Introduction: Adjusting Your Mindset with Behavioral Economics
Melina Palmer: Welcome to episode 13 of The Brainy Business. This episode is about adjusting your mindset with behavioral economics.
Announcer: You are listening to The Brainy Business podcast, where we dig into the psychology of why people buy and help you incorporate behavioral economics into your business, making it more brain friendly. Now here’s your host, Melina Palmer.
Melina Palmer: Hello everyone. My name is Melina Palmer and I want to welcome you to The Brainy Business podcast. Today’s episode is going to take some of what I’ve talked about in the last two behavioral economics foundations episodes dedicated to anchoring and adjustment and relativity, and combine them in a new way. In the foundations episodes, I focused a lot on building your pricing and how to present your offers in business. But today I’m going to take a different spin: mindset. We’ll still talk about pricing a little bit, but it’s the different side of it. I’m going to assume you have a basic understanding of the two concepts, which you can revisit as needed. Anchoring and adjustment is episode eleven and relativity was episode twelve. You can either scroll back in the podcast app or visit their individual pages, which are super easy to find. You just type in the website followed by the episode number. For example, relativity would be at thebrainybusiness.com/12 and I will link to them in the show notes for this episode, which is at thebrainybusiness.com/13. Easy peasy. Remember, for both eleven and twelve, as their foundations episodes, they have worksheets that you can use, they’re freebies that you can download and use to work through those concepts. You could go back and download those now as well to help you with using that and applying it to mindset. So go ahead and grab those if you want, either before or after the episode, in case this is your first episode with me, in which case, welcome. You can find the show notes within the podcast app you’re listening to or by visiting thebrainybusiness.com/13. I don’t reference the show notes every time something is linked there because there are a lot. And just know if I reference another episode or an article or study or anything that makes you think, I should look into that, check the show notes first because it’s probably already linked there for you.
Understanding Mindset Issues and the Virtuous Cycle
Melina Palmer: Okay, on to mindset. I decided to do this episode because I’ve been noticing a trend with my clients and others I’ve spoken to recently, and I wanted to just dedicate an episode to this because it’s so important. Everyone struggles with mindset issues from time to time. Whether you own your own business or work inside a larger company, Mindset is a big deal. It can make or break you, and it always seems to creep up in some way or another. This could be the imposter syndrome in which you feel like a fraud, as if you would be found out as not worthy, or that you don’t actually deserve your job, your accomplishments, friends, family, et cetera. So you know this is absolutely a real thing. And studies estimate 70% of people have felt this imposter syndrome from time to time. So know you are not the only one. This could also be a lack of confidence around pricing or your offering. People seem to re-encounter mindset issues whenever they enter into a new market or change their prices. It’s totally normal. But I want to help you overcome a couple of aspects where your brain is contributing to this, and a simple shift can help you break out of that mindset problem. Sound good? Well, let’s go ahead and dig in here. You’ve probably heard of a vicious cycle where you get stuck in a downward spiral and can’t get out. Mindset can do that. Your brain fixates on small problems and makes them seem bigger, continually building on that negativity and fear to create a worse and worse problem that’s hard to see beyond. But did you know it can go the other way too? Have you ever
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heard of a virtuous cycle? It’s basically the same thing, but good piles upon good, making you better and better. One great example of this is the confidence competence loop. No matter how you slice it, confidence matters when it comes to sales. Being confident closes deals. And as you know from previous episodes, closing deals and sales are not necessarily about pricing. There are all these other areas, including change management, where you are selling even if no money changes hands. So there is this thing called the confidence competence loop, and here’s how it works. As you get more confident, you gain competence, which makes you more confident and more likely to gain competence. And on and on. This is a virtuous cycle. In a real life example of this, let’s say you have increased your pricing and it’s now you’re charging double what you were charging yesterday. Until you get someone to buy at that price or a few people, it can feel really scary to say that number out loud. It doesn’t mean it’s the wrong price, it just means it is scary for you. But what you need to do from a mindset perspective is get to a point where you can say that number as if you’re telling someone the weather or what time it is, no matter how exorbitant it feels to you, practice in the mirror. Say it aloud again and again until you really start to believe it. Own that price. I know role playing isn’t something most people like doing, but it truly helps to train your brain. And you need this because the subconscious brain of your buyer will pick up on the slightest sense of hesitation. You know that saying a dog can smell fear? It’s like that. This is the scent of the cookies before you even name the price. And it could be a huge detriment if your mindset is out of alignment. If they smell confidence, it’s great for you. If they don’t, it can be a real problem if you don’t know what I’m talking about. When I say the scent of the cookies, that goes back to my four part. It’s not about the cookie series, which started with episode five, the truth about pricing. There’s a link in the show notes if you want to go back to that.
Lessons from Alaska Airlines and Advertising
Melina Palmer: After finishing up this episode in episode ten, the on air strategy session with Marielle Court, we talked a lot about mindset. One of the things I mentioned to her was training I had when I started working at Alaska Airlines. I got the job there when I was 18 years old. I was the youngest in my class because you had to be 18 to get hired, and the job was working as a reservations agent. When you called to book a flight, I was the one looking up all the options and presenting them to you over the phone. While the Internet was available for booking at that time, most people weren’t comfortable booking flights that way yet. So a lot would still call in to speak to someone to help book those over the phone. My training for the airline was extensive and phenomenal. Honestly. I believe it was twelve weeks of paid training with an additional four weeks of probational training on the phones, doing double jacking for any of you who’ve worked in a call center. So the first few weeks, someone’s taking a call and you’re listening in, but you can’t speak, and then you switch and you’re the one talking and somebody else can hear in case you get stuck or scared or whatever it happens to be. So, it’s a lot of time they put into that. They gave everyone this giant training binder to help us all through the process, and they discussed everything about the experience a customer would have and the approach that they would expect from Alaska Airlines. We did a lot, a lot of role playing and I really didn’t realize how much this job prepped me for the future. But thank you, Alaska Airlines. Thank you for being so awesome. It was really, really useful. Personally, I’ve always been good at sales. I remember I sold my mom on letting my sister and I get our own phone line when I was in elementary school.
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Yes, a phone line versus cell phones for any of the younger folks listening. And yes, my presentation to my mom was a complete presentation with a flip chart of the main points and benefits, to her if we were to get the phone line note that was benefits to her if we were to get a phone line versus the complaint of, but I want my own phone line. You know, I think I had points about how much time she would have to not worry about kicking us off the phone if her phone was always available. I later used a revised version to get us cell phones. And you can all, I guess, sorry, Mom, you had to live with me. It was all good. It worked out well in the future. She probably thought it was funny. My mom is very good at sales as well. So, anyway, one of the main things I learned from Alaska Airlines was when you quote someone the price, it doesn’t matter what it is, and if you would be willing to pay it or not, your budget doesn’t matter. You need to say whatever it is as if it’s nothing, and keep confident. For me, as an 18 year old, I had a very different perspective on what was reasonable to pay for a trip, and my confidence, or lack thereof, could greatly impact the close rate for the airline. Let’s say I was quoting a fare from Seattle to Portland. I have just looked it up right now here in the moment. And a first class ticket from Seattle to Portland is $150 each way. So it’s cheap. You can drive it in about 3 hours. If, for whatever reason, when I was working there, if I had gone through the search and found a flight that the customer wanted for much more than that, I still need to say it as if it’s nothing. The price is the price. It’s their choice whether they want it or not. In that case, when I worked at the airline, I had a script which I would read over and over again all day, and it went something like this. This non-refundable round trip ticket from Seattle to Portland leaving on September 22 at 08:00 a.m. and returning on September 23 at 07:00 p.m. is based on a seven day fare and will cost $5,748.68. Would you like to purchase that today? Say it with a smile and wait as long as it takes. You may have noticed that price was almost $6,000 for something I’m telling you should be 300. But it’s not my place. I smile, I wait, even if in my mind I’m thinking, whoa, pay me $2,500. I’ll drive you there right now. I will leave my office. I will pick you up. That doesn’t come through in my voice. I am outwardly confident and calm. If I was to present it a different way and say, it’s $5,000, are you sure you want to do that? I’m going to talk them out of that. Whether it was a good deal for them or not, I don’t know what their situation is. I don’t know why they want that ticket. Maybe they want that flight for a very specific reason, and price isn’t an obstacle. That’s not my place, and it’s the same for you and your business. The other amazing set of pricing mindset I got when I was just starting to work at the advertising agency right out of college truly impacted me. I have been very lucky over the years to have some really amazing insights that helped shape my mind about this. This was my first agency job, the first time I was working with billable hours, and it was a bit crazy for me to look down at a bid sheet and have people paying 85 or $100 an hour for my time. Many people within an agency would discount on the back end. You would look and be setting up the monthly billing for a client and start to cut here or there to make it feel.
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Feel more palatable. But that was for them. It was about them wanting it to feel palatable when they were presenting it, versus the client asking. So people would do this even if the client didn’t ask them to. This is a mindset issue, and if you’re doing that in your business now, stop. Don’t do that. And, it can take some getting used to it. It takes a lot to get over it. But know that you’ve been quoted for a reason and your time is worth whatever it’s worth. So unless there’s a very specific reason, like you agreed to a price in advance and you went over, so if you quoted a flat fee, then, you know, too bad, no better for next time. Or perhaps if you were learning something and it took you longer than it should have, then it makes sense to cut down on price. But those should be taken into account. If you’re discounting, like that and cutting things before you present invoices every time. You should be looking at mindset. Anyway, I remember sitting down and having a conversation with the receptionist who also did a lot of the accounts payable and accounts receivable. Her name was Liz and she was the sweetest woman. I feel like she was the grandmother of everyone in the office. I used to love and sit and chat with her, sort of a morning routine, especially on Mondays. I would sit and talk with her for a few minutes. I don’t remember the context of how this came up. If I had said something specifically or she could just sense it in me. But she said some of the wisest words I have ever heard and they’ve stuck with me to this day. She said, always remember, Melina, you are worth your hourly rate. It was chosen for you for a reason. And never doubt that you are worth every penny of it, because you absolutely are. Wow. It makes my heart full even when I think about it today, over ten years later. And you need to know that too. Whatever your hourly rate is, you are worth every single penny of that. You bring so much value into this world, it’s amazing. You need that mindset. Whenever you enter into a pricing conversation, walk into a networking event, turn on your live video, step onto the stage, whatever it is, you are worth it. And you need to feel it in every fiber of your being, even if it scares the hell out of you on the inside at first.
Applying Behavioral Economics: Resetting Your Anchor for Mindset
Melina Palmer: Now that I’ve laid that foundation of mindset for you, I want to talk to you a little about the behavioral economics of mindset, specifically with anchoring and adjustment and relativity. Recently I’ve had a lot of clients say things like, I’ve been working on getting my website ready and it’s almost done, but I just saw XYZ’s website and I see all the things they’re doing and I think I need to redo everything and start over to model after theirs. Or I know I should be doing live video, but I’m not as good on camera as all those other people doing it. I need to keep planning behind the scenes and get used to seeing myself on camera and look into getting lighting equipment, hire an editor to compete with people like ABC. So here’s the problem. You’ve set the wrong anchor. In our social media world, we are able to see all the amazing posts and achievements in our face every day and we are exposed to more content than ever. It’s easy to look and say that’s the standard, and until I meet that minimum, I can’t launch my new business approach or raise my prices or pull the trigger on my website. And in a space where you’re working inside of a business, it could be asking for a raise or applying for a new job or whatever. It happens to be asking for more budget, all sorts of things. You have set an anchor on the top of the market, the peak, something unrealistic in many cases, because those people have been in business for a really long time and have giant teams of people doing stuff for them in many cases. And because the people who have the money to pay lots of others to produce their content also have the money to pay for lots of ads. That is what you see in your feed constantly, which creates your vicious cycle and keeps you stuck in this I’m not ready phase. For all you perfectionists out there, I get that, this is going to be hard for you. I’m a recovering perfectionist myself. I get it. I understand. But trust me, there is no such thing as perfect. Good enough is better than most. So you need to reset your anchor and relativity points. You’ve set the high anchor on your mind at this ultimate, the place you want to be in two or five or ten years. If you really focus and adjusting down to a level you think you can exceed or that your clients will accept today, that’s keeping you stuck. Do you know instead what your anchor should be? I’ll give you a second to think on it. That’s right. What are you currently presenting to the world while you are waiting for perfection? If you are in the process of starting a new business and waiting to put your logo out there and print, business cards, or launch
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a website and have had a work in progress page up for more than a month while you’ve been fiddling, the answer is still nothing. People are getting absolutely nothing from you right now. That should be your anchor. Not this amazing thing that you could do someday, not the top of the market, but what people are really, truly experiencing, experiencing with you right now. Instead of looking at the green grass somewhere else, take a look at your own yard and know any website is better than none. My same small steps approach to marketing, sales and messaging applies to mindset as well. It’s better to take one small step each day than to sit and dwell on the big picture. Once you put it out there, once you take a step, you will have gained a little more competence, which will help with your confidence. Then you will gain a little more competence and up. And up. Look at one thing you’re going to do today. One thing tomorrow and just do that and move forward. Put it out there. Do that live video. The first one for all of us is terrible. Nobody likes doing them. And even now I’ve done it feels like a million. And every time you kind of have to psych yourself up to do it and that’s okay. We all have that feeling and all you get to see is the smile. And I say, oh, hello, here I am. But there, there’s a lot of mindset stuff in the back and know that that’s the case for everybody. So when you’re looking at this, at these small steps you’re taking and you’ve adjusted your anchor, you can say that relative to where you were yesterday or last week or last month, you’re doing awesome. Relative to all those other people out there who only show the world a tiny fraction of the best pieces possible, who cares? Yes, you should have goals for where you want to get to eventually and what that target is, what you’re aiming for, but they’re not a factor in your day to day. That is. For long term planning sessions. Save it for those which you can do monthly, quarterly, or at least annually. You have to be doing long term planning. It’s very important. But in the day today, focus on where you were yesterday and where you’re going to be tomorrow. That’s it. The small steps in the day to day. You set the anchor on the present offering you have out there and adjust up from there.
The Power of Dr. Seuss and Future Episodes
Melina Palmer: There are lots of other behavioral economics concepts that play into mindset, including fear of regret, loss aversion, status quo bias, and many more. But I’m going to get into those in other episodes for today, I really wanted to help you adjust your anchor to be on the reality of what you are doing instead of trying to be relating to someone else. Whether you’re a business owner or looking your way up the corporate ladder, applying these pieces of anchoring and adjustment and relativity into your mindset will make a big difference for you. And when in doubt, if you need a pick me up to help bring you out of the vicious cycle and into a virtuous one, always look to whom I would argue is the greatest philosopher of our time, Doctor Seuss. No, I am not joking. These quotes are so applicable to mindset and really amazing when you look upon them on their own. I’ve linked to an article of 37 Doctor Seuss quotes that can change the world in the show notes, but here are some of my favorites that I look to for all the time. First and will you succeed. Yes, you will indeed. 98 and three quarters percent guaranteed. Why fit in when you were born to stand out? Did you know that was Doctor Seuss? Probably not. You’ve heard it a lot, I’m sure. Also, you’ll miss the best things if you keep your eyes shut. When you’re stuck in this vicious space, you’re shutting your eyes to all the things that you could be doing if you were to take those small steps. If things start happening, don’t worry, don’t stew. Just go right along and you’ll start happening too. That’s one for that imposter syndrome. When you feel like you’re not worth it, just know. Let everything happen around you. And the last one only you can control your future. Doctor Seuss smart. I love helping clients with mindset work. It’s so awesome to help those light bulbs turn on and watch someone turn their vicious cycle into a virtuous one.
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Working with an expert can often be the jumpstart you need to get unstuck and start building the confidence to start that loop in your business. If you are interested in working with me directly to help you, now is a great time because, as you know, strategy sessions and tickets to the October workshop are 10% off. If you book by the end of the month, September 30, go to thebrainybusiness.com and click on work with me to schedule your free consult call or get more information on the Seattle workshop. And remember to use the code brainy at, checkout for the workshop to get the 10% off by the end of the month. Thank you to everyone who has subscribed, rated, and reviewed the podcast. If you have not done so yet, would you be willing to do so? It only takes a second, a tap of a finger, and it would mean so much more to me than I can say. And if you leave a review, I will likely read it in an upcoming episode. As I have done with so many so far, I want to give shoutouts and credits where I can. So thank you in advance for taking that step. And if you’re wanting more interaction between episodes, come join the conversation and social media. Follow me on Twitter or Instagram and like the Facebook page and start chatting. I’m the brainy biz on social. That’s b I z, not the full word of business like the website. I look forward to connecting with you there.
Melina Palmer: All right, I’m going to wrap up this mindset episode with one last quote from Seuss. You’re off to great places. Today is your day. Your mountain is waiting so get on your way. Next week, episode 14 is on to our next behavioral economics foundation, scarcity. I look forward to sharing it with you. Until then, thanks again for listening and learning with me, and remember to be thoughtful.
Announcer: Thank you for listening to The Brainy Business podcast. Melina offers virtual strategy sessions, workshops, and other services to help businesses be more brain friendly. For more free resources, visit thebrainybusiness.com.
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