subconscious assumes I must know something about populations, your brain assumes brands must know something more about gas. [36:56] Ford calls itself "America's best-selling brand". That's actually an empty claim that sounds good. Yet, it means something to your brain. [38:06] An example about “AVG DAY CARE”. Is this a good name? [41:21] Next week I'm going to dig into the science of choosing the right numbers and how to use statistics in your messaging. [41:48] If your toothpaste is recommended by 4 out of 5 dentists, does that mean 1 in 5 dentists don't recommend that toothpaste? [42:56] Some of the most misleading terms in real estate and what they mean. Cozy mean small. Charming means old. Convenient location means loud. Etc. [44:25] This is also getting into the concept of PRIMING – which is going to be the topic of episode 18. [44:41] The way you explain something sets an expectation and can impact the way someone feels about the whole experience. [46:05] All the adjectives included into a description could be considered the frame. [49:08] When I worked at the credit union our biggest competitor claimed they were “a member owned, not for profit credit union” even though, that is basically the definition of a credit union. [55:26] Next week, episode 17, is taking framing a step further, into the best ways to display numbers, when you should use each one, and more. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 9 Behavioral Economics Foundations: Loss Aversion Episode 11 Behavioral Economics Foundations: Anchoring and Adjustment Episode 12 Behavioral Economics Foundations: Relativity Episode 14 Behavioral Economics Foundations: Scarcity Episode 15 Behavioral Economics Foundations: Availability Difficult Happens Episode 29 Why your subconscious is the Real Boss with Melina Palmer Cinematic Syndicate 52 Card Media Jennifer Findlay Portraits The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) Episode 8 What is Value? Episode 2 The Top 5 Wording Mistakes Businesses Make Prospect Theory: An Analysis of Decision under Risk Thinking Fast and Slow Episode 7 Change Management (It’s Still Not About The Cookie) All Frames Are Not Created Equal: A Typology and Critical Analysis of Framing Effects 10 Tips Gas Stations Don't Want You to Know America’s best-selling car brand is not American ‘Cozy’ or Tiny? How to Decode Real Estate Ads

Today’s behavioral economics podcast is about availability. This is another foundational episode that ties in to last week’s episode about scarcity. Similar to the bond between anchoring & adjustment and relativity, scarcity and availability can often be found together. There is also a free worksheet available for download that will help you apply today’s concept in your business. What do sharks, cows, toilets, buckets, and air fresheners have in common? They are part of the interesting concept of availability. Our brains get lazy and decide the likeness of something happening is based on how easily we can think of an example of it happening before, or how much we have heard about it. Listen on to hear how these random things work together, and for more interesting examples of this concept and how you can apply them in your business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [06:05] Availability is about how easily something comes to our mind. [06:38] What comes to mind when I say the word shark? [07:32] What comes to mind when I say the word cow? [08:05] Even though, most people are afraid of sharks. There is less than one shark-related death in the US per year, but there are 22 deaths by cow. [09:41] We fear sharks more than other things that actually cause more harm or deaths because of availability. [10:18] The only time we hear about sharks are when they are attacking people. These examples are easy for our brain to remember, and we assume they happen more often than they do. [11:12] Our brains categorize cows as less dangerous. In spite of the actual statistics. [12:07] Daniel Kahneman dedicated chapter 12 of his book to the concept of availability. [13:52] With availability, our brain swaps out questions at hand with questions that we would be more likely able to answer quickly. [14:32] With availability it's about how easily examples come to mind. [15:31] Personal experiences and examples are more available than statistics. [16:16] Our subconscious brains love stories. [17:56] Your social media strategies should support what you are doing in your business. Use social media to gain a following in other things, not in the platform. [18:37] Do you know what movie increased tourism in Norway in 2014? [19:22] Norway had to cut their tourism budget, because they were overflowing with visitors. [20:49] In 1997, the sales of Mars Bars went up significantly (even though they did not change their advertising at all). This was because of the Mars rover. These are examples of how our brains associate things with each other. [21:47] When it comes to availability in your business, you need to associate your business with things that are going on around you. [22:57] In last week's episode, I gave examples of scarce items that flew off the shelf (from Starbucks, Disney and more). They were associated with things that were already popular at the time like the color rose gold. [26:10] Currently, a lot of people are talking about Nike and the Kaepernick Campaign. [28:16] In episode 4, I talk about one of my favorite books called A More Beautiful Question. I reference combinatorial thinking, which helps you get more ideas by combining things together that others may not think goes together. Instead of connecting A and B try to connect A and Z (or better yet, A and 26). [29:41] HARO is a website that connects reporters with potential sources. I reach out and respond with my unique perspective (sometimes it might seem random, but that is often better!) and I have been quoted in some articles. [32:38] Last week, I promised to revisit the story of how diamonds became the powerhouse that they are today. Diamonds actually aren't that rare. Diamond engagement rings didn't become popular until the 1940s. [35:42] De Beers had to create an illusion that diamonds were forever. [38:24] Young men had to view diamonds as an expression of love. They then used movies and magazines to reinforce this perception about diamonds. They also stressed the size of the diamonds. [40:22] By 1941, the advertising agency was able to increase the sale of diamonds by 55%. The sale was based on an idea of the eternal value of a diamond. [42:53] De Beers and diamonds is the original availability case study. They changed the face of the entire world forever. [43:23] Diamonds became a piece of our culture without us even realizing it. [44:37] They also did solid research into the mindset of the consumer and found new ways to get their message out. [45:23] Watch conversations and look for the right time to interject yourself. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 4 Questions or Answers Episode 11 Behavioral Economics Foundations: Anchoring and Adjustment Episode 12 Behavioral Economics Foundations: Relativity The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) Copy That Pops Cows Are Deadlier Than You Ever Knew Human Shark Bait In the War Between Sharks and People, Humans Are Killing It Thinking, Fast and Slow Why ‘Success’ on YouTube Still Means a Life of Poverty Frozen Has Massively Increased Tourism to Norway Contagious: Why Things Catch On Rose gold: The fashion trend that just won't go away A More Beautiful Question: The Power of Inquiry to Spark Breakthrough Ideas HARO Have You Ever Tried to Sell a Diamond? The 'Oprah effect:' Does everything she touch turn to gold?

Fall is a favorite season of mine and probably a favorite season to many of you. It’s also the time of year that my favorite honeycrisp apples are available. Like cotton candy grapes, these apples benefit from scarcity. Today, I break down what scarcity is and how you can apply this concept to your business. Scarcity is another concept in my lessons on behavioral economics foundations. Traditionally, scarcity is when an item is limited, but there is unlimited desire for that item. When we see something as scarce, we perceive that it has higher value. In today’s behavioral economics podcast, I will share stories and examples of how scarcity affects perceived value and how it relates with other foundational concepts like loss aversion. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [02:27] I love the fall, baking, and apple season. [03:12] My favorite apples, honeycrisp, are only available around certain times of the year. These apples have the benefit of scarcity, and that is what this episode is all about. [03:36] In today's episode, I break down what scarcity is and what happens in our brain when we perceive that something is scarce. I also give a lot of examples on how to implement this tactic in a business like yours. [06:00] Scarcity occurs when an item has limited availability, but unlimited demand. This includes resources like oil and water or more abstract resources like time. [06:22] We see things as more valuable when they are less readily available. [06:52] With a watch advertisement, people were actually willing to pay 50% more when they thought that the watch was scarce. [08:01] The most valuable stamp in the world, the British Guiana is valued at $11.5 million! [08:23] The first silver dollar printed and issued by the US government (called the flowing hair) sold for $10 million at auction. [09:32] Scarcity and value are closely tied together and for some reason our crazy brains think less is more. [09:38] Scarcity also triggers loss aversion. When something is scarce, we don't want to miss out on the opportunity to get it. [10:48] Examples of big brands using scarcity that you can use to apply in your own business. [10:51] Costco: People stock up when shopping at Costco, because they know that the great deal they find won't be there when they go back. Costco also has a great return policy to eliminate people's fear of making these purchases. [13:01] Starbucks: Right now it is time for the pumpkin spice latte. A drink made famous by Starbucks. Scarce items take on a life of their own. @theRealPSL even has its own Twitter account. [15:19] Scarcity can create cult followings which means other people do the marketing for you. [17:45] From rose gold Starbucks tumblers to rose gold Minnie Mouse ears, scarcity encourages items to sell. [18:40] These examples are a combination of scarcity and availability which will be the topic of next week's episode. [20:22] Real estate: Scarcity is implied. You can use words to trigger scarcity, such as limited time, extended, custom, handcrafted, one-of-a-kind, and close out. [21:21] There is value with holding firmly to specific hours. When you are booked you are booked. [21:52] When enforcing your hours, you need to say it with confidence. I talked about this in last week's episode about mindset. [22:51] If you aren't selling a product yourself, you can still you scarcity by putting on a contest. [24:07] The holidays are full of examples of scarcity. There are limited holiday treats, black Friday sales, and usually a big toy of the season. [25:26] When using scarcity think exclusivity instead of cheesy tactics. [25:50] Diamond engagement rings. Diamonds actually aren't that rare, and large diamond engagement rings weren't that popular until the 1940s. The concepts of scarcity and availability work together to make diamonds what they are today. [30:29] The diamond example is fascinating, and next week I will talk a lot more about it. Basically, they used scarcity to create perceived value. [32:49] You can book a strategy session with me for 10% off if you book by September 30. That 10% discount also applies to the workshop in Seattle on October 24. [34:08] I will be giving my Consumers Are Weird talk at the Arkansas Bankers Association Mega Conference in Little Rock next week - will you be there? [34:38] I will also be in Portland, Maine in a couple of weeks. Email [email protected] if you would like to connect. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: TheBrainyBiz on Instagram Episode 2 The Top 5 Wording Mistakes Businesses Make The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them)What is 'Scarcity' Influence: Science and Practice (5th Edition) Narcissists as consumers: The effects of perceived scarcity on processing of product information Episode 8 What is Value? The Top 10 Most Expensive Stamps In The World The Five Most Expensive Coins Ever Sold at Auction Episode 9 Behavioral Economics Foundations: Loss Aversion Costco Business Model and Their Strategy @TheRealPSL on Twitter Episode 5 The Truth About Pricing Want a Starbucks Unicorn Frappuccino? Too bad. Most stores sold out Starbucks Coffee Rose Gold Pink Sequin 24oz Venti Tumbler Cold Cup The Rarest and Best Disney Mickey and Minnie Mouse Ears How ‘Tickle Me Elmo’ Caused Holiday Hysteria Back In 1996 Have You Ever Tried to Sell a Diamond?  

Mindset is something that everyone struggles with from time to time. Whether you are experiencing a lack of confidence or stuck with an “imposter syndrome” mentality, you have the power to change your mindset. Offering a new service, raising your prices, or entering a new market can all be triggers that can set off mindset issues. Today, I talk about how behavioral economics plays in, and how you can adjust your mindset by overcoming a couple of aspects where your brain is contributing to mindset problems. I talk about vicious/virtuous cycles, the confidence/competence loop, and how to shift your outlook. Of course, this episode features research and real life examples to help cement the concepts of this behavioral economics podcast. Show Notes [03:16] Everyone struggles with mindset issues occasionally. [03:32] Imposter syndrome is when you feel like a fraud. Experts estimate that 70% of people have felt this from time to time. [04:05] You could also have a lack of confidence around pricing or your offering. [04:23] I'm going to help you create a simple shift to break out of mindset problems. [04:39] A vicious cycle is where you get stuck in a downward cycle. Your brain fixates on small problems and makes them seem bigger. [04:58] There is also a virtuous cycle. This is good piling upon good. [05:15] The confidence/competence loop is a great example of this. [05:28] Confidence matters when it comes to sales. Being confident is what closes deals. [05:49] As you get more confident - you gain competence. [06:16] A real-life example of this virtuous cycle is when you increase your pricing and get so comfortable sharing that increased price that you are saying it like you are saying the weather. [06:49] Practice in the mirror and say it out loud until you really begin to own that price. [07:05] You need to do this because your buyers subconscious brain will pick up on the slightest hesitation. [08:03] I talked a lot about mindset in episode 10. I shared a story where I was hired as a reservation agent at Alaska Airlines when I was 18 years old. [08:42] My training was extensive. This job prepared me for the future. When you quote someone a price it doesn't matter what that price is. And it doesn't matter whether you would be willing to pay that price or not. [11:00] You need to sound confident and say that price as if it was nothing. My confidence could greatly impact the close rate for the airline. [12:04] A price is a price. I would read my script over and over all day. [12:29] Say it with a smile and wait as long as it takes. I was outwardly confident and calm. [13:22] At my first agency job, I learned how to quote high hourly rates. Always remember that you are worth your hourly rate. It was chosen for you for a reason and never doubt your worth. [16:22] You need to feel like you are worth it whenever you walk into a pricing situation. [16:43] The behavioral economics of mindset specifically around anchoring & adjustment and relativity. [17:32] Do not set the wrong anchor. We are exposed to more content in the social media world. [17:56] Don't think you can't launch until you meet some minimum standard. [18:22] Don't set your anchor against people who have been in business for a long time and have a giant team of people. [18:41] People who have the money to create a lot of content also have the money to create a lot of ads. This is why you are constantly seeing their information. [19:24] Reset your anchor and adjust down to a level that you and your clients can accept. [19:59] What are you presenting to the world while you are waiting for perfection? [20:31] The small steps approach applies to mindset, as well. [20:46] It's better to take one small step today than to sit and dwell on the big picture. [21:44] If you are taking small steps, relative to yesterday or the day before you are doing awesome. [22:52] I want to help you adjust your anchor to be on the reality of what you are doing instead of on what other people are doing. [23:33] When in doubt look to Dr. Seuss. [25:02] I love helping clients, and working with an expert can be the jumpstart you need to get unstuck. Remember - 10% off virtual strategy sessions and the October Workshop are only available through the end of the month. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 12 Behavioral Economics Foundations: Relativity Episode 11 Behavioral Economics Foundations: Anchoring and Adjustment Yes, Impostor Syndrome Is Real. Here's How to Deal With It Cognition and Performance: the Relation to Neural Mechanisms of Consequence, Confidence, and Competence Episode 5 The Truth About Pricing Episode 10 On Air Strategy Planning Session with Mariel Court 37 Dr. Seuss Quotes That Can Change the World

Our brains use relativity to make comparisons when assigning value. Relativity is one of my favorite concepts and part of the behavioral economics foundations. Today’s show builds upon last week’s behavioral economics podcast on anchoring and adjustment, because these two concepts are closely aligned. Relativity is all about value. In this episode, I dig deep into relativity to make sure you really understand what it is. Then I get into all the examples for varying industries and circumstances, so that you can apply this concept in your business. I also talk about how to increase sales by creating three offerings.   Show Notes [07:00] Last week we talked about anchoring and adjustment. I also mentioned relativity several times in the behavioral economics podcast, because the two concepts are very much aligned. [09:59] In behavioral economics, relativity is about value. [10:50] How relativity applies to value. Our brains make comparisons to assign value to things. [11:54] When it comes to value everything is relative. Just like in the grilled cheese example (episode 8), we know that $200 is a high price for a sandwich because we can compare it to other things. [12:11] Our brains are constantly making comparisons between items. Even though, those comparisons aren’t always the most logical. [12:25] A simple example on how relative values can shift. [13:49] The will to save $15 depends on the item it is attached to. The difference between saving $15 on a dollar item and a $500 item is relative (but it shouldn’t be). [14:45] How people will drive across town to save on gas. Even though, the savings may not compensate for the time and expense of driving across town to purchase that cheaper gas. [16:58] An example of how silver medalists aren't happy with coming in second. [18:40] How to incorporate relativity in a retail shop. [18:59] Anchoring and adjustment works together with relativity. An example where seeing a $99 t-shirt when walking in a store makes the real price of the shirts seem much lower even though it may be higher than last year's price. [20:28] The purpose of the $99 shirt is to make other prices look low. [21:44] An example of how setting an expensive espresso machine next to another one will help it sell. The high anchor makes the other pricing look more affordable. [23:22] Three option pricing advice. Offer a best thing, something similar but worse, and something completely different. [23:50] I share how this worked in my online strategy session in Episode 10 On Air Strategy Planning Session with Mariel Court. [24:30] In the earring comparison example, find a favorite color or birthstone to create a comparison example. Have a slightly more expensive pair that is more than double in size. This uses relativity to show the better value. Also include a completely different pair that is at least the price of the best pair. [26:07] When given three choices most people will pick the middle choice. [26:09] A furniture store example. Start with the most expensive option and work your way down. You want to set a high anchor not a low anchor. [28:10] A real estate example by Dan Ariely. [29:09] We like to make decisions based upon comparisons. Even if those decisions aren't rational. [30:10] Including a decoy will help create a point of comparison. [30:52] An example of the value of relativity from The Economist. Using relativity to sell subscriptions. [32:29] How removing an option that no one buys makes sales go down. This is the power of relativity in action. [33:46] When setting prices consider the decoy. If you are offering a service, look at the packages you are offering. Have a great value and a worse value and then a completely different product. Your brain wants to feel like it completed the due diligence to make the best decision. [35:58] An example of how a high priced bundle actually made another high-priced offering seem affordable. [37:22] A diet example that compares calories burned to calories consumed. You have to run 50 minutes to burn off one can of soda. Finding the right point of relativity can help encourage healthy behavior. [39:43] Hopefully you can see ways to incorporate relativity into your business. [42:19] Be sure to tune in next week for one simple mindset adjustment that will change your life and business forever. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Stacking Your Team Episode 11 Behavioral Economics Foundations: Anchoring and Adjustment The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) or text BRAINY to 345345 Einstein's Theory of General Relativity Episode 8 What is Value? Episode 5 The Truth About Pricing There is no silver lining: The hilarious pouts of the Olympians who went for the gold - but wound up in second place The Relativity Mind Trap: How Comparisons Can Lead Us Astray Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions Thinking, Fast and Slow Episode 10 On Air Strategy Planning Session with Mariel Court Clicksuasion Podcast Reality Check: To Burn Off A Soda, You'll Have To Run 50 Minutes

Today’s behavioral economics podcast is another foundational episode focusing on anchoring and adjustment. My last foundational episode was Episode 9 - Behavioral Economics Foundations: Loss Aversion and even though it has only been out about a week, it has been one of my most popular episodes to date. You listeners know one of my all time favorite studies features anchoring and adjustment, and it is also one of the main concepts in my signature talk Consumers Are Weird. In business, anchoring and adjustment can be used to help influence the subconscious brain to lean toward a certain number. Skillfully using this concept to persuade someone to agree to a higher or lower number or quantity can close sales, increase conversions, and help in all kinds of negotiations. In today’s episode, I give business examples in several scenarios including a jewelry store, furniture store, real estate, car sales, multi-level marketing, service companies, non profits, and more. Show Notes [05:58] This is the second behavioral economics foundation's episode. The first one was about LOSS AVERSION, and it was super popular. [07:14] Today's foundational topic is ANCHORING AND ADJUSTMENT. [10:21] One of my all-time favorite studies is on anchoring and adjustment. This is one of the main concepts in my signature talk Consumers Are Weird. [11:06] When your subconscious brain doesn't know the answer to something that takes a guess. [11:24] As our brain processes at 11 million bits per second, it is using these judgement calls a LOT to guide you through your day and life. [11:50] Our brains are all about shortcuts.When we are given an anchor number, it will influence our guesses.   [15:00] I share a story of having listeners at a presentation I was giving think about the last two digits of their social security number and then estimate the value of my necklace. The results demonstrate how anchoring and adjustment work. [16:56] These anchors only work if they are entered into your mind right before the question is asked. This is called priming (a focus for a future foundations episode). [17:14] My favorite study selling Snickers bars. The sales were increased by 38% when the number 18 was used instead of the word them. This was anchoring and adjustment at work. [19:46] Limits also affect the amount purchased. A limit of 12 doubled the amount purchased. [21:11] I was featured in a back to school shopping article on highya.com and warned about watching out for quantity discounts. [21:28] Seeing an expensive item when you walk into a store can anchor your brain to think that the same items for less money, even though they are still expensive, are a good deal. [23:09] How to apply anchoring and adjustment in your business messaging. [23:29] JEWELRY STORE In a jewelry store. Using too low of an anchor can be a mistake. If you give a low starting number, it will become the anchor. [25:26] Instead, start with the most expensive item, then what the average customer spends and then say there are many options under a certain number. [26:37] REAL ESTATE With big-ticket items like homes, you're already working with a number that is unrealistic and often too low. This is what someone wants to spend. [27:08] The buyer needs to disconnect from that number in their mind to be realistic with the current prices. [27:15] When comparison shopping, start with the most expensive house on the list. [28:17] If you are driving with the client, drive through the most expensive neighborhoods. What you show them (or what their subconscious sees and notices) and what you say matters. [29:13] FURNITURE OR OTHER STORE You can use the same tactics if you work in a store. Be mindful what you walk the customers past. [30:34] CAR SALES Selling something with a lot of options and features. You can 1) present a baseline model and all of the additional options to choose from or 2) present them with the top of the line vehicle and let them add or delete features. People will buy more expensive vehicles and packages when presented with the second option. [32:14] MULTI-LEVEL MARKETING Present the most expensive item first and work your way down. Incorporate bundles and give people the option to remove what they don't want. [33:37] SERVICE-BASED BUSINESSES I had two different people in service-based businesses recently implement my advice and have amazing results. [34:32] Using anchoring and adjustment changed Dawn's business. She created a $20,000 bundle (at no cost to her) and now her $10,000 products are flying out the door. [35:58] These simple brain tricks can help women entrepreneurs (and everyone else) make more money without really doing any additional work. [37:45] INSIDE A COMPANY Big numbers being thrown out can impact you. Mentioning an anchor number even if it is not the number that is going to be used will influence the value of the final decided upon number.   [42:33] LOW ANCHOR These low anchors can be helpful, but you need to be absolutely sure the claim is true. And I mean, all the time. Because if it isn’t, you are at a huge risk of the “bait and switch” brain reaction. [43:31] An example of promising how long it takes to learn a language. Be careful with low anchors because brains don't like being lied to. [43:54] NON PROFIT I have served on several boards, and we would discuss what numbers to suggest during fundraising. We thought a number that was too high would turn people off. This was before my extensive research and work in behavioral economics. If I was having that conversation now, I would know exactly what to say: “GO HIGH!” [46:37] With anchoring start with the highest number and work your way down for live auctions. [50:47] I will be in Little Rock, Arkansas in September and Portland, Maine in October for speaking engagements. If you are in those areas, or close enough to get there, send an email to [email protected] to talk about scheduling an in person session without the travel expenses! Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Selling With Soul Podcast Dr. Robert Cialdini Episode 3 Do Lead Magnets Work and Do You Need One? Episode 9 Behavioral Economics Foundations: Loss Aversion Episode 1 Unlocking the Secrets of the Brain Episode 2 The Top 5 Wording Mistakes Businesses Make Episode 5 The Truth About Pricing The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) Free Download or text BRAINY to 345345 Episode 6 How To Sell From The Stage Episode 10 On Air Strategy Planning Session with Mariel Court Predictably Irrational by Dan Ariely An Anchoring and Adjustment Model of Purchase Quantity Decisions Seven Tips for Better Back-to-School Shopping [email protected]

In this behavioral economics podcast it is time to apply what I have been talking about in the first 9 episodes through this very first on air strategy session, featuring my guest Mariel Court. Mariel is someone I met in the BizChix Coop (which is Natalie Eckdahl’s Facebook group). We started a conversation when Mariel posted about rebranding her business. I have a background in branding and wanted to be a resource for her, so we became accountability buddies. Today, we showcase what incorporating behavioral economics into your business looks like. We ask questions to get at the core of what Mariel really wants. This is a real conversation in the form of a virtual strategy session. Mariel is the owner of Gypsy Moon Piercing (a body piercing and fine jewelry studio in Medford, Oregon). Today, Mariel shares her two biggest issues which are changing her name and talking about pricing. We focus on pricing and I provide recommendations incorporating behavioral to frame the issue. You can find Mariel Court here: Gypsy Moon Piercing Facebook PageGypsy Moon Piercing on Instagram@gmpiercing on Twitter Show Notes [05:48] Melina wanted to be a resource for Mariel, plus she was going through her own rebrand. [06:18] An on air strategy session showcases what incorporating behavioral economics into your business can look like. [07:15] We ask questions to find out what Mariel really wants. [07:36] This is a real process with no boxed solutions. [08:23] When someone books a virtual strategy session with me, it is conducted via a recorded video chat, which I provide to the client after the call for added value. [08:44] Mariel Court is the owner of Gypsy Moon Piercing, a body piercing and fine jewelry studio in Medford, Oregon. [09:03] Mariel's two biggest issues are the name change for her business and talking to people about pricing. [09:22] Sometimes Mariel feels that she is apologetic when explaining pricing to people, but it is also expensive to run her business. [09:56] She charges a $35 fee plus the cost of jewelry. Gold starts at $70 per piece. [11:34] Gold is handcrafted and a lot more can be done with it. [11:56] When buying gold jewelry, it will probably be more in the $150 to $200 range. [12:06] In the world of anchoring and adjustment when people hear “starting at $70” they will think the price should be $70 (or less). [13:29] Mariel feels she loses about three quarters of the phone calls that are about pricing. [14:45] Getting the caller to answer personal questions may be a better approach than talking about pricing right off the bat. [17:05] After finding out what the caller wants, recommend something more affordable like silver colored jewelry to keep the cost down. [17:57] Parents want to know that someone is going to take care of their kids. Put the parents and the kids at ease. [18:58] Use the person's name and pick out some jewelry that they may like. [21:56] We had a key turn in the conversation. Mariel's concern was talking about pricing, but it became clear that it was more of a mindset issue about how she approaches the pricing discussion. People ask about pricing because they don't know what else to ask. That is relativity which I talked about in episode 5. [22:38] The subtle shift of talking about value instead of price (covered in episode 8). [24:41] The value Mariel provides is with her impeccable taste in jewelry and her experience and how much she cares about people. Her reviews show this. [25:51] If you say the price apologetically, people will think you're overcharging them. [29:35] People buy on emotion. You want them to fall in love with the product before you ever talk about pricing. [31:23] Piercing could be a special day for moms and their daughters and become a really important memory. [33:55] Mariel does more jewelry sales than she does piercings. [34:21] She has an active Facebook group even though it's only three months old. [35:38] Choosing whether to focus on kids or adults and building an experience around that focus (pick a niche/avatar). [37:44] KEY POINT: Selling the experience as opposed to selling the price of the jewelry. [39:50] There are things that Mariel can do to make her customers feel special, like having a stuffed animal for the kids which would be included in a “princess package.” [41:14] The subconscious relies on emotion. Find the things that make them want to come in before they even visit the shop. [43:33] Once people have committed to a certain package, Mariel can show them upgrades, and they will feel like they are only paying the difference. [43:59] I would love to hear what you moms in the audience think about the suggestions we talked about. Would you pay more for the “princess” experience? Let me know in the comments. [44:35] KEY POINT: Incorporating behavioral economics into your business doesn't have to cost a lot. There are small things that can make a big difference. [44:47] Look at the brain's natural decision-making process and find the right way to incorporate your business with that. [45:04] The queen package I mentioned is a high anchor with relativity to make the princess package look more attractive. Listen to episode 5 for more on that. [46:37] BONUS! Because this is episode 10, I want to do a 10% off special for all my listeners! This can be applied to a virtual strategy session or the workshop I have coming up in Seattle on October 24th. [46:46] If you want to take advantage of 10% off a virtual strategy session, schedule a 15 minute consult call (which is free) by September 30, and if we end up working together, I will apply that 10% to whatever we deem is the best solution for you. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: 6 Marketing Podcasts You Should Be Listening To Amy Porterfield BizChix Episode 4 Questions or Answers Episode 5 The Truth About Pricing Episode 8 What is Value? The Brainy Business Event (To take advantage of the 10% discount simply use the code BRAINY and book your ticket by September 30.)

Because this is a behavioral economics podcast, it is time to build our behavioral economics foundations. This is the first in a series of episodes where I dig deep into one concept at a time. Previous episodes have been about problems and concepts in business. Such as The Top 5 Wording Mistakes Businesses Make and The Truth About Pricing. Today’s concept is loss aversion. When speaking about behavioral economics loss aversion is usually the first concept I introduce, and it is a great starting point for this podcast. In this episode, I share a cool study of how loss aversion works and then highlight the concept with several examples. These include examples from financial institutions, businesses coaches, interior designers, accountants and more. I also share how these examples can be used in your business. Show Notes [06:08] Building the foundations of behavioral economics. This series will have a lot of concepts. [06:30] There will also be more problem statement episodes mixed in along with a new exciting format that I'm introducing. [06:50] Loss aversion. The first concept I bring up is always loss aversion. [07:12] This is a very simple concept to grasp and understand. [07:22] This is one of the truest foundations of behavioral economics itself. [07:50] People hate to lose things. [09:10] Our subconscious brain is basically a two-year-old throwing a tantrum. [09:45] In business, we have taken this concept and done things backwards. We try to give people all kinds of things. [10:04] Humans are more easily driven by avoiding a loss than gaining something. [10:52] The difference between how you feel when you find a $20 bill and lose a $20 bill. [13:10] The studies of Kahneman and Tversky have found there is a science to this. We hate losses compared to the joy we feel from getting new things. [13:21] Research shows it takes about DOUBLE the joy felt by a gain to equal the pain felt by a loss. [13:44] Switching from gains to losses. [15:23] What if a FINANCIAL INSTITUTION said, “We have put $50 in your account, if you use your card 20 times this month, you get to keep it.” [17:02] Being able to see it is a big key when triggering loss aversion. [17:43] A BUSINESS COACH example. How to use loss aversion to keep your client motivated to do their tasks and reach their goals. [21:30] An ACCOUNTANT example. People are more likely to ask for help if they expect to owe as opposed to ask for help to get more back. [22:23] When messaging around tax time focus on reducing what is owed or being audited and the fear of having to pay or get in trouble. [23:52] An example for FURNITURE sales, interior DESIGN, REAL ESTATE, or any PHYSICAL PRODUCT. Perceived ownership is vital for physical products. [24:34] Getting people to touch the product or walk through a staged home that the buyer could see themselves living in. [25:11] Make the experience as real as possible for the buyer. An example using the show Fixer Upper. [27:18] Loss aversion, the fear of regret and WEDDING dresses. [28:00] How the brain is struggling with the weight of all the decisions it has to make, and knowing once it commits, all the other choices are gone. [28:06] What if questions and fear. [28:22] Triggering loss aversion, so that they know they got a good deal and will feel positive about buying from you. [29:54] An ONLINE SALES example that is the most ridiculous and over the top example of loss aversion that I've seen. [30:25] Clicking yes or no type options to close out a pop up box. Upping the ante using loss aversion. “No thanks, I’m not interested in quickly obtaining my dream body. I understand…” [33:08] A more subtle approach could be more effective. Getting too extreme could go in the opposite direction. [00:37:15] Next week, we have the very first on air strategy session. There will also be an awesome giveaway. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 2 The Top 5 Wording Mistakes Businesses Make Episode 5 The Truth About Pricing Episode 8 What is Value? Episode 3 Do Lead Magnets Work and Do You Need One? Econometrica What Is Loss Aversion? What Is Loss Aversion? Losses attract more attention than comparable gains. Loss aversion Episode 6 How To Sell From The Stage These Are the People Who Are Most Likely to Get Audited [email protected]

I’ll be talking about the meaning of value on today’s behavioral economics podcast. The past three episodes have been dedicated to the “it’s not about the cookie” framework. Which shows that the experience leading up to the sale matters more than what is actually being sold or the price. I’ll talk about the difference between value, price and worth and the perceived worth created by the endowment effect. Then I really dive into every aspect of value and how it can relate to sales and persuasion. I talk about how value is often based in our minds and how much we love something. I share the importance of being realistic about price, worth and value when selling things. I touch on the the way that herding, perceived value, and loss aversion work together in things like bidding wars and more on this episode. Show Notes [03:29] Value, price, and worth are used interchangeably, but they are not the same. [04:57] Price is what someone is willing to pay for a good or service. [05:30] Opportunity costs means something can only be used once. [06:04] Worth is the expected selling price of something. Things have worth even if they are not being sold. [06:53] The endowment effect is the phenomena in our brains where simply owning something causes us to find more worth in it. [07:22] I share an example where people were given a lottery ticket and then refused to trade the ticket for two dollars, because once they were endowed with the ticket they could see value in its potential. [08:50] Value is the usefulness or desirability of a good or service. [09:16] Value is based on how much we love something. It's in our minds and it's personal. [11:54] How in real estate people often overvalue their homes because of the sentimental attachment. [12:32] How getting people to be realistic about the worth, price and value is very important when you are trying to convince them to sell something. [12:46] Herding is the brain's desire to be part of the crowd. [14:02] Our brains are trained to assume that the collective consciousness of the group knows more than our brains on their own. [14:22] Herding, perceived value, and loss aversion work together in things like bidding wars. Watch out when you throw scarcity into the mix. [14:43] An example of someone buying William Shatner's kidney stone. [17:23] The ripple effect of price as it makes its way through the herd. As in two billionaires in a bidding war for rare artwork. [19:12] I talk about the Basquiat painting that sold for $110 million dollars and the man who bought it. The purchaser wanted the painting because he was struck with excitement and gratitude for his love of art. [21:15] The power of brands and how they give companies value. [24:21] How our brains get what they expect and a quote from Dan Ariely the author of Predictably Irrational. [27:06] The value of a $200 grilled cheese sandwich. [28:00] Creating brand value with exclusivity and scarcity. [32:34] How brands tell a story about who we are, and our brains love stories. [33:02] Tahitian black pearls and creating value out of thin air. [35:47] With the pearl example, the price tag set an anchor. The Winston name added exclusivity and scarcity, and the glossy advertisement instilled confidence in the herd. [36:14] Our brains believe what they are told until they are told otherwise. [39:03] The placebo effect and how people actually think they get more value when they pay more. [40:02] How price and perceived value are linked in the human brain. [40:14] Measuring sticks for value like currency. [41:48] Value is subjective, in our heads, and it changes. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Cost vs Price vs Worth vs Value Episode 5 The Truth About Pricing Episode 7 Change Management (It’s Still Not About The Cookie) Anomalies The Endowment Effect, Loss Aversion, and Status Quo Bias Human Herding: How People are Like Guppies Brother, Can You Spare An Organ? Basquiat painting smashes record with $110m sale Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions People Try World's Most Expensive Grilled Cheese Episode 2 The Top 5 Wording Mistakes Businesses Make How Your Brain Keeps You Believing Crap That Isn’t True

The past two weeks have been dedicated to my “it’s not about the cookie” framework, which shows how the experience and all the things leading up to the sale matter much more than whatever is being sold itself. This week, I am extending this framework to one more application – change management. Think of this as any time you are trying to get someone to buy in and make a commitment where money is not exchanged. In this behavioral economics podcast, I talk about what change management actually means and how the “it’s not about the cookie” framework ties into change management. I talk about how using perceived ownership, the endowment effect, and loss aversion to your advantage in the beginning will pay off in the end. I also talk about how framing is not what you say but how you say it and how to overcome status quo bias. This is the most complex episode of the cookie framework, but it will give you proven tools to implement change. Show Notes [03:38] What the concept of change management actually means. [04:59] Change management or leading through change is something that a lot of people are talking about these days. [05:18] Change and getting people to change is all about selling them on your perspective and getting them to buy in and commit. [05:48] An example of trying to get your significant other or child to do something. [07:48] Ways to get the child to buy in may be making it fun, leading by example, and using distraction. [08:32] I often compare our subconscious brain to a small child. Much of our decision-making is still that on this level. [09:22] A small detail can hang people up when making positive changes. [10:30] How what the person selling the concept thinks is important may not align with what the person buying the concept may think is important. [10:52] Consider the ripples. One small word can have a different impact on different people. [11:21] An example from my credit union days. [12:51] When it comes to credit cards there will be several different groups affected. The messaging needs to be focused for the individual groups that matter. Keep the overall brand message consistent. [14:36] I'm not getting into habitual buying in this episode, but it is really fascinating and I will dedicate an episode to it soon. [15:17] It's important to think about what the specific people need to hear and where they are coming from before applying your messaging. [15:34] Thinking about the group as a whole instead of considering the individuals. [15:55] Office Space, Milton and the red stapler. [17:19] How our brains are very good at dwelling on small items. [17:42] When trying to sell change get ready for loss aversion to rear its head. The Endowment Effect, Loss Aversion, and Status Quo Bias [18:21] The endowment effect as the anomaly that our brains favor things they own over other things. [20:10] We go all in with things that we already have. [20:24] Loss aversion. People hate to lose things. It takes double the joy of a gain to outweigh the pain of a loss. [22:35] Status quo bias. When given the choice people tend to go with the status quo and favor it heavily. Be wary of giving people too many choices. [23:13] How all of this ties into change management. Using these concepts to your advantage is the best approach. [23:45] The five components of “it's not about the cookie.” The scent of the cookie, free sample, perceived ownership, today only, and buy three get one free. [24:26] The prep is critical for change management. [24:46] How the smell of the cookies breaks through your subconscious clutter. [26:33] How rumors about the upcoming change are like the smell of burnt popcorn. [28:04] Be thoughtful of how the meeting is framed. Avoid being too vague. [29:14] People need time to process. Share and be transparent. [29:32] Reciprocity - sharing information makes the recipient more likely to have an open conversation. [30:43] Perceived ownership is where people work harder for ideas that they came to on their own. Outline the information you present, so that the recipient will perceive ownership. [31:12] Do your homework when proposing a big change. [34:07] The importance of having advocates and thinking long-term when any change is implemented. [35:10] Using scarcity is optional in change management conversations. Use with caution. [36:45] Knowing what matters to each person helps facilitate the conversation with the desk moving example. [38:28] The problem with unintended ripples using the scarcity approach. [39:10] Framing is everything when it comes to change management. It's not what you say it's how you say it. [40:03] Decide what the one thing is that you want this person to do. Get the person invested in the outcome. [40:37] Frame your offer properly by pointing out the benefits. [44:07] If you thought this was the most complex of the scenarios in the “it’s not about the cookie” scenario, you’re right. There is a reason it was the final installment. [46:11] Change is all around us, and being able to lead people through it is important in any business. Turning naysayers into advocates is critical to your success. [47:28] Don't forget to tune in next week to Episode 8 What is Value? This episode will make it clear why the cookie framework is effective. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 5 The Truth About Pricing Episode 6 How to Sell from the Stage Episode 7 Change Management (It’s Still Not About The Cookie) Get The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) and join my mailing list at The Brainy Business Episode 1 Unlocking the Secrets of the Brain The Endowment Effect, Loss Aversion, and Status Quo Bias Episode 3 Do Lead Magnets Work and Do You Need One? [email protected] Downsizings, mergers, and acquisitions: Perspectives of human resource development practitioners People management in mergers and acquisitions in Sri Lanka: Employee perceptions

Last week, I talked about The Truth About Pricing, you might want to listen to that episode before we dive into today’s episode about how to sell from the stage. Both are built on the same foundation. In the truth about pricing “it’s not about the cookie,” there were five components that I talked about. I have always loved being on stage from acting as a child to singing and improv classes. I don’t think I would be where I am today without this background. When it comes to selling from the stage, the same five components apply. I’ll be talking about these components of the scent of the cookie, free samples, perceived ownership, today only, and buy three and get one free as they apply to selling on the stage. Show Notes [02:28] Thanks to all of my new listeners and downloads. [03:18] I love being on stage and grew up acting and dancing. I was also a vocalist and even competed in Opera. I am also in the Screen Actor's Guild and sang with a country band in Seattle. I also sang the National Anthem for the Seattle Mariners. [06:30] I know how to be on stage and work with an audience. [07:24] Being on stage is no different than selling. [07:45] A quick recap of last week. [07:58] How an expert at selling can get a customer drooling like Pavlov's dog where an amateur may not even be able to sell the same product. [08:15] It's all in the delivery and in the right order. I unlocked this method in episode 5. [11:02] How the scent of the cookies forces your conscious brain to do what the subconscious wants it to do. [11:52] You want to build your pricing on this foundation. Even if you are selling on stage. [12:32] Conversations are based on this concept as well. Buying and selling is not always about exchanging money. [12:56] Next week, I will extend this scenario to change management and non-monetary conversations. [13:29] The five components were the scent of the cookies, the free sample, perceived ownership, today only, and buy three get one free. [14:07] A master of selling can get the audience excited about anything that they want to sell. [15:08] The smell of the cookie flags your conscious brain. If you are a speaker, the audience is focused on you. [16:16] Using the 80/20 rule when speaking. 80% of your sales will come from 20% of your audience. [17:40] The scent of the cookies is the title and description of your conference. [20:55] Have an interesting title that is different and makes people want to learn more. [23:42] Incorporating questions into your titles and descriptions. This engages the mind differently. Use questions that will make people say yes. [27:00] The free sample phase of public speaking is when you give your customers a taste of what it would be like to work with you. [28:12] Perceived ownership or reminding the audience of things that are important. [31:34] There is a delicate balance between selling and sprinkling in what it would be like to work with you. [33:19] Today only or a special offer if you act now. This is the concept of scarcity. Watch infomercials for an example of this. They work, because they speak to the subconscious part of the brain. [37:01] The average of people who ask for refunds is about 5%. [37:30] Money back guarantees encourage buying and spending more. [38:44] Buy three get one free. The brain likes things that sound better. The way you frame the message impacts with the brain hears. [40:01] FRAMING is everything – and just as with pricing, it isn’t what you say…it is how you say it. [40:57] Two types of public speaking. The hard pitch uses the tactics of relativity, anchoring, and adjustment. [41:58] The informational pitch is more of a long term strategy and it is about 80% of presentations. This is the tactic I take. [42:43] Sprinkling in additional resources that can further learning go way beyond the presentation. [43:24] Offer the one thing that you would want your audience to do. [44:41] In most public speaking the sale is actually a freebie that gets people into your family or on your list. [46:35] This method in these formulas work. You can use the free worksheet to implement this strategy. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: The Truth About Pricing The 80/20 Rule And How It Can Change Your Life The Top 5 Wording Mistakes Businesses Make Questions or Answers Unlocking the Secrets of the Brain The Buying Brain: Secrets for Selling to the Subconscious Mind The mind's mirror Good For You, Better For Them: The Truth About Retailer Guarantees Thinking, Fast and Slow, Daniel Kahneman Do Lead Magnets Work and Do You Need One?

Pricing is a top concern for most business owners, service people, and sales people. Today, I’m going to tell you the truth about pricing. The dirty little secret people don’t want you to know. It may seem like I’m taking awhile to get to that point, but I want to build the foundations that will create those ah-ha moments for you. I recently returned from the eWomenNetwork conference for female entrepreneurs in Dallas, Texas. I was so inspired by the conference, that I wrote the first draft of this show while flying home on the plane. Price isn’t always what matters most to your potential customer. It is how you phrase the price and whether you get your customer excited. Today, I talk about the subconscious, using the senses, having three price points, and how to combine these tactics to increase sales. Show Notes [04:13] One thing I love to watch at conferences is how people position their offers or services. [04:32] It's fascinating to watch the true masters when they sell from stage. [05:30] Next week's episode digs into using behavioral economics to become a better presenter. The concepts are all built on pricing which I demystify for you in this episode. [06:11] Molina is constantly questioning the world around her. Everything is a learning opportunity. [07:21] When I'm consciously examining an advertisement, I'm not really aware of what my subconscious is taking in. [07:43] 99% of our brains processing is subconscious. [09:08] The joy in our brain happens in the anticipation phase not when we get the item. [09:34] The smell of chocolate chip cookies will get your subconscious brain very excited. By the time you arrive to store, you may not be able to resist the temptation of the cookies. [10:45] The importance of the order in which things happen. [12:28] How your conscious brain will unwittingly give in to the will of the subconscious. [12:49] This cookie example is an example of an expert and a novice selling technique. Even if the cookies were expensive, you had already bought them in your mind before you walked in the door. [14:10] Masters of selling will get you excited about selling anything in any medium. [14:44] Melina considered a membership site before deciding on a podcast. [15:59] You want to hear in my campus next piece of information. If you are solving a real problem for your customers in a way that they can understand, they will find a way to pay for it. [16:39] You just need to draw them in with your own take of fresh baked cookies. [16:57] People need to understand the importance of behavioral economics before they care enough to take any step that will cost them money. [18:33] The scent of the cookies needs to come first. Like the information broke down into a free podcast. [18:43] What is your item that gets people to stop and want more? This is the top of your funnel the podcast, the billboard the Facebook or Instagram post. [19:46] If you start out with price people will already tune you out and move on. [19:59] What will draw your clients subconscious in to flag their conscious to be interested in your product? [21:01] Make sure whatever tactic you choose is on point with your brand and your offer. [21:24] How can you incorporate one of the five senses into your business to make it stand out? [22:18] What is your lead magnet? If it's a food item, give your customer a free sample. [23:14] Loss aversion and perceived ownership. [23:31] Our brains are hardwired to latch onto things and not want to lose them. Our brains claim ownership incredibly quickly and do not want to give things up. This is greatly increased with the power of touch. That's why with the furniture example it's good to give them something to touch. [24:06] The overnight test drive is a great example of this. [25:27] Involving the senses can help stimulate the brain's ownership response. How can you do this with your business? [26:22] The concept of scarcity. FOMO or fear of missing out caught on for a reason. Notice the countdown clock next time you buy something. Can you fill your anxiety spiked? [27:59] These countdown clocks trigger something in your subconscious brain. [29:20] Studies show that phrases or offers that rhyme or sound good are more convincing. [31:09] Framing is everything. It's not about what you say it's how you say it. It's not about what you sell it's about how you sell that. [31:22] All of the stuff that leads up to the offer and the pricing matters more than the numbers themselves. [31:43] How to present the item price. [32:22] A study done with grocery store end cap displays. Buy 18 Snickers resulted in a 38% sales increase. The number stands out to your subconscious brain. [34:28] When asking people for money, start with a high number first. [35:17] The concept of relativity. [38:15] Provide three options when setting prices. Take your best offer and list out the value comparisons. Build a decoy item. This should be very similar to your best offer, but with an obviously worse value. Incorporate a third item to provide balance. [41:42] To be a master of selling, you need to understand how these principles work together and which ones to use in your particular situation. [42:20] This is where I can help you. Using these tools, you will see benefits when you start to incorporate even one or two of them into your strategy. [42:27] I also offer a free worksheet to help you build these out yourself. I would also like to help you. Please check out my Product Sales Sheet. [44:28]  If you click on work with me on my website, I also offer a free 15 minute consultation. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: eWomenNetwork 1. Unlocking the Secrets of the Brain 4. Questions or Answers 2. The Top 5 Wording Mistakes Businesses Make When Silence Is Golden: Effects of Silence on Consumer Ad Response 3. Do Lead Magnets Work and Do You Need One? The Effect of Mere Touch on Perceived Ownership The mind's mirror Thinking, Fast and Slow by Daniel Kahneman An Anchoring and Adjustment Model of Purchase Quantity Decisions Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions [email protected] Ticketmaster Rent the Runway Product Sales Sheet

I am so excited about today’s episode. Why? Because I love questions. I love asking them, being asked them, evaluating them, and looking for new ones. Innovative approaches are all about asking questions. As a “what if” personality type, questions are my jam. I also have an awesome freebie to go along with this. I talk about my ENTP personality type. My favorite book A More Beautiful Question, and how actionable questions can be used in business. I talk about the right approach to questioning and going from “why” to “what if” to “how.” I talk about questionstorming and how this can help you find innovative questions that lead to innovative answers in your business. Questions are a great tool to think outside the box and come up with business changing answers. Show Notes [01:48] I am an ENTP which means I'm extroverted, intuitive, thinking, and perceiving. Stats say that between 1% and 3% of the female population is this personality type. [02:26] In MBTI, all of the types have a title to help describe them. The ENTP is known as "the visionary" or "the inventor." [02:33] My strength is understanding the world around me almost immediately, absorbing ideas, and turning possibilities into ideas. [02:48] ENTPs are great at solving problems in unique ways and asking "what if." [03:09] I also have a love of finding the right answer, and I've always been a straight-A student. [03:26] When it comes to brain training what is better? Questions or answers? and Why? [03:33] A More Beautiful Question by Warren Berger is my favorite book. [04:54] A beautiful question is an ambitious yet actionable question that shifts the way we think about something. [06:09] Innovations that came out of beautiful questions include Airbnb, the Cheetah prosthetic leg, Kodak film, Wite-Out, and microwaves. [06:15] The right approach to questioning is to go from Why? to What if? to How? [06:33] Why questions are your big overarching questions. This is where you start from. This is passion and the core of what you do. [07:20] Why do we have to wait for the picture? Is a question that was asked by the daughter of Kodak's founder. [08:09] People who asked these questions change the world. And you can to with a little bit of brain training. [08:20] Our brains are built on habits and rules of thumb which the subconscious uses to make decisions. [08:53] The more habits you let your subconscious brain get used to, the less reason it has to stop and give your conscious brain something to work on – allowing it to be more and more complacent. [09:18] I'm going to ask you a few questions about your morning routine… [10:07] These questions refer to places where your subconscious brain has taken over the process. [10:19] Train your questioning muscle with these simple tasks of putting your makeup on with your nondominant hand or taking a different route to work. Change things up and force your brain to pay attention. [11:26] How our brains store and retrieve information. [11:39] The Political Mind: A Cognitive Scientist's Guide to Your Brain and Its Politics and the blue square example. [14:19] What does this have to do with business? [14:57] Brainstorming is taking ideas off the surface but not really digging in. [15:14] To help clients approach problems and think about things from different angles, I recommend the activities from Thinkertoys: A Handbook of Creative-Thinking Techniques. [15:39] Questionstorming is an easy thing to try. The goal is to ask as many questions as possible. [16:37] An example of questionstorming. [18:28] Asking “what if” questions and taking the problem on as your own to shift your thinking. [18:37] Pandora asked “what if” we could map the DNA of music? [18:44] The brainy business “why” question is: Why is behavioral economics a best-kept secret? [18:49] What if I show people why it matters? What if I tell people how it works? [20:31] Becoming a better questioner and linking distant connections. [20:52] The final piece is the “how” question. Keep asking “how” until you get to the final piece that sticks. The trick is to fail and fail often. [22:00] Solving problems means knowing what questions to ask. [23:33] Don't let your fear of finding the perfect question keep you from getting to the right answer. [23:50] It takes many questions to find the path to an answer. Start asking as many questions as you can. [25:14] Helping organizations to ask better questions and look at things in a new way is probably my favorite thing to do.   Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: A More Beautiful Question Unlocking the Secrets of the Brain Filene Research Institute The Political Mind: A Cognitive Scientist's Guide to Your Brain and Its Politics Thinkertoys: A Handbook of Creative-Thinking Techniques E.E. Cummings John Tukey [email protected]   Send an email to [email protected] and reference episode 4 Questions and Answers to be one of the first three people to get a free strategy session.

All over the place these days – they offer you something for free, you fill out a form and get onto their list. So What Makes a Good Lead Magnet? So many kinds – checklist, template, white paper, video tip – I have my ebook, The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them), which I do invite you to download if you haven’t already. Links and Resources Sweetening the Till: The Use of Candy to Increase Restaurant Tipping Giving Your Donors a Gift—Wait! Research Suggests The power of yard signs II: Escalation of commitment What Makes a Good Lead Magnet? (69 examples from Opt In Monster) Customer Avatar Unique Value Proposition   Tap for full show notes