Welcome to The Brainy Business Podcast
Melina Palmer: Welcome to episode 19 of The Brainy Business, understanding the psychology of why people buy.
Announcer: This Behavioral Economics Foundation’s episode is focused on herding. Come on and listen. Everyone else is doing it.
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.
Melina Palmer: Now, here’s your host, Melina Palmer.
Melina Palmer: Hello, everyone.
Melina Palmer: My name is Melina Palmer, and I want to welcome you to The Brainy Business podcast.
London Trip and Behavioral Economics Examples
Melina Palmer: Anyone who follows me on Instagram, Facebook, or Twitter, where you can find me as thebrainybiz b I z knows that my husband and I just got back from London, where we went to watch the Seahawks take on the Oakland Raiders. The most surprising news, potentially, is that Aaron and I finally got to see a road win for the Hawks. We have been to several away games to watch the Seahawks, and they have all been some of the worst losses or most boring games on record. If you remember that really terrible six to six tie against the Cardinals back in 2016. Yeah, we were there. This was a great trip for more than that, of course. I also got to see some good friends of mine who are from Bristol, and I have not seen in person for about ten years, so that was awesome. They went to the game with us and then obviously got to meet my husband for the first time. We also went out to Stonehenge, which was so awesome and worth the two-hour bus ride. I would recommend it, and I absolutely love the Tower of London. If, you’re into history at all, you really need to go. It is amazing and just so fantastic. And shout out to all my, celiac brothers and sisters out there, or gluten freers, if you’re listening. There were so many great options in London. We were a little bit nervous, but the lists we found were great. My friend provided us with one from someone who has celiac there as well. My husband and I ate pizza almost every day, and I did not get sick, so that is a big win, as anyone with a celiac disease knows. But for me, the best part of the trip was probably Harry Potter. Anyone who knows me even a little bit probably knows how much I love Harry Potter. I am, absolutely the biggest possible nerd for Harry Potter. Maybe not the biggest, but I’m a huge Harry Potter nerd, which my husband knows. And he booked us a couple of really awesome Harry Potter adventures. We went out to do the Warner Brothers studios tour and got to see the sets where they filmed all the movies, and they’re currently working on Fantastic Beasts and where to find them. And we went to see the cursed child, part one and two. So it was about five, hours, a little over 5 hours of Harry Potter magic on the stage, which my husband was nice enough to go and enjoy with me and fight the herds or crowds of people that were out there to see those. But I can tell you both of those are not hype. They’re awesome. If you get a chance and you have any sort of appreciation for Harry Potter, you absolutely have to go.
Melina Palmer: Okay, so why am I talking about London? One, because I was just there and it was great, but because I’m me. While walking around London, I was on the lookout for behavioral economics examples to share with, you on the podcast, the blog, and YouTube, things like that. And I was specifically looking for examples of herding for this episode. And I have some, herding specific examples, I’m happy to say, which I’m going to share with you later on in the meat of the episode. But I do have a really great example that I wanted to share that’s not on topic per se, for herding, but it’s very much in line with behavioral economics in general.
00:05:00
Melina Palmer: If you’ve heard me speak publicly, if you’ve been to one of my presentations or you’ve listened to really, any episodes of the podcast, you’ve likely heard me talk about how the subconscious brain makes 99% of your decisions, and it’s the gatekeeper for your conscious brain. If you’ve not yet listened to episode one, unlocking the secrets of the brain, I talk about this in more depth there. But your brain uses rules of thumb to make decisions which are based on really frequent assumptions. And in general, these are done as a species. So when I’m talking about behavioral economics, it’s a lot of things that we all do as a species, the way our brains are trained. But you’ve potentially also heard me talk about learning to drive a car, where it started out as a really difficult effort, which is when your conscious brain is working on it, and then it transitions to your subconscious brain, where now it’s super easy to drive a car because your subconscious can take over. It’s created these rules of thumb over time, and it knows how to drive a car without having to flag your conscious brain. So I have a new example about how the subconscious brain takes over and starts to learn things and will potentially get you into trouble, which, when you travel abroad, like I had in London, what do you think my example is, yeah, crossing the street, something that I should be very adept at. I cross streets all the time. But when you have grown up in a part of the world where people drive on the right side of the road and not correct, but left versus right, you are conditioned to look to the left before you cross to see if there are any cars coming. It’s something your subconscious probably now does. Automatically turn your head to the left, check for cars nobody’s coming, run across. Obviously, this does not do you very much good. In England, of course, there are not going to be cars coming from the left. Your subconscious thinks all clear, but the car coming at you from the right says otherwise. Hopefully you’re going to notice or someone will pull you back, before it’s too late and you get hit by that car. Thankfully, London, and I’m sure England in general, has enough tourists who drive on the opposite side of the road from them that they have painted the words look left or look right, depending on where the cars are coming from on the street at almost every intersection. In behavioral economics, this is what we call a nudge, a term that was coined by Thaler and Sunstein in their book of the same name. I’m going to get deeper into that in a series of future episodes on the foundations of choice architecture, which is a really fascinating subject. But essentially, in behavioral economics, we expect people to make errors. There’s just too much going on in the brain for it to make the right choice all the time. There are certain categories that pop up often, and when you know how to anticipate an error, like looking left instead of right, you can put a little nudge out there to help get a flag for the conscious brain so someone does not make an error that can cause them harm. This is also why your car makes a dinging noise when you don’t have your seatbelt on, or why there’s a little plastic piece to help you from leaving your gas cap on top of your car as your driveway, which used to be a really common problem before that tiny little strip of plastic was invented. Again, nudging and choice architecture are going to be topics for a series of future episodes, but this was just such a perfect example of subconscious taking over and having this impact on your life that you don’t even realize until you’re in a new situation. I just had to share it with all of you, so hopefully you enjoyed that. And I’m very thankful that, they have those look left and look right signs because they helped me many, many, many times over. The few days that we were in London.
Podcast Milestones and Listener Shout-Outs
Melina Palmer: Okay, before I dig all the way into herding, I do have a couple of housekeeping items. First, I’m so happy and excited to report that we officially have listeners and downloads of The Brainy Business podcast in 78 countries and all 50 states. Yay. A big thank you to my friend Debbie Page and anyone else who I don’t know that might have shared with, someone, from Wyoming or trying to get them to download and listen to the podcast. Thank you so much. Your efforts were a success. Debbie.
00:10:00
Melina Palmer: As I told you on Facebook, you are absolutely going to get a baby brain. You earned your baby brain through your Facebook sharing to instigate some Wyomingers. Wyomingites. What are you called? Wyomingers? I don’t know. But your efforts were a success, whomever shared. Thank you all. I, really appreciate everyone who has downloaded, shared, subscribed, rated and reviewed the podcast. The 18 episodes of the podcast before this one have been downloaded. It’s going to be definitely over 7500 downloads by the time this episode airs, which is super exciting. And I also really want to thank the twelve people who have subscribed early adopters onto the new YouTube channel. It’s really exciting for me. Thank you. I don’t know all of your names because of the way that YouTube, sort of hides that information, but I’ve always found YouTube to be a bit of a struggle in getting subscribers. So getting twelve without a ton of extra promotion has been really exciting. So thank you all for jumping on board and becoming subscribers. If you’re not yet subscribed to the YouTube channel, please take a moment to do so. You can listen to all the full episodes there, as well as getting special, exclusive video content as it comes out. I absolutely appreciate in advance anyone that does that. And before, I forget, there is a link in the show notes to the YouTube channel as well as to Debbie’s website, which I mentioned Debbie just a second ago and can’t forget to let you know that there’s link in the show notes. She is a money coach, she’s phenomenal, she’s a good friend of mine and is just super awesome. If you don’t know her, you should so go to those show notes and check her out.
Listener Review and Show Notes
Melina Palmer: Next, I have a new five star rating and review of the podcast on iTunes. This came from Business Bros who I had actually mentioned on last week’s episode. Funnily enough, their review came up after I had recorded, but before the episode aired, sort of like a ships in the night sort of thing. So, thank you for the review. I really appreciate it. It is titled Business Bros. Approved and reads. We love the brainy biz. Very practical information that, if put into action, can help increase your bottom line. Nothing is better in a business podcast than some practical and tactical advice that gets you into action and helps you be more profitable. Thanks, Melina, of course. And, thank you Business Bros for your review and for all the interactions we have on Twitter. I really enjoy communicating and chatting with people on social media and anywhere else. So, I’ve appreciated all the conversations we have had there. And for any of you listening, definitely shout out to me, ask questions, share comments, whatever it is, I’m always open to having conversations. I love interacting with all of you, so please don’t hesitate to engage with me on social media. And, you might end up with a shout out like Debbie or the Business Bros. And I have of course linked to the Business Bros podcast again in the show notes. So go check them out. And now that I’ve mentioned the show notes a couple of times, I just want to make sure you know where they are and what they are. I’m probably not going to mention them again, but know that anytime you think, ooh, let me make a note of that so I can look it up later. Check the show notes because I have anticipated your needs and linked everything there for you. You can find the show notes within the podcast app you’re listening to or by visiting thebrainybusiness.com 19 because this is episode 19, in addition to the links of those who got shoutouts on the episode, you will also find links to any referenced or relevant studies in case you want to dig into those, and to any past episodes that are mentioned. So they’re super easy for you to find and listen to again without having to take notes and try to remember all of that. And because this is a foundational episode, there’s a free worksheet available for you to download on that same page of the website, thebrainybusiness.com 19. Just click on the image near the top of the page. You can either download it now and follow along as you listen, or if you can’t, there’s no harm in getting it after the fact.
00:15:00
Melina Palmer: It will still be really helpful for you whenever you get it. It’s going to help you to reinforce and apply the lessons of herding into your business, which is why we’re both here. And if you’re already subscribed to The Brainy Business email list, there is a direct link to that freebie in your weekly email so you don’t have to sign up for anything again. And you can now have. I’ve added a special secret freebies page to the website for, anyone who is a subscriber that you can go to at any time and get all the freebies without having to go through the process of signing up for them one by one and finding their pages. I know that could get really tedious and I want you just to have the easiest way of getting all of that information. So now, if you subscribe once, every email that comes out weekly, they come out on Fridays. You will get links to the most recent episode as well as, where you can just download the freebie without again signing up. And there will be a link where you can go and get, all the freebies and any other content for that has been created through the week, like blog posts or YouTube videos. You know, there will be links in that email as well, just to make it really easy for you to go find anything that’s new in the behavioral economics news and postings of the world. Okay, if you are not yet on that list, and you would like to be, and I would love to have you there when you sign up for any freebie for this episode. So if you go to thebrainybusiness.com 19, you sign up for the freebie, you’ll be automatically added in to that main list and you will start getting those emails every Friday. You can also sign up for the free ebook, which is on the homepage of the website, and that will loop you in to where you will start getting those weekly emails as well.
Understanding the Concept of Herding
Melina Palmer: Okay, I think that’s all the housekeeping stuff. Let’s move on to talk about herding. I feel like it sounds like I’m saying hurting every time. So I’m trying to pronounce that very clearly of herd. Herding. So I hope it doesn’t sound weird and overly, enunciated, but I just hear it in my brain weird. So anyway, let’s keep going. The, nice thing about a concept like herding is it is a word everyone should already be familiar with. And yes, it is the same as the concept of a herd of sheep or cattle. Humans herd in the same way as other species, including wasps and schools of guppies, for much of the same reasons. Unfortunately, those reasons are pretty selfish. The main reason that animals herd is for protection. The animals on the outside of the herd, those on the periphery, are more likely to be killed or attacked by a predator than those on the inside. So it’s beneficial to be as close to the center of the herd as you can. If you watch videos of sheep being herded by dogs, the animals on the outside run very fast to try to get to the middle, while those in the center are less inclined to move. They might just be standing around until they find themselves getting a little too close to the outside, and then they start running toward the middle. They’ll also follow each other almost blindly. The assumption is, you know, if everyone’s running this way, they must know something I don’t. And instead of waiting around to see what they’re running from, I’m going to run first and ask questions later. When you think about survival of species, this is a very smart strategy, which is why all of our brains have really learned this over time. And this concept of herding impacts all sorts of species, which is why humans do exactly the same thing. It’s in our nature. I noticed while trying to adapt to the flow of walking traffic in London, again trying to move and sort of trend toward the left instead of the right. According to my friends, jaywalking is less of an issue there, and people often just walk across the street whenever they can. Again, on the left, maybe toward the right, or instead of toward the right. I was noticing how one person starting to move would make others waiting on the sidewalk feel uncomfortable. Some would then start to go without looking. So if somebody was to walk across the street, let’s say there’s a group of us on the corner, and somebody runs across the street almost
00:20:00
Melina Palmer: without hesitation. Someone else would start to go without looking, only to then be pulled back by someone else to keep them from being hit by an oncoming car or bus. But as, more people would cross the street before the light changed, you could see those that were on the corner starting to look uncomfortable and debating if they should go too. This happens all over. Look for it next time you’re waiting to cross the street in a crowd, maybe you’ve noticed it before. You can see people’s eyes sort of darting around. They look uncomfortable. They don’t want to be the last person on their side of the sidewalk. Another piece that was really interesting to watch was when we were walking through the financial district around 8:30 in the morning with what felt like about a million other people going in both directions. It’s amazing when you stop and think about it and you realize how everyone can walk amongst so many other people and follow the flow of traffic without hitting anybody. Else, for the most part, there aren’t set lanes or rules, but the group will quickly form its own without having to use verbal communication. This is the power of herding, and one of the reasons that we as a species have adopted this is that herding helps us to learn by observation. I’m going to talk about that later on in the episode, but watching where others go and following with the group keeps you safe, and that’s why we herd.
Relatability of Herding Instinct
Melina Palmer: I’m pretty sure you’re getting the point, but before I move on to some studies, I have to give the universal example that we can probably all relate to, which comes into herding, which is going to help show another time how those nervous people on the corner, that were waiting for the right time to cross and not wanting to be the last one left on the wrong side of the street, how that might have evolved over time to something that we all probably did or said when we were kids. I want you to think back to when you were a teenager. Your parents probably said this to you at least once after the umpteenth response of, but mom, all my friends are doing it or going there. To which she said, and I bet you can say it with me, if all your friends were going to jump off a bridge, would you do that too? That feeling of discomfort of not doing what everyone else is doing, whether it’s going to a concert or staying in a hotel after prom, or being the last one to cross the street, is fueled by our herding instinct. As humans have evolved to have a much more advanced and complex society than guppies or cows, herding behavior has not always served us well. It’s because herding is there to protect individuals, not the group or a complex society as a whole. During this episode, I’m going to give examples of how to use herding to your advantage in business, when you should use it, how you should use it, and just as a way of an alert, just to make sure, you know. I’m going to give examples of some times where herding can really lead us astray. So you can be aware of it and try to keep from making mistakes personally and in your business.
Herding in Consumer Behavior
Melina Palmer: Okay, so why do we herd? As I’ve said, in addition to safety, it’s also a key way that we learn. Learning by observation is critical to the survival and growth of our species. Babies watch adults do things, or other children, and emulate them almost immediately. This is how we learn to speak and walk and be safe and find food. It’s very important for our survival. Speaking of food sources. Studies have shown that when presented with two sources of food, ants will tend to choose one over the other, and then the whole group uses that one instead of being evenly distributed among both options.
00:25:00
Melina Palmer: When you look at this logically, if you were to observe it, you might think, that’s really silly. Why wouldn’t any one of these ants go to this wide open food source? There’s nobody over there. It’s the same food. How silly of them. But sorry, to tell you, humans do the same thing when it comes to food. We choose restaurants by online reviews and crowdedness. I’ve talked about this before on episode 17, unlocking the power of numbers. To get back to this example, if you were in a new city and you had to choose a restaurant and you could only go by the street view, so you had to go walking down the street, you’re not going to use online reviews, and I’m not going to really dig into that because you know how reviews work, and I’ve talked about it on that power of numbers episode. Most people would choose a full restaurant over one that was completely empty. So if you were walking by two right next to each other, one’s full, one’s empty, what would you think? Those people must know something I don’t. That empty restaurant must be bad, and the full one must be great. Sound familiar? That is herd mentality at work. Another thing restaurants or coffee shops do is to seed their tip jars with money to make it look like others have put tips in the jar already. You may have heard this before, and you might be expecting it now based on what I’m talking about on the episode, but people are more likely to leave a tip when others have done the same. So a jar that has money in it means people are more likely to leave tips even if that money was put there out of the register, versus actual tips that were provided. Because you don’t know that when you look at the jar, you just see a full jar. Interestingly, I was able to see this on a very grand scale. While we were in London, we went to a few museums, and they all had these giant clear containers with lots of cash in them, encouraging donations. You could clearly see lots of money inside bills and coins, which would make others more likely to contribute as well. I have shared a picture of this on my social media accounts. So you can see it firsthand, and you can find me as thebrainybiz if you want to see it for yourself. Again, this is the power of herding. Have you noticed how these days when you go to the grocery store, the checkout asks you if you want to donate to a cause. You have to say no, and it makes you feel this twinge of guilt when you press the button. Maybe you look around to make sure no one else sees you press the big red no button. Taking it a step further, sometimes the person working the register will ask you if you want to donate to the cause and you have to verbally say no. You could just leave it at that. But often people are inclined to give an explanation. While I was recently at an airport, the woman in front of me in line was asked by the lady working the register if she wanted to donate a dollar to. I think it was to the troops. Her answer was no. I do a lot of volunteer work at home and you know, I send lots of donations to the troops on my own, so I don’t need to do that now. It made me laugh a little as I was standing there because I’m obviously aware of this concept of herding. And it’s funny because she gave this explanation as if the lady working their register actually cared. It isn’t her cause after all. I’m sure it’s corporate policy to ask everyone. She probably doesn’t even like asking that question. Or, you know, perhaps lady in line thought I would be judging her. She was inclined to think the rest of the herd would donate, and she needed a reason to explain why she was choosing not to donate. It made her feel better, even though it did not matter to anyone else. There, you see? Herding mentality is much more likely to come out when people feel vulnerable or are unsure of themselves. I know nothing about this lady. I couldn’t even tell you what she looks like. But it’s very possible that she doesn’t actually volunteer or do anything for the troops. If that is the case, why would she have said that? To overcome her natural tendency to feel that she needs to go with the group and to overcome her guilt that she feels with saying no when asked if they want to donate. Many people get antsy, like
00:30:00
Melina Palmer: those people on the sidewalk not wanting to be the last to cross. It’s their herding brain taking over.
Herding and Reputation
Melina Palmer: Another time that people do not feel very confident and are thus likely to take on a herd mentality is when it comes to finances and investing. This is another time where reputation can come into play. And when you’re concerned about your reputation and what others would think or say, herding behavior can run rampant. Let’s say you’re part of a group where everyone is betting on something with a million to one odds, everyone in the group bets on the same thing. The thing with the good odds, would you be able to stand up to the group and bet on the one in a million chance? Many people have a hard time with this because it’s better to be conventionally wrong than unconventionally right. In other words, if you bet and come up wrong but everybody else did too, you are much less likely to be ridiculed than if you went against everyone else and made a losing bet that no one else made. Let’s say you’re brought into a meeting of your peers with a large corporation that wants to invest in some smart companies like yours, but they’re looking to see which of you are the best. Best of the best. In this group interview, you sit down and are shown a slide with a very simple equation on it. Let’s say, what does two plus two equal? You are the 8th person in the group, and as each person ahead of you answers four. Four. Four, you follow suit. Easy. There are a couple more rounds of this, and then on another seemingly simple question, what color do you get? If you mix red and yellow, you, had an immediate answer in your head and you were confident until the first person says purple with absolute confidence. Purple. You think, how ridiculous. Then the next person says purple. And the next. And the next. You’re getting anxious now. You thought it was orange, but these people must know something you don’t. It’s almost your turn. What are you going to say? Purple or orange? Studies have shown that up to 75% of participants will give an answer they know is wrong to go with the group. You might say you wouldn’t do it, but in the heat of the moment, your subconscious herding brain might take over and force you to say something you don’t believe. To keep from being ridiculed or just embarrassed in front of the group. It takes strong will and conscious focus to be willing to go against the group. And it’s even more difficult when those people are like you. So people you want to impress or are similar to. You mean you’ll be more likely to go with the group than to trust your gut again. This especially comes up at times when you are less confident in yourself or your knowledge. Do you remember the show Candid Camera? There is a video, that they have from an old episode which I have linked in the show. Notes of people facing the wrong way in the elevator. And then you can watch people who were not in on the experiment turning to face the left, the right, or the back of the elevator. Instead of facing forward like people normally do in an elevator, to be part of the group and go along with what everyone else is doing. Similarly, if you are walking down the street and see someone looking up at the sky, or better yet, a group of people looking up, even if there’s nothing there, chances are you will stop and look up too. This is a reason things go viral as well. People want to be cool and share on social media once something has become worth it. If everyone is talking about it, you better share it too so you aren’t ridiculed. But interestingly, most people do not want to be the first to, like, comment or share something on social media because they don’t want to stand out from the herd. But more on that in a little bit.
Investment Bubbles and Herd Mentality
Melina Palmer: Next, I’m going to talk about a real problem that has come from herding in our society. Investment bubbles. As I said earlier, many people are not confident in their knowledge of investments, what to do with money, which stocks to choose, etcetera. They’re relying on the expertise of others to tell them what to do, either an advisor
00:35:00
Melina Palmer: or by watching trends. If everyone starts buying something, many people think, oh, I better buy that too. Because again, it’s better to fail by making the same gamble as everyone else than by being the one person who went against the cumulative advice of the herd. After all, they probably did the due diligence and learned what was best. I’m just going to jump on board too. This is how markets crash, bubbles burst, and scams like those from Bernie Madoff can run so rampant. When everyone follows the herd and doesn’t take the time to do their own research, stocks or companies get artificially inflated by the confidence in others. This is not always based on the merit of the item being bought, but on the collective decision until the inevitable comes. Warren Buffett was famous for not investing in tech companies. When everyone else was jumping on the train. He was absolutely ridiculed by the masses. How could he be so silly? This was the future. Everyone was doing it, so it had to be safe. Until, boom, Buffett was not willing to go with the herd and buy into the stocks or invest just because everyone else was doing it. That was not a good enough reason for him, and he trusted his past strategy of only investing in companies he understood and can do valuations for. Dot coms didn’t fit into that at the time, so he did not make the investment. Everyone mocked him until they didn’t. Similarly, Buffett is notoriously harsh on Bitcoin and cryptocurrency, saying it’s not an investment, but a speculation that the next person is going to pay more for the nothing than you paid for it. I honestly I don’t know enough about cryptocurrency to buy any myself, but I’m definitely taking Warren’s knowledge and history to heart. 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 the concept of availability again, the topic of episode 15. You can see a couple of great stories and overweight those and the likelihood that they would happen to us, making it easier to listen to our subconscious desire to go with the herd and invest without doing your due diligence. Always beware if your brain is making you feel anxious to take steps and do something, anything, just because everyone else in air quotes there, everyone else is doing it. Or having your FOMO fear of missing out triggered in a way that makes you want to do less research than you normally would before investing your time, energy, or other resources. This shiny object syndrome can be fueled by the collective message of the herd, but don’t let it force you into a bad decision for your business. Be aware that this exists and turn on your conscious brain. When you feel the anxiety building, ask why it’s there. Do you actually want to do whatever that thing is? Is it the right decision for you or your business? Or do you just feel like you have to because everyone else is doing it? When the stakes are high, take the time to engage your conscious brain.
Using Herding for Good
Melina Palmer: Okay, enough about that sort of scary doom and gloom stuff. Here are a couple of great examples of using herding behavior to help do good in the world and for your business to learn to emulate. If you have stayed in a hotel recently, you probably saw a sign encouraging you to reuse your towels. It likely said something about saving the environment by using less water, which is great. When using this tactic, about 35% of people will comply and reuse their towels pretty good. Here’s a way to use herding combined with the power of numbers and framing both topics from recent episodes, which are linked in the show notes. When staying for four days or more, 75% of people will reuse their towels at least once during their stay. This is a fact, something that was found out in some sort of study. So if you shared that information and simply said on the sign instead of about the water you’ll save.
00:40:00
Melina Palmer: If you were to say 75% of guests reuse their towels, please do so as well. What you find is a, 26% increase in towel reuse. It’s pretty great, but what if you take it a step further? What if, instead, that sign said 75% of the people who have stayed in this room reused their towels? It may seem like a weird statement. You might be concerned about the cleanliness of the towels currently, hoping they have been washed since. And you would likely say, as with so many other studies I share, that it would not impact you differently. But as you have learned so many times on this podcast, you would be wrong. This slight tweak in messaging, just a few words different, was the most effective and had a 33% increase in towel reuse. Crazy, huh? Huh? This also works with getting people to use less energy, turn their lights off, encouraging people to vote, or driving more fuel efficient vehicles. All sorts of things. So what’s the point? People like to be part of the group, and this is increased when the other people in the group, your peers, are comparable and more like you. For example, if they’re your friends or neighbors, or people who stayed in the same room, or when that person is not confident about their own knowledge, like with investment strategies. Remember, whatever your business does, you are in the business of solving problems. The only reason people buy anything is to solve a problem, whether it’s the problem of being hungry or the problem of how to market their business. And problems make people feel anxious or uneasy or less confident. That means people will be more likely to tend toward herding behavior and look to see what others like them have done. So anytime you can provide reassurance through numbers like 95% of customers said their experience was stellar or a, five star rating on Yelp. It all matters in helping someone to make a decision to buy from you.
Overcoming Herd Mentality and Leading
Melina Palmer: Before I wrap up this episode, I want to talk about social media and a recent challenge I’ve started participating in. But speaking of challenges on social media, don’t even get me started on all the crazy or dumb things people will do to be a part of the herd on social media. Let’s skip over the Tide Pod Challenge debacle and instead reference the Ice Bucket Challenge. Eventually, everyone was doing it, and you would be mocked if you were called out on social media. If someone nominated you and you didn’t dump a bucket of ice water on your head, did you do it? Someone you know probably did. Maybe someone in your house? Here are some questions for you. Do you remember the name of the cause it was for? Do you know what they do? Could you tell me any of their stats or figures? Probably not, especially for that last question, but you participated because it was less painful to get doused with ice water than the psychological pain of not complying with the herd. That really says something. But did you ever sit and wonder who was the first person to dump a bucket of ice water over their heads? Or the second? And why did they do it? And then why did everyone else? Our brains are fueled by chemical releases. As I’ve said on the show before, the brain loves dopamine and will do what it can to get more and more. Similarly, oxytocin is released at times of bliss and known as the love hormone. This is released when you kiss your significant other and also what helps mothers and infants to bond. But it does much more than that. It is also released when we engage in any sort of social behavior. Being in a group makes us feel safe and happy because of this release of oxytocin. When we’re not part of the group, our brains do whatever they can to get that bliss feeling back. By seeking out more group relationships to help us feel safe and warm, I’ve linked to a really great article from the Association for Talent Development on Leadership
00:45:00
Melina Palmer: and herd mentality. I’m going to read a couple of the main points from that article on helping leaders to build a followership. First is to recognize the power of existing affinities. They say the high that we get from a flood of oxytocin can be habit forming, possibly even addictive. This means that breaking out of our existing connections can be extremely difficult. Sociologists long have noted how difficult it can be for an individual to escape the influences of a teenage gang. And now we know that gang initiations actually can cause physical change in the brain, which makes it harder to break those bonds. The second thing to do is to encourage the formation of new affinities. If you want people to follow you, their brains must be able to recognize that they’re part of a group of followers. Social media, face to face meetings, and other tools can help to send those signals to your followers brains. And third, fight the herd instinct yourself. The paradox of all this is that as a leader, you are in danger of falling into the herd mentality yourself. Leading often is uncomfortable because you may not see other people around you doing similar things. That’s because you’re out in front of the pack. When you are leading, your brain will not release the chemical cocktail that makes you feel good. Instead, you may feel anxious and begin to doubt yourself. It will seem safer to run to another group rather than to start your own. As a side note here, revisit episode 13 on Mindset to, help with getting over some of those instincts that you might be feeling if having a hard time with leading and difficulty with imposter syndrome. The good news is they say that herd mentality can be broken. Research shows that conscious choices actually will make physical changes in the brain, breaking established neural pathways and making it easier to form new ones. Leaders have to change two brains, their own and their followers. Understanding that fact might make it a little easier to deal with the herd instinct effectively. Again, there is a link to that article in the show notes. The lesson there is that understanding herd mentality in yourself and your customers makes you more likely to recognize it. And now, after listening to this episode, hopefully you can deal with that appropriately. This can help you to become conscious of its existence, which will help you to overcome the fear of being at the front of the pack, which is where you need to be to leave your mark on the world and grow an amazing business. And understanding what will trigger herd mentality in your customers for both good and bad can help you to message better and more effectively, which is what I’m here to share with you in this episode.
How to Start a Movement
Melina Palmer: One of my favorite Ted talks of all time is from Derek Sivers, and it’s just three minutes long. It’s called how to start a movement. But no need to google it. There’s a link in the show notes, and I have written an article about it on the blog as well. It’s a great video, absolutely worth watching. It has over seven and a half million views, so you’ll be in great company. See what I did there? In the video, Derek shows, another video of a shirtless guy dancing alone at an outdoor concert. He calls him the lone nut. That guy could dance alone forever. He isn’t worried about the herd. He’s just dancing and doing his thing. Others around him are looking on with confusion or laughing at him. That lone nut dancing in the field, you know, wondering, why isn’t he sitting like the rest of us? Until something suddenly changes everything. Another person, the first follower, runs up and starts dancing along with the lone nut. As he says in the video, the leader embraces this first follower as an equal. They’re now a group. A ah, they a plural. The first follower makes a simple gesture to suggest his friends join them. And one of the best quotes from the talk is when he says, a first follower is an underestimated form of leadership in itself. It takes guts to stand out like that. The first follower is what transforms a lone nut into a leader.
00:50:00
Melina Palmer: As the video continues, soon a third person joins in, and then another, and then two more, and then five more. And very quickly you watch people from around the field running to be part of the dancing group. This is now what the herd is doing and they do not want to be left out now that the risk has been reduced. And as he says, they can be part of the in crowd if they hurry. He wraps this up by saying, we’re told that we should all be leaders, but that would be really ineffective. If you really care about starting a movement, have the courage to follow and show others how to follow. And when you find a lone nut doing something great, have the guts to be the first one to stand up and join in.
Social Media and Herd Mentality
Melina Palmer: I mentioned my friend Debbie Page earlier in the episode, and I want to acknowledge her again here. A couple of weeks ago, she put a call out on social media for entrepreneurs who post at least three times a week on both Instagram and Facebook to participate in a little experiment. I obviously have more than enough posts and I’m always game for a test, so I raised my hand to participate along with four other ladies. The challenge to each like comment and share a minimum of three Instagram posts and three Facebook posts per person per week for a period of four weeks. So in addition to our own requirement to continue posting a minimum of three times on each platform, we also all agreed to like leave a thoughtful comment and share a minimum of 30 total posts per week. When you add up all the different people and all the different posts, and notice I said thoughtful posts, that means no cool or thanks posts. Here, you have to really understand what they’re putting out there, respect the effort and leave an insightful comment. So why am I talking about this? Because social media is rife with herd mentality. Most people do not want to stand out by leaving a comment, especially if they would be first. It’s easier to go with the flow, watch and not leave your mark. I heard once that for every hundred people who see a post, the best case scenario is that ten people will like it and only one will leave a comment or share. Even those of us who create a lot of content are victims of this. We’re stingy with our comments and shares. I know. I find myself liking things. I obviously have thoughts about them if I’m going to like them, but it’s often easier to be part of the herd and leave a semi anonymous thumbs up and walk away. Do you ever get comments or shares on social media? It’s amazing. It makes me so happy. Even these ones that I know are fueled by a commitment we all made feel amazing when they come in. I get that release of oxytocin with every comment or share notification and I love being able to provide that for someone else too. Why shouldn’t we comment and share more? Why not give out comments like they’re free? They actually are. In case you’re wondering, it’s because you’ll stand up from the herd. Most people don’t take the time and put in the effort to stand out like this, and that leader will remember and be appreciative to you if you take the time, if you stand out, if you’re willing to be either their first follower or their 50th, it all matters. This is a great way to use herd mentality to your advantage in business. Be generous with your comments and shares. I have now made myself a little checklist so I can do a couple on each platform every day to help spread the oxytocin love, because everyone deserves that joy. Though this will start in full force after this challenge is over. If you have ever sat down and shared 15 posts in a row on your Facebook page, it feels a little foreign and I was worried about being ridiculed at first, but they’re getting lots of comments and shares from other people too, and I think in a lot of cases, people who didn’t know the person I’m sharing about is now being able to see that and they’re commenting and liking. It’s really just spreading the social media love for all of us, which is the whole point and sort of what we’re testing out here. Being the first follower is helping to make that person into a leader and begin their movement.
00:55:00
Melina Palmer: I’m so happy to be part of that for anyone that I can and let me officially say thank you to everyone and anyone who has ever commented on, liked, or shared any of my content or subscribed rated reviewed. I appreciate you all so much and I know that takes a little bit of extra effort, but it’s so awesome, and worth it and a great thing to do.
Featured Business Owners
Melina Palmer: And of course, I couldn’t finish this up without mentioning all five of the ladies participating and linking to their profiles in the show notes. First, of course, is Debbie Page, who I have mentioned a few times. She’s a money coach and runs the Women’s Business Profit Lab. It’s a free group on Facebook and if you are a female in business, you should absolutely join it. It’s awesome. Next is Lynn Reifert, whose book Six Word Lessons for Taking the Fear Out of Mortgages is available on Amazon and linked to in the show notes. Then we have Debbie Mycroft of Memories Worth Telling. She helps families to get their memories, legacies and words of wisdom down into beautiful books to be shared for generations. Such an awesome endeavor. And Nicole Bandes from Virtual A Team. She has an amazing group of virtual assistants that can help you with virtually anything and a really great pricing structure to make it easy to work with her and her team and get started on projects large and small. Lastly is my girl Jennifer Findlay of Jennifer Findlay Portraits. You have of course heard me mention Jennifer before because she did my photos that you see all over social media, my website, videos, public speaking presentations and everywhere else. These women are all amazing and I have loved getting to know them and their business is better by being intentional about reading their content and engaging with them on social media. I highly recommend you take a look at each of their profiles. There are, as I said, links in the show notes, but also take the time to engage with people you admire or know on social media and step away from that heard feeling. Don’t be afraid to step out of that and stand out by being engaging and taking the time to comment and share the amazing things others are doing, you’ll be glad you did. I hope you enjoyed this episode on herding even if your mind was blown a little bit as you started to realize all the times you’ve gone with the crowd in your life when you didn’t realize it. Try not to judge yourself too harshly and don’t let this new information hold you back from implementing this in your life and business.
Wrap Up
Melina Palmer: All right, that’s it. Episode 19 on herding is done. Don’t forget to get your free worksheet at thebrainybusiness.com 19 and I hope you got lots of great value from this one next week on episode 20. Can you believe it?
00:58:00
Melina Palmer: 20 whoo. We’re going to talk about the power of defaults. It’s going to be a great one and you won’t want to miss it. 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.
00:58:39
