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WHY BEHAVIORAL ECONOMICS?

Why does it matter to you?

WHY BEHAVIORAL ECONOMICS?

The future of business

Bloomberg listed “behavioral scientist” as the top job of this decade for a reason – it is a field combining the best of economics, psychology and neuroscience to understand behavior. 99% of decisions are made by the subconscious brain.. do you know how to communicate with it or are you guessing? Behavioral economics, and specifically, What Your Customer Wants from Melina Palmer, shows how science can be used to unlock the secrets of consumer decisions for all kinds of business. While your competitors continue to throw noodles at the wall.. why not start throwing darts? Learn more about Melina Palmer.

TOP CONCEPTS

FRAMING​

How you say something matters more than what you say​

The logical brain likes to believe that a number is a number and how you say something shouldn’t matter. People are smart enough to figure it out—or do the math—but our brains don’t work that way. The way you say something can make a huge difference in how it is heard by the customer or employee. For example, imagine you go to buy ground beef and one stack is listed as 90% fat free and the one next to it as 10% fat – which do you want? Almost everyone says they want the 90% fat free option…and even though it is saying the same thing, the two options don’t feel the same. The right message framed incorrectly can result in a flop, but understanding how to speak to the subconscious can greatly increase sales. 

PRIMING

Why You Should Never Have a Difficult Conversation With Someone Holding an Iced Coffee

Images, sounds, smells, and the environment can have a huge impact on our behavior without us even realizing it. People in a room with a backpack were more cooperative than those with a briefcase. The wrong questions on a pre-test caused Asian-American women to perform 11% worse on a math test. And holding an iced coffee can make someone thing you’re more difficult, cold and distant. Are the images and words in your materials priming people to take the actions you want…or to give you the cold shoulder? Understanding your company’s goals and how to prime for them along the experience is a huge part of what we do for our clients.

ANCHOR

The 1 Word That Increased Sales By 38%

Humans are very influenced by numbers—even unrelated ones can impact buying decisions. This is why we will buy more (often double or triple) when something is labeled as “10 for $10” versus “$1 each”. They mean the same thing but framing the message this way can have a considerable impact on buying decisions. Knowing which numbers to try and where is a bit of an art we love to help our clients with.

Relativity

The Brain Can’t Handle 1-Off Items

I’ve got something for sale. I can’t tell you about it other than to say it’s unlike anything you’ve ever owned before. It’s $500…want to buy it? Of course not! Without context – relative items to help you decide – it is impossible for the human brain to determine if it is a good deal or not. (It was a flying car by the way, so, sorry about that).  When you understand relativity and put the right items next to other, similar items it will unlock the potential to sell more of the right things to the right people in all sorts of scenarios. 

Loss Aversion

Why Getting New Stuff Is Not The Same

It probably won’t surprise you to learn that people don’t like to lose things. This has led our businesses to create a gain-riddled society where we try to give people more and more. Unfortunately, that’s completely backward. Why? Countless studies have proven it takes double the joy felt by a gain to equal the pain felt by a loss. That means if you lose $20, I would need to give you $40 to cancel out that pain. The good news is, incorporating loss aversion doesn’t have to be negative—and properly framed loss aversion is one of our specialities.

SCARCITY

Why We Think Less Available Means More Value

This is one of those concepts everyone has heard of, but almost no one properly applies in their business. And scarcity applies to more than one-of-a-kind paintings or rare stamps: it is also relevant for concepts like time. Do you want customers to value you, your products, services, and staff more? Scarcity is a great tool to get you there when used correctly.

WHAT YOUR CUSTOMER WANTS AND CAN'T TELL YOU

“The most important business book to come out in years.”

– Michael F. Schein, author and columnist for Forbes, Inc, and Psychology Today

Wouldn’t it be great if you knew how your costumer’s brain made decisions…and that you had a recipe to better communicate with it?

What Your Customer Wants is the answer. It was created for people like you who are looking for an edge in business. It provides exactly what you need to understand and begin applying behavioral economics into your business right now (without being too academic or too general). Are you ready to uplevel your life and work?

Herding & Social Proof

Check This Out…Everyone Else Is

If given two identical food sources, a colony of ants will choose one and every member will go to that same option (leaving the other untouched). This may seem crazy, but we humans herd just like ants, sheep or cows. It helps us feel safe and impacts countless decisions we make. Following someone back on Twitter, which restaurants to eat at or products to buy on Amazon…knowing someone else has been there and liked that has a huge impact on our behavior. Knowing how to implement the various forms of social proof can help clients and customers herd to your default food source.

NUDGES

Choice Changes Based on Context

If you let kids loose in a cafeteria with unlimited funds and their parents would never know what they bought…what do you think they would choose? An overwhelming pile of junk food? Studies have found that where items are placed in the line can have more impact than anything – putting desserts first made them 25% more likely to be chosen, and at the end they were 25% less likely to be chosen. And whatever was at eye-level (be it carrot sticks or French fries) was the top choice. Knowing choice is relative, everyone is tasked with being a good “choice architect” and presenting choices in a way that helps people make the best decisions. How? With the right nudges and lots of thoughtfulness. 

Paradox of Choice

The Overwhelmed Brain and Its Impact on Decision Making

Our brains get overwhelmed incredibly easily. Asking people to remember an extra five digits (up from two to seven) can make them more likely to choose chocolate cake instead of fruit salad as a snack. How many times are you giving your customers just “one more” click, form, field, or hoop to jump through to do business with you? If you have a lot of people saying they need to “think about it” and never come back…you are likely overwhelming them. Properly reducing choices and friction can make a huge difference in conversions.

Surprise & Delight

Why Meeting and Exceeding Expectations Isn’t Enough

A 5% increase in loyalty can increase profitability by as much as 60%. How does your company track and measure loyalty? If it is by asking “how satisfied were you?” it’s missing the mark. Satisfaction will never drive loyalty because it is expected. Incorporating some surprise can result in a delightful experience, which speaks to the subconscious, buying brain instead of the logical conscious. The unexpected creates joy and delight, loyal customers who share about how great you are – and keep coming back for more.

WHAT YOUR CUSTOMER WANTS AND CAN'T TELL YOU

“The most important business book to come out in years.”

– Michael F. Schein, author and columnist for Forbes, Inc, and Psychology Today

Wouldn’t it be great if you knew how your costumer’s brain made decisions…and that you had a recipe to better communicate with it?

What Your Customer Wants is the answer. It was created for people like you who are looking for an edge in business. It provides exactly what you need to understand and begin applying behavioral economics into your business right now (without being too academic or too general). Are you ready to uplevel your life and work?

Peak-End Rule

Do You Know The True End of Your Experience? Are You Sure?

If someone was to ask you how your meal was, how would you quantify a response? Evaluating every data point moment by moment is an amazingly complex calculation the lazy brain doesn’t want to take on, so it uses a simple rule of thumb to make it easier. It only looks at two points: the peak (either positive or negative) and the end. When designing your experiences, it is important to know whether your overall experience is good or bad (be honest!) because it impacts whether your peak and end points should be the same…or need a little room to spread them apart. Your customers’ impression of your entire brand is at stake, so you want to be sure to get it right!

Habits

95% of Decisions Are Habitual…Which Side Is Your Business On?

The subconscious brain is running the show for you, your peers and your customers. Even though we like to think our buying experiences are evaluated as we go, even the big ones (like buying houses, cars, or new phones) are done on habit most of the time. These rules of thumb are the foundation of behavioral economics. The big thing to know is how you should apply habits into your brand strategy. It is different for category leaders and emerging brands and a misstep could be costing you customers and sales. The subconscious brain is running the show for you, your peers and your customers. Even though we like to think our buying experiences are evaluated as we go, even the big ones (like buying houses, cars, or new phones) are done on habit most of the time. These rules of thumb are the foundation of behavioral economics. The big thing to know is how you should apply habits into your brand strategy. It is different for category leaders and emerging brands and a misstep could be costing you customers and sales.

Reciprocity

When you go to eat at a restaurant, do you think getting a mint with the check impacts how much you tip? It may seem crazy, but some well-planned mints and a thoughtful statement has been shown to increase tips by 23%! This is why smart lead magnets, opt ins, money back guarantees, and transparent, honest messaging can pay a business back much more than it cost to produce. The human brain is programmed to want to give back when we get a gift—no matter how small. Are you properly leveraging reciprocity in your business? (Note: it is different for nonprofits than for profit businesses – tune in for more details!)

What do you get when you work with The Brainy Business?

There are hundreds of concepts your customer’s subconscious brain uses to make thousands of decisions every day. Over years of work, we’ve learned there are some common ones that are central to any business project. And while no two projects are the same, we often follow a similar process when working with clients from any size or genre.

STEP 1: This is the most important (and where most businesses go wrong)…understanding the true problem.
STEP 2: Dig in on existing research as we develop a study or project plan.
STEP 3: Test and implement!
STEP 4: Analyze results to determine how to continue to improve in the future.

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