Latest / The SmallBizChat with Melinda Emerson / Behavioral Economics - Why Your Customer Does What They Do - with Melina Palmer

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Behavioral Economics - Why Your Customer Does What They Do - with Melina Palmer · The SmallBizChat with Melinda Emerson

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  What I do is help people to see how you can take those common rules and then apply them in
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  a way that's gonna make it more likely to be successful, more likely for people to choose
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  you and to feel good about those decisions.
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  Technician, liftoff.
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  Ending small business failure.
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  Welcome to the small biz chat podcast.
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  With the number one small business expert, Melinda Emerson.
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  Melinda's goal is to end small business failure.
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  And she'll give you the information you need to succeed and live the life you dream of.
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  Now here's your host, the small Biz chat lady herself, Melinda Emerson,
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  Hi, everybody.
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  I'm Melinda Emerson, the small biz lady.
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  America's number one small business expert.
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  And I am excited to welcome you to another episode of the small biz chat podcast.
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  Now this is Marge.
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  We have a special show in store for you tonight because it is Whitman's History Month, and I
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  have 3 fierce ladies here with me who are going to break down all aspects of business to help
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  you grow and learn and be your best in your business.
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  Now Tonight Show is about digging in and learning more about your customers and why they
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  buy.
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  If you're looking for ways to build a deeper relationship with your target customers, you're
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  in the right place because we're gonna be talking about behavioral economic.
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  Here on the small business chat, we talk about how to start and how to grow successful small
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  businesses.
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  We consider this podcast a peer to peer mentoring program.
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  Now the mission of small business chat is to end small business failure, and we always bring
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  you Sage advice from multiple perspectives to help you do just that.
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  Now the small business chat podcast can be seen on my small biz lady fan page on Facebook and
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  on my YouTube channel.
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  Please be sure to subscribe and share so that other people can get all of this great
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  information on how to be awesome in their business.
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  So with that, it's time for me to introduce My first guest, Molina Palmer.
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  She is a celebrated global keynote speaker with her mission to help create brands Do great
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  things by leveraging the power of behavioral economics.
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  She is the CEO of the Braney Business which provides behavioral economics training and
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  consulting to businesses of all sizes around the world.
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  Her broadcast, the brainy business, understands the psychology of why people bought and has had
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  downloads from over a 170 countries.
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  And is used as a resource for teaching applied behavioral economics for many universities and
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  businesses.
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  Molina also teaches applied behavioral economics through Texas A and M's human
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  behavior lab and rights of behavioral economics column for ink magazine.
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  Her first book what your customer wants and can't tell you.
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  And her second book is what your employees need and can't tell you which was published.
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  In 2022.
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  So for more information, you can go to the brainybusiness.com.
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  Melita, welcome to the small business chat podcast.
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  Yeah.
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  Thank you so much for having me excited to be here.
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  Alright.
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  So you gotta tell me your origin story.
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  How in the world did you find your way?
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  To behavioral economics, because I gotta tell you, when you first emailed me and told me that
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  was your expertise, I was like, Okay.
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  What is that?
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  Right?
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  So so tell us all how you got on this journey of being such an expert, you know, sales and
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  marketing expert, essentially.
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  Yeah.
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  So, yeah, it's definitely not the the hottest of terms as far as field names go.
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  But my undergrad is actually in business administration and marketing.
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  And in, you know, one class, there was a tiny section of something that I knew was just
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  Exactly what I wanted on this, how people buy the psychology of buying decisions, but it was
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  a really tiny, tiny piece.
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  And I spent the better part of 10 years calling schools and asking them what programs existed
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  and how I could get a master's in that, and it didn't exist yet.
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  But after, you know, 10 years of working in brand strategy and and marketing consulting, I
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  found and was introduced to behavioral economics, which is essentially the psychology
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  of why people buy, and that is then something I go in and apply.
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  And because I was early into the field, especially on the lives side.
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  It was a pretty academic space when I got in there, being able to focus on how you actually
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  use this stuff.
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  The things that were so obvious to me and how communicating better with other people's brains
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  can help businesses.
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  Just wasn't being talked about anywhere.
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  So that, you know, I said, why not me and ended up rebranding my whole company and launching a
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  podcast, and and it's all kind of jumped off from there.
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  So you explained to us what behavioral economics is.
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  But let's get into this deeper because I always thought that there there's emotional buyers and
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  there's logic buyers.
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  And so But based on behavior economics, you're saying, uh-uh, it's your subconscious that's
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  making all these decisions.
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  And so talk to us about how your research Does it does it rebuff this myth of of of emotional
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  buyers, or is that just another layer to it?
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  It's actually mostly on that more emotional level, but if we take a step back and learn a
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  little bit about how the brain actually makes decision how it works, is think about your
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  brain like a person writing an elephant.
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  You have that logical conscious writer who knows where it's going, has a plan where we
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  wanna go, We know what's up.
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  But you're kind of at the mercy of that subconscious elephant.
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  And if it wants to sit down or run-in another direction, you kinda have to go where the
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  elephant wants to take you.
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  And that is that subconscious, which does the bulk of our buying.
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  The actual, every person makes an average of 35,000 decisions every single day, which is
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  Crazy when we think about it, but the bulk of those are done subconsciously by that elephant.
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  And we would like to think that it's making those decisions using full logic all the time,
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  but it really has to make the bulk of those decisions on habit and predictability.
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  That's why we love the status quo that subconscious brain likes to know what's gonna
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  come next, what's most likely to work.
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  And so those rules that the subconscious uses is what behavioral economics is built upon.
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  What I do is help people to see how you can take those common rules and then apply them in
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  a way that's gonna make it more likely to be successful, more likely for people to choose
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  you and to feel good about those decisions.
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  Love it.
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  So What is it different for b to b versus b to c depending on,
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  you know, because do corporate buyers use their subconscious mind, or is it a little bit more
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  complicated to that?
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  Yeah.
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  It's at the end of the day, we're still dealing with people making decisions in those,
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  departments.
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  And so if you were to say, you know, you're selling cloud based computing software.
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  You need you have a new system that you're trying to get a team to move over to.
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  We've anybody who's done that type of selling, you've been in those meetings and the executive
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  team is on board and the management likes it and the pricing is right and everybody loves
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  it.
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  And then there's somebody that's, you know, deep deep into the department that doesn't like
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  the idea of using that system and says, oh, I'm not gonna move Not gonna do that, and it
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  derails everything.
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  And it's because of the status quo bias loss aversion or maybe even just the way the
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  information was presented to them, the frame that was used for it.
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  And so understanding the people, even when it $1,000,000,000 decisions, we are still, you
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  know, the elephants making those decisions, for the bulk of it.
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  So what made you get interested in consumer behavior?
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  Was it just because you were working with a lot of consumer brands?
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  You know, I've Like I said, it was in that, undergrad.
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  I think so it was before I even, you know, got in and started into that space.
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  I think I've always been interested in, why people do things and been a pretty natural
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  questioner.
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  And so being able to look at something and go, that's weird.
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  But I wonder why that is.
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  And so that's something that people don't do enough anymore.
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  And when we understand more about the habits and the way that our brains make decisions, we
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  kinda just go through the motions a lot of the time and don't even realize it.
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  And so if we can invest a little bit more time in being thoughtful.
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  We can't be more thoughtful about everything, but you can be a little bit more thoughtful
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  about why did I open that email and delete this other one?
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  Why did that LinkedIn request feel super spammy?
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  And, why was this other one something I was interested in opening?
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  Why was that article interesting and not that one?
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  And, hey, as a small business owner, what does buy stuff look like?
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  Because it's funny.
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  We kind of forget that we're human when we start to be communicating and when we're in
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  work mode, the stuff we write is often really weird and not something that would compel us to
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  buy at all.
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  And it's because of that, you know, elephant writer problem.
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  I get it.
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  So you talk about in one of your series that it's not about the cookie.
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  Now what does that mean?
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  Yes.
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  So this is my framework for pricing strategy and for change management.
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  And just the really quick is, you know, imagine we're walking down the street, having a great
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  conversation, and all of a sudden, there's this amazing scent.
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  That comes down the street.
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  And we're still talking now, but kind of distracted by what this is and where it is.
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  And more like cartoon characters now with our noses pulling us down the road.
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  And it's sweet and salty.
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  We realize it's cookies baking.
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  We're so excited.
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  And we see there's a line and and they say you can get a free sample and buy 3, get one free.
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  And, you know, before we know it, we both walk out of there with eating a cookie in an
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  undisclosed amount in a bank.
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  For later.
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  And in another version, if we're walking down the street, same conversation, someone shoves a
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  flyer in our face and says, today only I have cookies and and they're on sale.
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  And if you only pay for 3 of them, if you buy 4 and, you know, here's a sample, you know, this,
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  that guy Gross.
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  Get out of here.
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  You know, we're having such a good conversation how rude is he.
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  And by the time you see the lion as well, the cookies, you know, you're writing a Yelp review
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  about how terrible their practices are.
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  So in this point, we know it's not about the cookie.
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  You know, we're definitely buying.
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  In the first case, we're not in the other.
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  It's also not about the price.
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  Right?
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  It could have been $3 cookies the first time around and 50¢ cookies in the other, and it was
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  more the stuff that happened before the price.
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  Had more of an impact on the decisions we made.
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  And all the same things happened as well, but they were in a different order.
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  So understanding what's happening in the brain is part of that framework presenting it in the
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  right order.
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  Like it.
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  Alright.
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  So I know I know a lot of times you help brands with park pricing.
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  And there's this rule, you know, those of us that do internet marketing, you know, you never
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  put a 0 after something.
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  You always wanna use a 7 or a 9 or some people say you need to use a 5 at the end of the
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  number.
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  You know, does that really matter?
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  So the good news is It doesn't really matter as is the who's staying there.
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  So we can kind of let go of feeling that stress of picking the perfect number.
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  The big decision that you would want to make is to determine if you want your brand or your
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  product or whatever it is that you're putting out there.
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  To be associated with being a deal or a bargain or a value space, in which case rounding down
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  is a really good strategy.
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  And then, you know, 975 and pick what works well for you.
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  If you don't want that and you want to be more of a if you're a luxury item, if you're
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  something people are buying as a gift, or something that's more of that splurge, you can
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  be on that whole number, and it's better to do that.
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  It's like people don't typically like to buy discount wine, you know, when you're looking at
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  that, the things like that.
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  So you know, ending in a 0 or a 1 or a 2, something that's rounding up can be something
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  where it feels better and doesn't have that discount connotation if that's not what you
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  are.
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  Alright.
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  Last question before the break.
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  What is the one word that increases sales by 38%.
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  And what concept is at play here?
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  Okay.
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  So it's not a magic word itself, but the concept here is one of anchoring.
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  And so it had to do with selling Snickers, and they had 2 different ads.
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  At the grocery store.
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  1 said, Snickers buy them for your freezer.
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  The other said, Snickers buy 18 for your freezer.
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  And if we were making those ads, it'd probably feel really weird to put numbers like that out
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  there kinda arbitrary and whatnot But the number 18, because it set a high anchor in the
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  brain, ended up increasing the sales by 38% because of the way that we interpret where then
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  it's kind of a fancy word for 0, in this case, and we're not necessarily gonna buy and 18, we
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  stay low.
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  I'm way better than everybody else.
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  I don't need 18.
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  I'll just get 6.
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  Very, very interesting.
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  Well, when we come back, we're gonna talk more with Melina Palmer about behavioral economics.
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  Stay with us.
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  Are you ready to become a boss?
• 13:42
  Hi.
• 13:42
  I'm Melinda Emerson Small Bizzley, Click the button below and take my free boss quiz.
• 13:48
  This assessment will help you learn your entrepreneur type and find the right business
• 13:52
  model you.
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  Get this information about the number one asset in your business.
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  Yeah.
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  That's you.
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  Welcome back everybody to the small business chat podcast.
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  I'm Melinda Emerson's small business lady, your host, and we are talking about How to figure
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  out what your customers want and can't tell you with Molina Palmer.
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  Alright.
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  Molina, tell us what are the top 5 Warning mistakes that small businesses make when
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  they're writing copy or producing ads.
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  Yeah.
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  So I've broken this into 5 categories which would be being too boring, too much, too vague,
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  too confusing, and too literal.
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  So a couple of those are pretty quick to explain and understand if your messaging is
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  boring and long, it's hard to get people to buy.
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  And if gen in general, if you're asking yourself, Is there too much here?
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  The answer is yes.
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  So you can pretty much always cut something.
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  It's good to go in and look at, favorite example about not being boring is cotton candy
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  grapes, looking at something super commoditized and being able to make it feel fun and that
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  people are charging a lot more for and excited to pay for, you know, that's a really good
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  example.
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  So the next grouping that comes up with this is where we look at being vague and confusing.
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  And it's really amazing how often websites, ads, emails, are missing a call to action.
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  So if you're gonna be putting a bunch of work, into having someone Like, they have to think
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  about what they're supposed to do.
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  We don't really get it.
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  They're gonna be bailing out on that.
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  So what you wanna look at is If you can only do one thing, if this piece of communication is
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  only gonna get one thing done, what is the most important thing, and then put all the eggs in
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  that basket to make it so it's really clear and compelling for someone to take action on
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  whatever that is.
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  So the last piece is being too literal.
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  And what I mean by that is we like to give really specific information, and it feels like
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  we need to communicate really tiny details that people are gonna go look it up and they're
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  gonna know we didn't say everything exactly right or something's been hanging out for a
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  long time.
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  So in this example, my there's a nail salon by my house, which I go to now.
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  But, years years ago, they had this big sign up front that said best in the south town 2009,
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  2010, 2011.
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  And that's all fine in Dandy if it was 2012, but it was 2017.
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  And so this message, which should have been good and compelling, actually made my brain
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  kinda go, e, you know, what happened?
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  What's what's gone downhill for these last 6 years.
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  So if you instead reframe that to just say best in the sound south sound 3 years in a row, It's
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  now a very compelling message when it's not quite so specific.
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  Now in your book, you talk about behavioral banking.
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  What does that mean for business?
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  Yeah.
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  So when you think about applying all of this, it's easy to feel a little bit overwhelmed as
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  I'm talking about so many concepts and things going on in the brain and wanna have you think
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  about applying it in the same way as if you were gonna, you know, be a professional baker
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  if you wanted to start baking.
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  You probably need to know what the ingredients do.
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  So because sugar, flour, butter, eggs, they can be combined in many different ways to create
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  all sorts of different things.
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  And you need to know what you wanna make.
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  And you're probably gonna follow some sort of a recipe.
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  You're not just throwing everything in a bowl and hoping it becomes brownies at the end of
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  the day.
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  And if you are, you know, good luck.
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  But instead, we also would never say as you start baking, you know, if you make it cake and
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  it's kinda soupy or something's off, you're not gonna say, oh, you know, I tried baking once.
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  It's not real.
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  It didn't work because That's ridiculous.
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  But we do that with work stuff all the time.
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  Right?
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  Like, I tried Instagram and I didn't go viral.
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  That's not a real thing.
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  Right?
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  It seems silly, but but we feel that way.
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  So with implementing and testing out these concepts, you wanna start with some simple
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  recipes that are kinda tried in tried and tested.
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  I have some in my books.
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  That you're able to go in and start to work with.
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  And then from there, maybe you can spice things up with a little bit more, but it's about small
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  tests, little things, a tiny reframe, you know, how that work, and look at it more of a long
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  term investment in the the testing of behavioral economics instead of a 1 and done
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  fix all.
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  Good advice.
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  It's like people giving up on Right?
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  It's like you get your heartbroken once and you're like, I'll never love again.
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  I mean, it's it's like people behave that way about stuff in business too.
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  And, you know, the thing is is that you gotta test You gotta test some more.
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  That's really how this work.
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  Alright.
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  Last question for you.
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  What is the best business advice you've ever received?
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  I would say my favorite piece of advice, I was working in an advertising agency just out of
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  college.
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  And the woman who was the receptionist and also ran the books.
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  It was a small agency, and she had said to me, Melina, you are worth the hourly rate that
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  we're charging for you.
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  Whatever that is know that somebody picked that for you, and that is the number that you are
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  worth.
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  And don't ever shy away from that, you know, and you're worth even more, but we it's hard
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  and small business, sometimes, and especially, you know, being just out of college and It was
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  a number that was higher than I would be paying for anything at that time.
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  So to have that confidence in the pricing, I think, was really a great piece of advice.
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  I love it.
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  I love it.
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  Thank you so much, Milena, for your valuable insight.
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  It was very helpful.
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  Thank you all for joining me for this episode of the small business chat podcast.
• 19:39
  If you're ready to grow your business and you're looking to use email marketing, head
• 19:44
  over to small business lady university, I've got a great 6 week online course that'll put
• 19:48
  you in the right direction and start closing more sales right away.
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  Alright.
• 19:53
  I wanna leave you all with this.
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  You never lose in business.
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  Either you win or you learn.
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  I Thank you for joining us everybody.
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  God bless.
• 20:11
  Thanks for listening to the Small Biz chat podcast with Melinda Emerson.
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  Subscribe to this podcast, wherever you listen to podcasts, and join us next Wednesday for
• 20:21
  more fantastic information and interviews.
• 20:24
  You can find more sources and small business success strategies by visiting Melinda's
• 20:28
  website succeed as your own boss dot com.
• 20:32
  Thanks again for listening, and we'll see you next week.