The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

It's that time of year when everything starts to speed up. We all have so much to do for our businesses and personal lives...how can we get it all done? This is the perfect time to talk about your brain on time pressure as we head into Black Friday and Cyber Monday deals and limited time offers at every turn. You may be considering if you should do a year end sale or offer in your business, or maybe you love taking advantage of the deals—or want to know why you can't stop yourself from a deal sometime. Whatever the background, we all can learn about our brains on time pressure. And it isn't just buying decisions that are impacted by this, which I will get into during the episode. You also have other impacts within your work and personal life where your precious commodity of time is limited and impacting your performance. Think about it. If you had all the time in the world to make a decision…what would you do? How would you go about it? I discuss time pressure and how it impacts you as a consumer. Then I will discuss some ways to think about using time pressure in your promotions and offerings, and finally, some ways to think about how it impacts your actions in life and business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [03:46] If you had all the time in the world to make a decision, what would you do? [03:59] You would ideally be able to evaluate every important feature and aspect against each other, and devise a system for ranking values. [04:39] Trying to consider every facet and every decision means you never actually make a decision. [05:01] We need to structure our decisions properly and only consider what matters. The subconscious brain has to make a lot of those decisions because the conscious is too slow. [05:47] The subconscious is heavily influenced by rules and concepts of personal biases and that doesn't always lead to the best results in life and business. [06:03] Limited quantities, opportunities and time are all closely tied to value in the brain. [06:44] When there is plenty of time available, we might be calmer and the conscious has some time to think and process. But time pressure? Move over conscious! You're too slow and I got this down. [07:06] Studies have found people are less creative when they are under time constraints. They also defer making choices at all and if forced to make a choice, it's not the best one. [07:25] Time pressure is a form of stress. [08:24] How time pressure affects you as a consumer. People buy more during the holidays. [09:34] When the brain is overwhelmed, the subconscious takes over and that can negatively impact your decisions. [09:48] Studies show that the things the brain focuses on when making decisions shift and can actually reverse when time pressure is applied. [10:03] When there is plenty of time available, people become risk-averse. When pressure is applied, we become loss averse and FOMO takes over. [10:17] Time pressure can encourage people to buy an extra item or get something "just in case" especially when paired with a discount or benefit of some kind. [10:42] Have a plan and a list if you have regrets about overspending after time discounted shopping. [11:19] Make a list of everyone you want to shop for. List of dollar amount you want to spend on each person. Run this against your total budget for the holiday to make sure you are in alignment and make any necessary edits. [12:12] Having a list makes it easier to hold yourself accountable to a plan. [13:44] It's good to set up rules when you are in a cold state so you are prepared when you get into the hot state. [15:28] Having any check in point and taking a moment to breathe can help you determine if this thing you are interested in is truly a great deal for YOU at this moment. [16:16] Making promos and offers. It's important for most businesses to have promotions and offers at some time or another. [16:28] Some ways you can incorporate time pressure in your offers is to have a discount or sale or gift that is only available until a certain date or time. [17:04] Countdowns are very effective in showcasing a deadline and the time pressure. [18:03] Another way you can look at time pressure is with a limited quantity. [19:03] Look around at what makes YOU want to act. When have you bought something you didn't realize you were ready for? [20:33] It's best to test and find out what works for your business. Time pressure can almost always be effective when used properly. [20:59] Don't feel like you have to do a Black Friday offer just because everyone else does. [21:53] If it doesn't work for your business…don't do it! [22:20] Actions you take in life and business and how they are impacted by time pressure. [22:51] The worst case and best case scenario become the new normal and that impacts your decision. [23:12] When you have lots of time to get something done, you have a status quo of all the important things to look at and do. You make a list and work through it and have risk accounted f

Six months ago, I did my behavioral economics analysis of Costco, which has zoomed into the 11th most downloaded episode of this podcast. My analysis of Apple Card is right above it, so we can say they share the 10th spot. Today, I'm doing another behavioral analysis of a business: Starbucks. It's not a coincidence that we are getting into Starbucks right around the holiday season. They have definitely done some things very right when it comes to the holidays…and I will touch on the controversy they've seen as well. In the episode we will talk about featured drinks, red cups, nostalgia, pricing strategy, scarcity…and a whole lot more. If you've been listening for a while, you know I love Starbucks. Not just for their chai tea lattes and marshmallow dream bars, or because I live in Seattle…but because of the amazing things they have done as a company to shape the world we live in today. Starbucks is a dynamic and large company with a plethora of examples I could have chosen to talk about today. There isn't time for everything. Instead, I have picked some of my favorite pieces for the episode – ones I think you will find valuable and interesting and be able to apply to your own business (whatever that may be). Whether you work for a global business like Starbucks, are a solopreneur or an academic or somewhere in between…you can learn from the smart things the company has done and how they have understood human behavior. In the episode, we will dig into their star rewards program, as well as featured drinks and products – from PSL to the Unicorn Frappuccino, as well as the coveted red cups (which just launched a couple days ago by the time this comes out), the personality and overall brand choices in their logo, locations and on social media and, of course, pricing. Show Notes: [04:31] Without the original brand and pricing, Starbucks would be just another coffee shop. [05:04] It really is an amazing feat when you think about the commoditized industry Starbucks was facing before it launched its first store. [06:04] One of the big aspects Starbucks had to overcome was the pricing anchor. The first number you hear (or a standard price) is the anchor, and the brain adjusts from that to determine what is reasonable. [07:02] The way we act is driven by our subconscious, and when you ask a logical question to the conscious, it doesn't answer in a way that reflects true behavior. [07:19] To justify a higher price, Starbucks needed to invent a new category. [07:59] This wasn't just about coffee – it was creating community…a "third place" – an experience that was something more. [08:21] Functional fixedness: when all you have is a hammer, everything looks like a nail. [08:48] When you look at what everyone else is doing, herding will keep you stuck. [09:01] Howard Schultz and Starbucks took a step back, got out of their own way, and created a new category which changed the conversation about coffee. [09:12] Asking good questions can help you get there. [10:01] Ask questions that aren't about what everyone else is doing. Don't get stuck in the herding or the anchors. Instead, it is about looking to what could be, and asking "How might we?" or "Why?" [10:07] For your business, look at all the things you do because everyone else does. Is that serving you well? What would make your customers excited? Delighted? [10:29] Price is never about price. It's about all the things that come to for the price. Starbucks is a fantastic example of that. [10:56] Studies about wine show that people get more enjoyment from drinking wine that is more expensive. [11:37] When you can break free from the herd and make it about something more, your business can reap benefits beyond what you even imagine. [12:13] Starbucks changed the game with all of their drink options. The first drink they made famous was the Frappuccino. [13:38] The brain gets what it expects. If you expect Frappuccinos to be delicious and you get something similar by a different name, it won't be as good. [14:46] Starbucks started the original pumpkin spice latte or PSL. The limited nature triggers scarcity and loss aversion. [15:53] For scarcity to be a value in your business, you actually have to take something away. [18:43] Starbucks is constantly testing, and they're not afraid to have something popular only available for a limited time. [19:20] The new thing that started this week is the red cups. Keeping traditions alive is something that Starbucks does amazingly well. [20:03] For many, the red cup has become part of a tradition on holidays. When you become a lifestyle brand, you bear the responsibility of becoming a part of peoples' lives. [21:34] Starbucks had a set of filters that every brand aspect had to pass through. These included being handcrafted, artistic, sophisticated, human, and enduring. [23:46] Taking the time to stop and evaluate what is really going on is important. [25:11] When you think about the value of the brand, it's about the overall experienc

Roger Dooley is here to talk about his new book Friction. Roger is the founder of the Neuromarketing Science website, host of the Brainfluence podcast, a Forbes contributor, and the author of Friction, Brainfluence, and The Persuasion Slide. FRICTION―The Untapped Force That Can Be Your Most Powerful Advantage is about making customer's lives easier by removing friction. Roger is the perfect guest for me to have on this show because neuromarketing and behavioral economics are similar in many ways, and throughout the book Roger gives examples and shares concepts of behavioral economics: including relativity, nudges, framing and more. It's a great book, and a perfect interview topic for this show. If you're a regular listener, you've heard me talk about Richard Thaler (the Nobel Prize winner and co-author of Nudge). Here is his review of Friction. "What do Amazon, Apple Google and Netflix have in common? They made life easier for their consumers by removing what Dooley calls friction. Reading this book will arm any manager with a mental can of WD-40." CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [04:08] The book Friction intentionally has a slightly gritty cover to convey a sense of friction. [05:35] Roger began his career as an engineer, but he was always interested in psychology and advertising. [06:03] When he was about 30, he was in charge of strategic planning for a Fortune 1000 company. This is also the time he chose the bailout and become an entrepreneur. [06:14] He co-founded a catalog marketing company at the very early days of home computers. Over the years, his businesses have evolved and become more digital oriented. [06:45] About 15 years ago, Roger noticed neuroscience and marketing beginning to come together. That's when he started his website about neuroscience marketing. He now has over 1100 blog posts on the topic. [07:48] Books, his podcast, and his website give Roger the opportunity to explore how neuroscience and marketing come together. [09:20] There has been a recent increase in business interest in behavioral science. Even Neilson has about 20 neuroscientists on board. [12:50] 95% of the time businesses have too much friction in their processes. [13:08] An example of when adding friction helps is a retirement plan that requires a form instead of a phone call for withdrawals. [13:50] Amazon reduced friction with one-click ordering. They actually patented it. Steve Jobs paid Amazon $1 million to use one-click in iTunes. [16:19] Friction is any unnecessary effort required to complete a task. [22:05] Total cost, time, and effort need to be looked at when creating ways to reduce risk. Many burdens are for stuff that isn't important. [23:20] Where there is high trust, there is low friction. [24:08] Expense reporting can create extra paperwork. Some processes can have unintended consequences and waste time and effort. [27:40] Think how things can be made easier and how many people will be affected. [29:20] A more difficult form can be a screen. This is a time when more friction may be better. [31:15] To increase phone leads, eliminating the web form didn't work, instead the form had to made longer and less friendly to increase phone leads. [32:25] BYAF (but you are free) technique. Letting someone know they are free not to do something relieves the pressure and helps them comply with the request. [34:56] Buffer took all of the friction out of scheduling social sharing. They even used to have curated content. [38:09] Never say "actually" when answering a support question, because it seems to correct the person. [40:36] Loyal customers are more valuable than new customers. What drives loyalty is low effort experiences. High effort experience doesn't inspire loyalty. [44:23] Eliminating processes can also be an option. To board a cruise ship people had to go through a check-in process and fill out a health form. This useless process was eliminated. [48:38] Open your eyes and look for things that take longer than they should. Is there something you can do to reduce the effort your customer has to take to do business with you? Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: FRICTION―The Untapped Force That Can Be Your Most Powerful Advantage Episode 12. Behavioral Economics Foundations: Relativity Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Episode 16. Behavioral Economics Foundations: Framing Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Episode 28. Behavioral Economics Foundations: The Sense of Touch Episode 63. How To Set Up Your Own Experiments Episode 60. Surprise and Delight Roger Dooley Roger Dooley on LinkedIn Roger Dooley on Twitter Neuromarketing Nudge Conversion Sciences Buffer Hootsuite

You may remember episode 68 on counterfactual thinking (why we 'what if' and 'if only'). That episode and the Inc.com article I wrote on how to break the negative cycle of 'what if' thinking were incredibly well received. That episode talked about the different types of counterfactuals – upward or downward, omission or commission, and usual or extreme. Today, I'm going to build on that and talk about the difference between a prefactual and a counterfactual. I'll explain how they can work differently to help you achieve goals (building on last week's episode as well). Goals are so important at this time of year. As the year is ending, you're looking back at what you have done, what you could have done, and also looking forward at what you can do in the future. This is all counter and prefactual thinking in action, and as I've already said, they can be a huge aid in reaching goals…or a massive hinderance. Understanding how they work is a big step toward being able to use them to your advantage, and that's really the point of this episode. Before we jump in, I want to remind everyone that the cart for the Brainy Mindset Course is now open! Claim your spot by November 1st. The first of our six weekly live training sessions begins on November 5th. There are also lots of worksheets and a dedicated Facebook community where I will also be answering your questions. It's going to be amazing, and we already have some fantastic people signed up and interacting in the group and getting a jump on things. Another amazing thing is that it's only $199 for the entire six week course, which will give you all the steps to tackle mindset including live support with me walking through it with you every step of the way. To make things extra sweet for you podcast listeners, there is an extra bonus of 25% off. This brings the total down to only $149 if you use the code BRAINY50OFF at checkout. Sign up now! Show Notes: [06:05] Counterfactuals are looking back at something that has already happened, and essentially undoing it in some way in your mind. [06:19] Ruminating isn't the same as a counterfactual. Memory reflection itself isn't enough…you need to change what happened or could have happened in your brain for it to be a counterfactual thought. [06:39] Prefactuals are when you look to the future, and think about what could be. Like counterfactuals, this can either be negative positive. [06:49] If you look to the future in a negative way, it has been called "defensive pessimism" and may involve anticipation of regret and building strategies to avoid that. [07:27] When you think about what could happen or how you might succeed in the future, studies show you can actually have great benefits in all sorts of tasks. [08:25] The brain does get benefit from dwelling and dread. [08:51] Your brain loves dopamine and it drives it to do all sorts of things. Anticipation is at the core of prefactual thinking. [09:48] The treat for the brain is in the pre-buildup or the prefactual. [10:31] I decided to send a Gratitude Discount to people on my mailing list for my Brainy Course, unfortunately there was an email mistake and about a dozen people received %firstname% instead of their name. [13:06] I could dwell on this for hours in the counterfactual/prefactual world. [14:37] Counterfactuals tend to focus on things that we really have no control over. [14:57] Prefactuals are more likely to focus on things in your realm of control. [15:33] Instead of just predicting the possible future outcome, you want to identify a specific circumstance. [16:19] My 10/10/80 A/B test gave me a chance to think a little about what could happen (prefactual) and because I didn't dwell too much on what might have been (counterfactual) I could take steps to actually make it better. [18:46] I also used the power of prefactual thought to prevent this from happening again. [19:41] One key to using counterfactuals and prefactuals for your benefit, is to look for the learning opportunity. [21:30] When something goes wrong the inclination is to make a giant alert on the website, but you can't always do that because it will overwhelm the brain and make it so nothing else is noticed and draw attention to it. [22:15] If something goes wrong, and only affects 2% of the audience, there is no need for a massive alert to everyone. (It can actually make things worse.) [22:55] Knowing the true impact is really important before you send out that apology. Don't let prefactual and counterfactual thoughts blow things way out of proportion. [23:31] First – take a deep breath, pause for a moment to assess the situation. Then ask some questions. How many people were impacted? What really happened? Is it fixed already? If not, when will it be fixed? What can we do now to make it better? [23:47] Then take the actions that you know need to be taken. [24:09] Write out what you could do to make this situation and others like it better in the future. [24:23] Breathe, assess, questions, actions,

How do successful people get things done? A lot of it has to do with setting and achieving goals. A topic that isn't always as easy as it sounds. Today's episode is about setting, reaching and exceeding brainy goals. We all have goals, and are all optimistic that we'll achieve them "someday," but the truth is if you don't set your goals up correctly, there is a good chance life will move too fast, and you won't achieve what you're capable of. (I've linked to episodes on time discounting and optimism bias that help explain why our brains are fine with "someday".) Everywhere you look, you'll find advice on goal setting and tips and tools to help you achieve what you want. Success can be as simple as taking (and adhering to) the following three steps to set and achieve your brainy goals. All you have to do is 1) define your goals limiting them to no more than three. Then 2) break those large goals into small steps that will get you there, and 3) say NO to everything else, so you can focus on what really matters. Sounds easy right? Not so fast. Our brains are wired to rebel against this simple process. (Especially, step three.) Saying NO is the hardest part, and where most humans get hung up. We want to do a little of this and a little of that…multitask…not limit ourselves. You've likely heard some of these tips before, but I'm adding the extra (and very important) layer of explaining WHY your brain doesn't want to adhere to the plan to help you fight it when it rebels against you. This show will explain the way our brains react to these steps, and if you want someone to walk through the steps with you the Brainy Mindset Course (cart opens next week!) can do that. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [04:23] We all have goals, but if we don't set them up correctly, there's a good chance we won't achieve them. [04:48] The three tips for setting and achieving brainy goals are: 1) define your goals, 2) break it down into smaller steps, and 3) say no to everything else. [05:22] Saying no to everything else is the hardest one for humans to do. [05:37] In a few weeks, I'm going to have author Nir Eyal on the show to talk about his new book Indistractable. [05:51] One of my favorite insights from his book is that you can't call something a distraction unless you know what it is distracting you FROM. [06:07] The opposite of distraction is traction. [07:26] When it comes to goals, you need to limit them. You cannot have 85 goals or even 10 or 5, because you can't achieve them. It's too much for your brain to handle. [08:53] To limit your goals, you first need to list out every goal you would like to accomplish in the next 5, 10, or 50 years. (Use the free worksheet in from the Master Your Mindset mini-course...link below.) These are the things that you want done when they read them at your eulogy. [09:09] List out everything you want to do and then think about how they might combine together and into an overarching goal. [09:40] Now that everything's listed, pick three goals. [10:51] Setting these goals can take some time but don't get caught in perfectionism or analysis paralysis. These are mindset blocks. [11:13] Keeping you stuck is a tactic used by your brain to delay change. [11:42] Your inclination is to have the top three be the most important, but still let goals 4-15 take up mental energy and be out in the world as things you are interested in. But they can't. [12:16] Items 4-15 are a distraction that you should avoid at all costs. [13:02] It's important to declare and OWN those top goals so everyone in your life knows what is most important and is on board. [19:17] Setting three goals and then sticking to them is really hard. [19:50] Once you know what the top three are, the next step is to break each big goal into small steps to get there. [20:54] When it comes to the big overarching goal all of these other things are little steps to get there. [21:55] Break the big lifetime goal into sub goals for the year. [22:25] With tiny habits, you break your big goal into the smallest possible component, something that would be impossible to say no to. [24:06] You can also use habit stacking to accomplish the small steps. [24:46] Now that you have your goals, how tiny can you make the steps to reaching them? [25:06] Every goal is reached in lots of small steps. It's a sum of all the effort to get there, not the end result, and if you don't plan for them, they won't get done and you won't challenge the status quo your brain loves and you won't reach your goals. [26:04] The subconscious brain is the filter that determines what your conscious gets to focus on. You need to be incredibly particular about what it sees all day to help guide the filter. [29:21] Use reminders on your phone – set an alarm that repeats your mantra back to you or that you read. Put sticky notes on your bathroom mirror, or paint a picture that reminds you of the goal. (Master Your Mindset free mini-course has tips and a worksheet to help

After a year of doing this podcast, I've noticed trends in the topics I've been requested to do. My Human Behavior Lab interview with Dr. Palma was very popular. People also know that I read and do a lot of research, so I get a lot of requests for book recommendations. Today, I'm incorporating a new segment to the podcast where I interview authors who have written great books about or incorporating concepts from brain science. When I find a fit for the audience, I'll have the author on the show, so that we can really dig into the lessons and how they apply to business. Today's episode features a great discussion with Scott Miller, Executive Vice President of Thought Leadership at FranklinCovey, and author of the new book, Management Mess to Leadership Success. Scott is the host of the On Leadership podcast and Great Life, Great Career on iHeartRadio. He is also a fellow columnist on Inc.com. I'm super excited to share our conversation with you. Show Notes: [06:22] Scott's book sold 20,000 copies in the first 6 weeks. (Wow!) [07:25] Scott is Executive Vice President of Thought Leadership at FranklinCovey. They are the world's most prominent leadership development firm and have been in business for over 40 years. [07:42] Their influence is built upon a variety of thought leadership books including The 7 Habits of Highly Effective People by Stephen Covey. They do a lot of consulting around leadership development, productivity, and executing strategy. [08:07] Out of the hundreds and hundreds of business leadership books written every year, Scott never had one that spoke squarely to him, so he wrote his own. [08:30] He wrote a very vulnerable and relatable book that challenges conventional wisdom. He talks about the 30 challenges that every leader faces not only in business but in life. [09:01] His book is raw. He lays out his messes and his successes. It's also short and digestible, which is part of the reason it's done so well in the four months since the launch. [12:13] Scott's philosophy is that we all have messes, but let's not wallow in them or make excuses for them. It's hard to improve if you don't acknowledge your mess. [14:01] The 11th challenge is Check Your Paradigms. One of Dr. Covey's gifts to the world was understanding your paradigms or belief systems. Leaders don't always have the full picture. Their lens is tinted by what they believe to be true. [16:21] Stereotyping and brain bias is an issue for everyone. They serve us in some ways, but we also need to know how they impact us. [17:48] Challenge two is to Think Abundantly. Having an abundance mindset means you believe that there is enough to go around. [22:00] Being loyal to the absent. Defending those who are absent obtains the trust of those who are present. [22:49] Great leaders don't speak about people when they're absent any differently than they would if they are present. [26:18] Challenge 23 and 24 are about setting wildly important goals (WIGs). WIGs are like BHAGs (big hairy audacious goals). Leaders need to be very articulate about elevating some goals over others. [27:36] Properly defining goals is also super important. You can influence lead measures but not lag measures. [28:37] Align your actions with the goals. To accomplish a wildly important goal, you either have to learn something new or do something different. [32:40] Most people confuse opinion and emotions with facts. [34:39] Assume good intent and declare your intent. [36:10] Leadership in organizations has been positioned as it's easier if you just keep doing what you've been doing. Leadership is hard and it's not for everyone. Acknowledging and understanding your messes can make you a genius maker. [37:13] Leadership is a combination of confidence and vulnerability. [40:57] Scott is giving up some things on B level like his radio show to do more things at A level. [41:45] The tips in Scott's book align well with the concepts of this podcast even if the terminology is different - I've linked to some relevant episodes and other items we discussed below. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: [email protected] Management Mess to Leadership Success: 30 Challenges to Become the Leader You Would Follow Everyone Deserves a Great Manager: The 6 Critical Practices for Leading a Team On Leadership with Scott Miller Scott Miller on Twitter Scott Miller on LinkedIn The 7 Habits of Highly Effective People Episode 42. Apple Card: A Behavioral Economics Analysis Episode 47. A Behavioral Economics Analysis of Costco Episode 33. Inside the Texas A&M Human Behavior Lab Episode 23. Behavioral Economics Foundations: Reciprocity Episode 45. Overview of Personal Biases Episode 46. Biases Toward Others – Including Groups Episode 14. Behavioral Economics Foundations: Scarcity Episode 68. Counterfactual Thinking: Why We 'What

I love the concept of counterfactual thinking. In fact, it was one of my favorite things to read about in school – I find it to be fascinating in many ways, but perhaps it's because it relates to something we all do, all the time, and don't really stop to think about why. And more importantly – we don't stop to think about if it is doing us harm or good, and how we might control this natural state of the brain. Counterfactual thinking is a fancy way to say "what if.." or "if only..." Maybe you have memories of your childhood or choices you made, and then think that with a little more discipline (or focus or effort or training) you could have been an actor or doctor or run that marathon. We all have regrets on actions taken or not taken, and these are represented in our brains via counterfactual thinking. This may seem like a hurdle to overcome, but it is actually central to being a human being – our emotions and the way we think - and can be a VERY good thing (listen to learn the 1 important step to shift from vicious cycle to goal-achieving awesomeness). Studies have found counterfactual thinking happens across all cultures and as early as 2 years old. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [02:42] Counterfactual thinking is a fancy way to say "what if" or "if only." [04:05] Counterfactual thinking can be very useful for setting and accomplishing goals. [04:20] There are different types of counterfactuals, and they do different things. When you are thinking about a better alternative it is called an upward counterfactual, and those with worse alternatives are downward counterfactuals. [04:57] Upward counterfactual are tied very closely with regret. Anticipated regret (or prefactuals) will be the focus of a future episode. Regret and counterfactual thinking really go hand in hand. [05:17] The first theoretical explanation of counterfactual thinking came from Kahneman and Miller back in 1986, and was called norm theory. [05:39] When looking at counterfactuals consider if they are omissions or commissions, ruminations or undoings, usual or extreme, actions of ourselves or others, and if they cause negative impact or how they can be used for good. [06:29] An omission is when you wish you had acted. A commission is wishing you had not taken an action. [07:10] A rumination is where you think about what happened, but you don't have any thoughts about how things might have been different. Undoing is where the counterfactual "if only" or "what if" comes into play – what might have been if you had or hadn't done something. [08:40] Usual or extreme: the way you do your counterfactual thinking will be different if it was coming in through the same door as you always do versus coming in a way you never do. [11:24] Ourselves or others. Whose actions the counterfactuals are targeted at. We tend to focus our counterfactual thoughts on ourselves – what we coulda shoulda woulda done – more often than we look at others. [12:24] Distress and anxiety. While there is a healthy side to counterfactuals, when used in excess it can be really damaging to the psyche. [14:25] Thinking and counterfactualizing doesn't change what happened. [16:02] Putting too much into 'what if' and counterfactual thinking can often make a mountain out of a molehill. It can be unhealthy and cause you more harm than simply letting it go and moving on would do. [16:12] Your conscious brain can only focus on so much and the brain gets what it expects. [18:16] A study was published in 1995 in Personality and Social Psychology Bulletin on counterfactual thinking and undoing traumatic life events. [20:58] A study found that 80% of those that lost loved ones in a car accident had ruminative thoughts of the event, and 59% said they had thought about the events leading up to the accident within the past month. [21:49] Over half of the respondents were actively undoing the event in their heads – having counterfactual thoughts – within the last month, for an event from 4-7 years earlier. [22:20] 69% focused on a usual activity. 28% focused on an exceptional activity. [23:34] 41% of those undoing reported wishing that they had done something. 31% reported wishing that they had not acted as they did. 17% reported both. [24:24] 55% focused on their own behavior, while the other 45% were focused on the behavior of the deceased. Not one person reported trying to undo the other driver's behavior (even though in most cases that person was legally responsible for the accident). [26:29] The person thinking about the process is more likely to undo the actions of the focal actor – themselves or the person they knew. [27:26] If you go through counterfactual "if only" and "what if" sort of thinking…remember that just because your brain is only focusing on you…it doesn't mean it is right or the only option. [28:39] Undoing may, at least partially, be a distress-driven cognitive process. [31:09] The more you continue to focus on undoing, the more you will have continued

Motivation is definitely a key piece of the mindset puzzle, so it's no wonder its been taking up brain space for me recently. My Instagram followers already know I've been working on getting back into running. In this episode, I get vulnerable and share with you my very personal relationship with running. It revolves around a limiting belief that was created in my mind, as well as mindset and motivation issues. I also talk about the two types of motivation. Motivation can either be intrinsic or extrinsic. Essentially, that means it either comes from your own self (intrinsic) or from an outside source (extrinsic). I also talk about apps and other things that can help you with motivation (or you can use to motivate employees or customers in your business). In fact, this is where today's topic came from. While on a run I was thinking about the apps I use and how their pricing could be better aligned with motivation and the way the brain actually works. Hopefully, you'll walk away with motivation inspiration and pricing insights for your business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [04:03] Motivation is definitely a key piece of the mindset puzzle. [05:01] I'm going to get vulnerable and share a story about my relationship with running. [06:14] Unfortunately, words from a misguided ballet teacher helped cement a limiting belief in my mind that I couldn't run. [08:27] I wanted to run again and tried, but I still had mindset blocks. In 2013, an executive coach helped me to break through my mindset blocks. [10:36] I had overcome my running mental demons, but was then hit by two cars on the freeway. This led to new mindset and motivation struggles. [12:09] In August, I decided to apply all of my mindset learning and make a change. I started Couch to 5k all over again from the beginning. [13:30] Running gives me clarity. The spark for this episode came from my thoughts around the running apps that I used and how their pricing could be better aligned with motivation and the way the brain actually works. [13:59] Motivation can either be intrinsic or extrinsic. Essentially, that means it either comes from your own self (intrinsic) or from an outside source (extrinsic). [15:12] Thinking about something from a fresh, new angle will allow you to shake off the cobwebs and old rules to refresh your motivation. [16:16] A lot of people get hung up on is sales calls or some other version of drumming up new business. [16:28] the act of making the call is scary – that's fear talking. You are intrinsically dwelling and keeping the whole conversation inside your own head. [17:02] You could make a commitment to a friend that you will both make a certain number of sales calls by the end of the week. [18:10] Loss aversion and other brain motivators can help you get over the mindset block and into motivation territory. [18:29] When you are feeling a lack of motivation or want to motivate yourself, think about the mindset block that is keeping you stuck. [19:25] Understanding your priorities so you can say no to things that are outside the goals is key to getting (and staying) motivated. [20:37] Couch to 5k is a free app, but you have to pay to upgrade to get some bonus features. [22:19] One thing I think this app really lacks is it stops tracking when their prescribed course is done. [22:42] They are conditioning me to not want to put in any extra effort or push myself beyond their 30 minutes because there is no benefit to doing so. [25:04] Also, I am pushed outside the app to get my pace, which decreases the value of the sell and makes me less likely to pay. [26:56] If ZenLabs and Couch to 5k was my client, I would recommend that the monthly payment include access to all the apps and benefits. [27:34] If it does not include all the apps, I recommend the extrinsic motivation / loss aversion model. [29:30] If you don't plan (which conditions for the importance of mental preparation around fitness) you pay if you miss. Lazy Jar does exactly this. [30:10] This is like stickK which I believe was the first app to use brain science for motivation in this way. This app was created by behavioral economists and has helped people reach all sorts of goals. [31:18] Runkeeper allows you to store your running data. You get tons of free stats. You also get badges, and it does gps tracking. [33:31] I can pay up to track how similar runs get better or worse. [34:32] Little pulls from an account on a regular basis could be a motivational tactic as well. [34:53] Runkeeper is definitely catered to the one time annual payment (which I believe is opposite of Couch to 5k). [35:33] Isn't it funny how the big price disparity makes one thing look like a better value? How one small shift makes it look completely different? [36:10] If you have a business with subscription models that depend on regular usage and enjoyment…the goal is really to keep motivation up. [37:55] My 3 tips: 1) Limit your goals. Having too many goals is a recipe for motivation

The Brainy Business Pricing Course is now live. For a fun twist on today's episode, I am interviewed by my good friend and client: the amazing Nikki Rausch of Your Sales Maven. Nikki helps entrepreneurs learn to sell easily and authentically, and we all know that sales and pricing go hand in hand. I gave Nikki a walk through of the course, and she has been along for the ride while I've created it. We talk about the course, what it entails, why it was the perfect first topic to kick off the Brainy Courses, and the positive impact brain-friendly pricing can have on your business. Nikki is the perfect person to interview me about this, because she understands the questions a potential student would be interested in. Nikki is also the author of new book The Selling Staircase: Mastering the Art of Relationship Selling and an all-around awesome friend and client. Pricing Course Workshop Bundle Save $100 with code BRAINY100OFF Pricing Course Only Save $50 with code BRAINY50OFF Master Your Mindset Free Mini Course CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [04:42] Nikki calls herself a super fan. She is excited about the course. [06:48] I put pricing first, because it's the thing I get asked about the most. Price is such a huge factor and having the right price makes such an impact. [08:49] This course is about all of the stuff you need to think about when creating a pricing strategy. We don't talk about specific prices until the very last module. [09:58] There seems to be a huge gap in all of the ways to think about the numbers. The course helps to understand numbers in a more robust way and factor in things that matter (like time). [11:10] There is also a step by step walk through on how to raise prices. That discusses what to talk about now before raising your price (and how to change the language/plan for current and new customers). [12:10] There also scripts for presenting the price depending on the platform. [13:50] I also review and explain specific framing examples using real-life ads and email subject lines from companies. [15:32] The Brainy Pricing Course has comprehensive worksheets to guide through all the steps and possible situations. [18:38] I structured the courses and workshops to be evergreen and updated when new relevant content comes out. Purchasers can revisit the course over and over. [21:35] The workshop component helps put a deadline in place to complete the work and it's an avenue to get questions answered and overcome hurdles that may come up. [25:07] The workshop emulates a mastermind hot seat format. There is so much extra value from hearing other people's experiences. [26:58] You can purchase the course and then add the workshop, but you will save $100 purchasing both at once. [28:55] Having the ability to set the right price and be confident about it is like the course paying for itself. [31:41] The course has 10 modules. You can also get the mindset module for free (Master Your Mindset mini-course) to see what a full course might be like. [35:26] You can find all the courses in the Brainy Business Member Vault. You can also save by buying the bundle, and use the above discount codes for an even better value. [37:24] This course is an investment you make in yourself and in your business. If you follow the steps, I guarantee it will more than pay for itself. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Your Sales Maven The Selling Staircase: Mastering the Art of Relationship Selling Pricing Course Workshop Bundle Save $100 with code BRAINY100OFF Pricing Course Only Save $50 with code BRAINY50OFF Master Your Mindset Free Mini Course

I'm so excited to finally talk to you about my study on behavioral economics and increasing savings rates. In my master's program, I was required to do my own study and submit it to at least one location for publication. I already had a relationship with the Filene Research Institute, so I decided to reach out to them before choosing the focus of my project. Their top choices were helping people save money and increase loyalty. A group of researchers from Duke University did an experiment in Kenya to try and find ways to increase savings. After six months, the surprising results were that a using a gold coin to mark off weeks of savings outranked sentimental reminders and matching funds. I loved these findings and wanted to see if this could be replicated if modified for the US. My white paper is now published, and I finally get to talk about the study and share it with you. I was privileged to have a conversation with Dan Ariely which helped me narrow down my three main concepts for the study which are time discounting, reciprocity, and a physical manifestation of savings. I hope you enjoy the results. Before I begin, I also want to remind you that the Brainy Pricing Course is now live. This 10-module course will walk you through mindset, priming (and finding your scent of the cookies), framing, anchoring, and relativity for pricing as well as knowing your numbers, notes on discounts and how to raise prices. Brainy Courses are a little different because they include a workshop component. Here's all of the info along with money saving discount codes. Pricing Course Workshop Bundle Save $100 with code BRAINY100OFF Pricing Course Only Save $50 with code BRAINY50OFF CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [06:19] Publication wasn't a requirement for graduation, the study just needed to be submitted. [07:27] The study done in Kenya on savings behavior stuck with me. [08:17] The gold coin was the condition that did the best. It even did better on its own than when paired with matching funds. [08:32] Finding a way to encourage saving without matching funds is like the holy grail. [09:05] I was interested to see how this would translate in the United States. [09:20] Problem number one was replicating the gold coin in the US. [09:53] The coin was a constant reminder to save. This needed to be replicated at least in premise. [11:17] The three main concepts I wanted to focus on were time discounting, reciprocity, and a physical manifestation of saving. [12:02] We started with 240 members, who were narrowed down based on a few factors, including age, income, and time with the credit union. [12:36] Filene requested we look at loyalty scores as well. [12:48] One item we used to narrow down the list was if they had completed a Net Promoter Score survey in the six months or so before the study began. [13:41] The 240 members were randomly assigned to one of three groups. The control group received no communication at all. [15:05] We tracked savings until the Monday before Black Friday so we wouldn't end up with totally skewed numbers when people went shopping after Thanksgiving. [15:29] I also had the previous year's data for comparison. [16:31] It was decided to not have the members precommit to wanting to save or sign up for a program. [17:50] Two of the groups groups received communication from the credit union talking about the importance of saving and this new information they found on helping people to save. (The other group was control.) [18:29] About a week before the planned study, the two non control groups received a letter with very similar text. One group also received a refrigerator magnet. [21:23] The magnet group's letter also had an image of the magnet in the corner. All envelopes were the same. [21:44] After 12 weeks, the 160 individuals all received an email reminding them of the importance of saving, and letting them know it was never too late to start or pick up where they left off. [21:52] And after the 24 weeks were over, they received an email thanking them for participating, encouraging continued saving, and everyone – all 240 members – received an email with an NPS survey to see if the loyalty numbers were different after 24 weeks. [22:55] Making the future self more tangible today is important in combating time discounting. [24:15] Even though I was only using three main concepts, these others still had to be considered and incorporated for the best chances of adoption. [24:53] The hypotheses of the study were that the magnet group would save more than either of the other two groups and that the magnet group would have a higher increase in loyalty score than the other two groups. [26:14] Physical representation is the magnet itself, which was specifically designed to be a reminder of money and savings. The letter only group was encouraged to make their own note and place it somewhere to be a reminder of savings and goals. [26:37] Time discounting is represented in the verbiage on the magne

The physical representation of concepts is an important tool to use in your business. Things like colors and shapes can be recalled by our brains and associated with other non related things. This topic is really an amalgamation of other concepts, but it's still a valuable tool to understand and use when communicating about your business. This episode gives examples of making concepts tangible, and their practical applications in business. This topic is the last main concept from my research paper that I announced last week. I also gave tips on running experiments like: keep it small, be thoughtful, and test often. I am super excited about next week, because I'll finally be sharing my study on on increasing savings behavior and its results. And...speaking of exciting, the Brainy Pricing Course goes live Monday, September 9! Learn all about it and save with special discount codes below: Pricing Course Workshop Bundle Save $100 with code BRAINY100OFF Pricing Course Only Save $50 with code BRAINY50OFF CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [04:59] This isn't really a topic you can easily look up. It's more of an accepted premise. The physical representation of concepts is an amalgamation of various other concepts. [05:35] The brain works on associations. [07:47] Colors and shapes bring a physical presence that can be recalled easier than words. Your brain has been trained to recognize this physical representation of the concept of street signs (as explained here). [08:56] Logos are physical representations of the concept of a business. [09:27] The physical manifestation of the brand makes the business more real in your mind because there is a logo to relate to. [10:21] This is not exactly the same as anthropomorphism, which is when animals or objects are given human-like tendencies; it can be a similar concept because it helps you relate to the item in question. [10:52] Abstract concepts are everywhere in business, and they can easily cause miscommunication in conversations or messaging. Providing a physical reference point makes everything feel more real. [15:16] I did not want to get rid of my DVDs during a decluttering session. The reason why was because the physical, tangible, representation – the box and the item itself – was tied to my emotional center and triggered loss aversion. [16:06] Where could you inject physical form we're only concepts exist in your business today? [16:48] How Progressive took the concept of insurance and made it tangible. [18:41] When you take something from conceptual to tangible, it makes it easier for the brain to categorize, relate, and remember. [19:19] Pictures, logos, and icons make your business and its features feel real. [19:29] Physical representation can help remind you of associations that you have made previously or that are important to you. [19:56] Physical items are a constant reminder to your brain. [21:57] You can make physical items that remind people of your business without having your name plastered all over them, that will be subtle reminders of you and your business. [22:04] A strong brand is able to live through the lack of words and evoke feelings – they leave an impression even without their name. [23:31] What could your business do to be a constant association and reminder in the brains of your customers? [25:01] I share a credit union concept where the idea of using logos on items could have gone very wrong. Keep in mind that small associations matter. [25:53] For your business, consider the emotions you want to convey – the things you want people to think when they consider your brand. Or, when they might be most likely to need your brand. What can you provide that will help them and remind them of you? [27:10] You can also create visuals around what you want to do to help achieve your goals. What you surround yourself with has a HUGE impact on your approach to life, business and your success. This is priming in action. [27:32] I want to help you surround yourself with the right physical representation of the concepts you care about to help you be successful. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 62. Behavioral Economics Foundations: Game Theory Episode 23. Behavioral Economics Foundations: Reciprocity Episode 51. Behavioral Economics Foundations: Time Discounting Pricing Course Workshop Bundle Save $100 with code BRAINY100OFF Pricing Course Only Save $50 with code BRAINY50OFF Master Your Mindset Free Course Getting to the Top of Mind: How Reminders Increase Saving 9. Behavioral Economics Foundations: Loss Aversion Progressive TV Commercial For Name Your Price Tool Progressive TV Commercial 'The Box' Jogger Commercial | Allstate Mayhem Episode 12. Behavioral Economics Foundations: Relativity The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business

Testing and experimenting is one of the best ways to find what works best for your business. This week we are talking about the benefit of experiments and some of my tips for how to do this on your own in your business, as not every experiment requires hiring a consultant to come in and run a big study. If you have been listening to the podcast for a while you probably remember me mentioning a few times that I have a research paper coming "soon" based on a project I did on behalf of the Filene Research Institute and a credit union in Portland, Oregon. I am so excited that I have approved the (potentially) final draft and that should be published any day now! There will be a dedicated episode talking about the research in two weeks, but I wanted to give some tips about experimenting first, because it truly is so important for every organization to test things. Next week is an episode on the physical representation of concepts, which is the only main concept in the study I have not yet covered on the podcast. Then on September 13th, I'll share all the details and findings of my research study. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [05:08] Experimenting is important for any organization. You have probably done experiments and not even realized it. [05:30] Good experiments need to be narrow and focused, because if you test too many things at once you won't know what contributed to the result. [07:09] I share a story about how I needed to continue to narrow down a research paper topic. [08:16] The study found that advertisements for low cognition products were twice as likely to be standardized as high cognition products. Ads using pictures were more than twice as likely to be standardized as those using text. [09:08] There were so many variables and items cross referenced just for a study that looked at one month of magazine ads. [09:59] The study I ended up with, which felt incredibly small to me at the time, was actually a huge undertaking - it was a true experiment. [10:16] When there is a lot weighing on the outcome of the experiment, it's a good idea to bring in experts. There are also tests you can do on your own fairly easily, which can still have a great impact on your business. [10:41] You can be more agile and adapt quickly with small tests. [10:56] The three things to keep in mind when setting up experiments are to be thoughtful, keep it small, and test as often as you can. [11:14] Keeping it small allows you to do the test on your own and understand what contributed to the results you are seeing. [11:55] To determine what is best, separate everything into multiple mini-tests. [12:53] Make one small change and track what the results are, so you'll be learning every step of the way. [14:44] One of the studies I share the most often is the one with the end cap displays for Snickers bars. This used anchoring and adjustment and found when they said "buy 18 for your freezer" there was a 38% increase in sales. [15:36] Behavioral economics shows us that hunches about what customers will do are often wrong, because they are based on logic, not the rules of the subconscious brain. This is why everything needs to be tracked. [16:01] Some other things you could test would be how your ads (or emails or direct mailers or website pages) do when you change a number frame. You can also do tests on blog post headers, or copy on social media posts, and images you use on ads. [17:04] The second important way to focus your attention is to be thoughtful. Being thoughtful means looking outside of what you always do or what you "know" to be true. [17:45] Behavioral economics teaches that humans do not always act "rationally" or with much forethought. Take the time to plan before you jump into a test, or start testing absolutely everything. [18:45] Instead of testing everything, just test the right things. Know the problem you are trying to solve and narrow your focus. [19:15] Anything can be worth testing, but everything can be a waste of time if you don't have a clear focus and goal. [19:36] If your company is about driving value, then all your tests should be about creating more value for your customers. [20:16] Focus on items that are driving revenue and value to your company. [21:01] The results of one test will not necessarily hold true in every situation or for every business. This is called generalizability or being generalizable - while it matters in most academic studies, it isn't as important if you are testing for your own business (because if the results don't apply to your competitor...who cares?) [22:05] It's also important to know whether the data you are collecting is qualitative or quantitative. Conversations with people are qualitative, number of clicks are quantitative. [24:00] If you know you will want to dig into demographics and other details, you probably need to build that into your data pull up front. Think and talk through what you actually want to know. [24:35] My final tip is to test ea

If you've been listening to the podcast for a while, you already know that humans aren't rational (and, honestly, you probably know that just from being a human person too). And the base of economic theory would often incorrectly predict behavior because it assumes logical people making rational choices. Because humans do not behave this way in practice, new theories needed to be developed which accounted for these irrational choices. And in game theory, it is exactly the same. We humans don't always make choices that are fully rational. We try to game the system or play the odds. This episode is all about game theory and how it can help your business. We will dig into three basic games: the dictator game, the ultimatum game and the prisoner's dilemma. And if you haven't checked out last week's episode, it was all about color theory and what really matters when using colors in your business and your brand. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [03:21] If you're wondering, Game Theory actually has a lot to do with business. [03:41] Humans aren't rational. Basic economic theory would predict behavior incorrectly, because it would assume logical people are making rational decisions. [03:45] Since humans aren't rational, new theories needed to be developed. [05:06] Downton Abbey and Survivor are great examples of game theory in action. [05:22] In behavioral game theory, we need to consider how revenge, fairness and personal gain all play into the outcomes. Three main games that are often used in game theory are the ultimatum game, the prisoner's dilemma, and the dictator game. [05:38] We start with the dictator game. What it is and how different scenarios can impact your behavior or decision. [08:38] The ultimatum game is similar, but the second person has an option to respond to the offer. If they reject, both get nothing. [10:18] History has a lot to play in the actions people take, and existing relationships help determine actions. [11:04] The human component – knowing you are playing against a person who is profiting from your situation – has a big impact on the way people respond. [11:57] Think about how the anchor shifts when you have power versus when you don't. [12:33] It's important to understand who has what power in each situation when you determine what to offer and think about how they might react. [13:11] Even when money is not changing hands, the process of buying and selling is exactly the same. Other items of value can be bartered. The way people react changes based on the power or belief they have. [13:22] This is worth considering as you put offers out to people and are wondering how they may respond or act. Are you putting power in their hands that makes a generous offer seem stingy? [14:02] In your business, you aren't limited to the lab style test – your clients know who you are and what you are offering them. [15:29] If you give something, people want to give back (reciprocity). [16:10] The last game is the prisoner's dilemma. [17:41] The shifting anchor impacts the position someone takes. Saying something may feel like a win win (even though it often isn't). [19:57] The best overall strategy for the extended prisoner's dilemma is a tit-for-tat strategy in which you cooperate until someone defects then you respond in kind. [21:41] Most of us would likely plan to play fair. Do you expect the same kindness and fairness in others? How does the story you tell yourself about what they think influence your actions? How would your strategy be influenced by the look of the person? [22:48] Game theory applies in all sorts of business situations. Obviously, this applies in negotiations with potential partners. [23:37] Humans are emotional, and it is not just in the after-the-fact stuff...the thoughts and "what ifs" before a negotiation starts can always influence actions much more than we may think. [23:57] Always have written contracts and agreements. [24:19] Negotiating terms in a cold state is so much better than not doing your due diligence. [24:38] Another example of how this impacts business is in advertising. [26:21] There are countless examples of game theory – it is truly all around us all the time. Pretty much any time you interact with another person or business or entity, game theory comes into play. [27:21] Buying in at the bottom of a recession is game theory in action. It's all based on what you expect other people will do and how you choose to react to it – before and after the fact. [29:47] The YouTube example of United Breaks Guitars which is the ultimate customer revenge. [32:15] When emotions take hold, it can cause people to make bad decisions that they may regret in the long run, so try and get some distance and perspective before acting…especially if you feel really betrayed and angry. [32:49] Perspective lets you look at the game in a whole different way and play by the real rules. [33:15] The last point I want to make is this: when it comes to games, many people ar

Last week we talked about how to surprise and delight customers, as well as the difference between satisfaction and delight and its impact on loyalty and profits. I also wrote an article that went live on Inc.com this week titled "Want to build brand loyalty? Surprise your customers—literally." ALSO: The presale for the Brainy Course on pricing is now live. Lock in your discount. You've probably heard the basics of color theory before – that certain colors link to certain feelings or emotions in people, and so some colors are better than others for brands. There are tons of color charts out there. I've even linked to a few. I'll give you the general associations in this episode, but I'm also going to explain what really matters when it comes to using colors in your branding – the common mistakes and the most important things to keep in mind. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [05:01] GENERAL COLOR MEANINGS [05:03] Red: is full of excitement and said to be youthful and bold. It is also said to make people hungry or angry, and is associated with stopping. [05:45] Orange: is said to be cheerful and have confidence. It is also fun, whimsical, childlike, friendly, spontaneous, glowing, hot, and persuasive. [06:16] Yellow: has optimism, clarity and warmth. It is also joyful, illuminating, nourishing, sunny, sweet, stimulating, innovative, energetic, hot, surprising, or can bring awareness. [06:50] Green: is said to be peaceful and associated with growth and health. It can also be calm, quiet, fresh, lush, soothing, renewal, balance, life, and fertility. [07:43] Blue: is associated with trust, dependability and strength. Some other words (again, depending on the shade) can be calm, quiet, water, clean, peaceful, reassuring, serene, transcendent, open, sophisticated, confident, tasteful, cool, credible, authoritative, classic, traditional, nautical, or professional. [08:42] Purple: is associated with creativity, imagination and wisdom. It can also be romantic, thoughtful, nostalgic, thrilling, dramatic, regal, intuitive, mysterious or visionary. [09:19] Pink: ranges from vibrant, flirtatious, attention-getting and high energy to soft, subtle, romantic, compassionate, delicate, innocent, fragile or youthful. [10:08] Grey and other neutrals: are bringing balance and calm. It is also classic, corporate, timeless, quiet, logical, reserved, basic, modest, efficient, accountable, staunch, professional, sleek, classy, mature, sophisticated, and methodical. [10:50] Brown: is earthy, rugged, outdoor, rustic and woodsy, but as you change the shade to chocolate it could be delicious, rich, robust or appetizing. [11:28] Black: is powerful, empowering, elegant, sophisticated, mysterious, bold, classic, strong, expensive, nighttime, stylish, or prestigious. [12:12] White: is positive, pure, clean, innocent, simple, airy, bright, pristine, or bridal, but it can also be seen as sterile, cold and clinical. [13:09] COMMON MISTAKES [13:11] Colors have tons of associations and meanings, and often opposite associations depending on the shade or context. [14:02] GENDER PREFERENCES [14:13] Gender does have different impacts on preference for colors, which can be important for brands. [16:06] Blue and green are universally predominant favorite colors. Orange and brown are least favorite for both genders. Purple is gender polarizing. [16:27] BEYOND GENDER In some cultures, white is bridal, pure and innocent, but it is a funeral color for others. Black can be sophisticated or menacing. Red can be aggressive or mean luck. [19:33] THINK ABOUT BRAIN ASSOCIATIONS The associations absolutely do matter, and studies have found that appropriateness of the color to the brand persona matter quite a bit. [20:18] Think about how all the context triggers come together to support or contradict the color used in your brand, logo or other aspects of your marketing. [20:41] When people are not already familiar with a brand, the common emotions tied with the color of the logo make a big difference in the way they interpret the brand. [21:13] When starting your brand be aware of the associations with color and the emotions those colors bring up. Knowing the color associations can also help you go against the traditional theory if that is your strategy. [23:00] When it comes to the way a designer or someone working with colors would explain the type of color, there are three important items: hue, value, and chroma. [23:51] The hue is the color itself. Purple, red, and green are all hues. [24:14] Value shows us how light or dark a color is – the level of brightness. [24:18] Chroma is the saturation of color or its vividness. [26:00] Google tested to find the perfect blue for its links. [27:13] There are ways to use color in your business, beyond brand associations and color choice. [28:28] The thing that is most important when it comes to calls to action is to have a lot of contrast. This is known as the isolation effect or the Von Restorff effect.

First off – welcome to episode 60! How exciting – I love hitting milestones and I am excited to celebrate this one with a fun episode on surprising and delighting customers and how that differs from satisfaction. Last week we talked about the pain of paying and how it can impact the way people spend with you. It is quite possibly one of my favorite episodes to date – I really enjoyed digging through the research on that one, and I think the most telling study for you was the AOL example. Special Announcement: The first online course from The Brainy Business is going live on September 9, and there is a one week presale starting this coming Monday, August 12! A lot of businesses are competing for your ideal customer. Plus, those same customers are becoming more selective and are more aware than ever of the many options they have. These days, it's not enough to just get the job done or to do an ok job. If you really want to build true customer loyalty and customer engagement, you'll need to surprise and delight your customers. This is how your business can build a loyal following and increase profits. In this episode I talk about how to do exactly that. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [06:26] Many people assume there is a linear relationship between dissatisfaction, satisfaction and delight, but it doesn't really work that way. Satisfaction is not the opposite of dissatisfaction, and vice a versa. [07:08] The scale of customer experience actually goes from outrage, to dissatisfaction to satisfaction to delight. [07:29] When you have a surprising positive experience, it results in delight. An unexpected, surprising negative experience? That is when outrage comes into play. [08:25] In a business, you have to be aware of these all the time, including your overall experience for everyone as well as for each individual customer. Ideally, you are living in "satisfied" territory most of the time, with a few "delights" popping up here and there. [08:57] Delight is much more likely to drive loyalty than mere satisfaction, and there is a lot of research that shows loyalty is positively linked to profits and stock market price. [09:45] Once a customer becomes satisfied, they have achieved pretty much whatever level of loyalty they are going to have, but the loyalty score shoots up when delight is introduced. [12:27] Delightful experiences are much more likely to hit the emotional center of the brain and be much more likely to be remembered. This also holds true for the mirror of delight which is outrage. [13:23] One heavily cited study estimates that a 5% increase in loyalty from customers can increase profit anywhere from 25% to 85%! [14:13] Delighted and loyal customers can have a lifetime value equal to 11 "regular" customers. [14:31] Loyalty can also result in lower costs in advertising, branding and acquisition, as well as higher revenues per transaction or per customer, lower defection rates, plus an increase in brand equity. [15:22] There's no standard scale for measuring delight. [17:08] Satisfaction is more of a cognitive process. Delight and outrage are more emotional. [20:25] The reason the Ed Sheeran Edchup promotion works is because fans know that it's authentic. Consumers can't be expected to let you know what will delight them, because at its core they can't be expecting them. [22:33] It's important to know your numbers, so you'll know in advance if the cost of delighting is worth it. [23:06] The next pitfall is the peril of ever-changing expectations. If the delights become standard, customers will expect them. The key to delight is surprise. [24:23] The last pitfall to be aware of is assuming that everyone has the same expectations. [26:41] Often, simply being courteous, showing empathy, and making an effort to understand the needs of the customer are enough to create a delightful experience. [29:41] Employee empowerment is still crucial in any business if you want to surprise and delight. [33:08] You can also provide unanticipated value. You can also provide novelty and entertainment – think of Disneyland or Disney World. [35:52] Reposition the business to focus on delivering solutions instead of products and services. [39:18] Seven organizational changes from the Berman paper to consider so you can better deliver delight: be aware of the need for organizational change to establish delight objectives; link customer delight to bottom-line benefits; look at world-class customer satisfaction criteria; listen to customers to ascertain what's important; empower employees so that they can go "the extra mile"; make measurement of customer delight and loyalty a priority; and link raises and bonuses to customer satisfaction scores. [41:30] Delight is not something you do one-off and hope for the best. It requires time and strategy. [43:13] If you are sending gifts to your clients and customers, don't do it in November or December, because people are expecting gifts at that time. Thanks for listeni

Buying things isn't all fun and games – and the process of paying for things can actually cause pain for many people. In fact, neuroeconomics has found that when scanning subjects' brains in an fMRI machine while they are going through the process of buying things, there is activity in the insula, which is a pain center in the brain. In many ways, it is just like physical pain, and the emotional pain can be very real. It doesn't impact everyone on every single purchase, and there are some times when it is more impactful, and some people it is more impactful for. In many cases in business, you want to do what you can to reduce the pain of a payment so people are more likely to go through with a purchase, but there are times when it is important to keep those pains in place…I will give examples of these and what to do when the pain can't be reduced. In this episode, I will let you know how this concept works including twelve different conditions where it is most likely to occur, some unexpected mechanisms that can cause pain when you wouldn't even realize it, and (of course) tips for how to use this concept to your benefit in any type of business.​ CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [04:08] The process of paying for things can actually cause pain for many people. [06:16] Context is incredibly important when it comes to the pain felt by making a payment. [10:06] Paying and consuming have sort of a reciprocal relationship…because making a payment reduces the joy of consumption, but consumption reduces the pain of paying. [11:48] The way you talk about the price impacts the pain felt in paying more than the amount. Everything that comes before the price matters much more than the price itself. [12:42] The more a transaction is perceived as: fair, an investment, immediate, for the sake of another person, under one's own control and has payment before consumption…the WEAKER the pain of paying. [13:45] When the pain of paying is too much – so that people do not buy things that they need or want because it is too difficult to give up money…they are called tightwads. Those who spend too much, too easily and do not feel an appropriate amount of pain before or during the spending process…we call them spendthrifts. [16:43] Tightwads and spendthrifts don't change their ways even when their income fluctuates. [19:45] Tightwads are most sensitive to framing adjustments, so that is where you can make a difference. Adding the word "small" before a fee, or framing the purchase as an investment made it so tightwads were more likely to buy and feel less pain in paying. [22:25] When people feel good about themselves (as when purchasing a virtuous product) there is less pain felt and associated with the payment across the board. [23:35] One of the big issues for spendthrifts is they do not account for or intuitively understand the opportunity cost in the moment when they are getting ready to buy or wanting to buy things. [25:38] Everyone will feel some sort of pain when paying. It is your job to figure out what the buyer needs, what would benefit them the most, and then present it to them in a way that will have the least pain felt. [27:27] Think about how people interpret what they are getting. Did they choose the circumstance or was it thrust upon them? If it was not their choice, are there some other areas where you can help them feel like they did make a choice? [31:14] When the pain of paying isn't felt as much, it doesn't impact the experience. [33:29] Loss aversion is a big contributing factor to having the meter running and the pain of paying. [36:30] Sometimes, people are willing to pay money to reduce the pain of lost time and they enjoy the experience more because it was their choice. [37:15] Consumption can reduce the pain felt by paying, but paying can reduce the joy felt during consumption. This is a concept called coupling. [39:56] Think about yourself as a consumer and how you would feel if you got the bill for your product or service after the fact. [40:43] Are there any points in your business where you could use coupons or tokens or chips or beads instead of cash? [41:28] The biggest thing is to make sure that people feel they are really gaining something when they spend money, and that it is not just being thrown away. [43:11] Classifying your product or service as a gift really helps overcome the pain. [44:34] Reminder: the more a transaction is perceived as: fair, an investment, immediate, for the sake of another person, under one's own control and has payment before consumption…the WEAKER the pain of paying. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 56. Behavioral Economics Foundations: Mental Accounting Episode 58. Behavioral Economics Foundations: Partitioning Abaneeta Chakraborty on Twitter Tightwads and Spendthrifts: An Interdis

Last week was the tribute to NASA in honor of the 50 year anniversary of Neil Armstrong's first steps on the moon. In that episode I told you about the space race, the Cold War, and how that all boiled down into five tips your business can learn and implement from the success NASA saw during the 1960s. If you haven't listened to it yet, give it a shot! Today, we are going to talk about partitioning, which I mentioned briefly in episode 56 on mental accounting. This is essentially about how the way things are offered or packaged can either encourage or discourage additional purchases and actions. I will let you know how this works both for physical products and service businesses, and how you can use this concept within your business. Show Notes: [04:09] Partitioning has shown us that when you put tiny barriers into place, it causes a consumer to consider their options and be presented with a new decision point. [04:46] If you are sitting in front of the TV with a giant, party-sized bag of Cheetos in front of you…how much will you eat? It's likely you will eat more than you intend even if you don't realize it. [05:30] When food items are partitioned into smaller containers, and you're required to take an action like grab another one out of the box, it creates a new decision point. The small transaction cost will drastically reduce the number of people who will go get a second serving. [06:26] An experiment was done with bottomless soup bowls. A group whose bowl kept refilling, without them knowing it, ate 73% more. [07:55] Have you ever found that putting less on your plate and having to go back for seconds caused you to eat less? [09:10] Decision making opportunities increase awareness and the amount of cognitive processing used. [10:31] One study found that once something became common – like a white partition between cookies – it no longer acted as a partitioning mechanism. [11:52] It isn't just effort that matters, but drawing the attention of the conscious brain really matters too. [13:03] Partitioning and aversion impacts can also be seen in gambling. [13:49] A gambling study featuring partitioned envelopes showed that once an envelope was opened…all the coupons inside were likely going to be bet, but the number of envelopes significantly impacted the total amount gambled. [15:50] Gamblers will think of house money differently and keep cash or chips in different pockets while playing. They have instilled their own method of partitioning, even if they don't realize it. [16:43] In another study, people with a higher aversion to gambling were significantly impacted by the partitions. [17:57] Partitioning money has also been found to help people save more or spend less. [18:45] The Shopping Momentum effect is where once you start the process of spending, you are more likely to spend again until you hit a partition. [20:32] What does this mean for your business? It's not only impactful on eating and spending, but other behaviors are impacted. It doesn't need to be a physical item that needs to be opened or unwrapped. Any cognitive interventions can trigger partitioning. [22:11] Having an AC that shuts off automatically and you have to walk over and turn back on is a nudge to use less energy. [25:03] Anticipated regret can force you to rethink a decision and possibly change your mind. [26:56] Questioning the price of a customer's purchase is a lose-lose situation where adding a partition is worse for everyone involved. [27:08] It's easy to talk people out of a sale, or make them feel bad about a purchase (or start to regret it) even when you are trying to be helpful. [27:24] If you keep asking someone, "are you sure?" you are creating unnecessary partitions and of course they are going to say, "I guess not" at some point. [28:00] Setting up targets or progress markers, on the other hand, can be great partitions for a business to set up to keep on the radar of their current, past or potential customers. [29:06] Removing partitions and obstacles can be great for businesses and customers alike. [30:08] Schedule a follow up call and get on their calendar RIGHT THEN at the event. I do this all the time thanks to the advice of Sales Maven Nikki Rausch, and it has made such a difference. [32:10] Every piece, whether it is an email or a Facebook ad or a direct mailer should be clear and concise. Can someone look and very quickly know what they are supposed to do? What the next step is? Simplify to eliminate steps. [33:49] The moral: make it easy for people to do business with you. Remove unnecessary partitions in the process and everyone will be happier. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 57. 5 Things Your Business Must Learn from NASA These 5 Leadership Strategies Enabled NASA's Impossible Moon Landing. They Matter Now More Than Ever Episode 56.

In honor of the 50 year anniversary of Neil Armstrong landing on the moon, we are going to talk about behavioral economics lessons you can learn from NASA! On July 20, 1969, Neil Armstrong descended onto the lunar surface and uttered those immortal words, "That's one small step for man, one giant leap for mankind." It's hard to believe that was 50 years ago, and that – knowing what we know today about technology – that it was able to be done with the equipment they had available. Most anyone today would think it was impossible to have completed that feat in the 1960s. So the questions may arise – why then? Why the moon? Why did it matter so much? There are lots of lessons your business can learn from NASA during the space race. While your failures are likely not life or death situations and you may not be breaking world records at every turn, and this story unfolded half a century ago, I want to break down five areas where your business – no matter what industry you are in – can learn from the Mercury, Gemini and Apollo missions at NASA. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [05:40] On July 20, 1969, Neil Armstrong descended onto the lunar surface and uttered those immortal words, "That's one small step for man, one giant leap for mankind." [05:43] Most people today would think that would be an impossible feat with 1960s technology. [06:40] The cold war intensified as the Soviet Union launched Sputnik, the first satellite, into orbit in October 1957 – much to the shock of the United States. [07:19] This led to fear and essentially kicked off the space race. The National Aeronautics and Space Administration (also known as NASA) was created in 1958. [07:47] Kennedy really ratcheted up excitement and budget for NASA. [07:59] In Kennedy's famous speech at Rice University, he mentioned that the budget and taxes would be increased to accommodate the new space program. [08:24] Overall, the Apollo program cost nearly 20 billion dollars – a third of NASA's budget for those 13 years, so public interest was important to keep funding around for the program. [08:42] Kennedy also does a great job of priming and framing throughout the speech, and playing on the past victories and pride of the US, Texas and the city of Houston. [09:17] In the moon speech, he did great work to motivate the audience and the general public about the importance of the program and to encourage them to get behind the initiative. [10:53] Kennedy drew a line in the sand that helped launch the program. He also helped to overcome some hurdles by saying we CHOOSE to go to the moon. [12:02] Acknowledging our mistakes and hinting that the Soviets had mistakes helped to instill confidence and combat the availability bias. [13:24] Kennedy also made the task ahead relatable to the audience. [14:35] Kennedy's speech was truly amazing and inspiring. Everybody should read /watch it. [14:57] There are a lot of lessons that your business can learn from NASA during the space race. [15:47] 1) Look for problems (and solutions) [16:31] It would be impossible to think of every possible issue that could come up, but it was critical to think through as many of these pieces as possible. [17:01] Using challenges as inspiration is in direct competition with a bias humans are susceptible to called functional fixedness. [17:23] There are times in your business when this natural bias in your brain is doing more damage than you realize. [19:00] When the astronauts needed to fix their CO2 scrubber, they were literally faced with fitting a square peg in a round hole. Flight director Gene Kranz famously said, "I don't care what anything was designed to do--I care about what it can do." Those on the ground were inspired to overcome their natural tendency toward functional fixedness to create an ingenious hack to save the lives of the astronauts over 100,000 miles away. [19:12] It's important to think through problems before they come up. [20:05] 2) Test and Retest (But Know When to Move) [20:34] Simulations and trial runs were critical. [21:38] They still moved forward instead of suffering analysis paralysis. [21:51] Narrow down your focus to one or two important goals. Break your goal into small tasks and set up tests to ensure they can be done. [22:35] 3) Autonomy and Support [22:53] The teams were united working toward a common goal, but they were also given the autonomy they needed to solve problems. [23:44] The leadership mindset came from the top down. [25:26] I always told my teams that I would support them in any decision they made and let them know how delegation was a sign of my trust in and respect for them. [26:19] In your business, do you delegate enough and trust your team to take on and really own your big vision? Do they feel supported to look for new options and innovative paths for you? [27:01] 4) Visibility Makes a Difference [27:21] The moon landing made the impact it did because of videos and photos cataloging it every step of the way. Mirror neuro

Hopefully, you tuned in last week for the special anniversary episode, where I went over the top episodes by downloads, your votes and some of my favorites. I also gave some of my book recommendations and a sneak peek behind the scenes with the top questions I get asked, the weird thing I hear all the time now…and so much more. Today, we are back into the swing of things with a behavioral economics foundations episode on mental accounting. This concept was mentioned briefly in the biases series, but today we are going to dig into what this really is and just how much it impacts our approach to money, risk, time and more. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [05:02] The concept of mental accounting was introduced by nobel prize winner Richard Thaler, and is based on humans' illogical approach to value in relative terms instead of looking at it as an absolute. [05:31] Three examples by Richard Thaler of mental accounting. [07:41] These are all examples of the way that mental accounting can impact the decisions we make. [08:17] Money and accounts should be perfectly fungible (that is an economics term for interchangeable). It shouldn't matter if money was in a savings account, or a checking account or your pocket or a 401k…it would all exchange exactly the same. [09:32] Our brain segregates when thinking about money. This is one of the reasons the field of behavioral economics was needed…traditional economics does not account for the importance of this phenomenon. [10:10] The three ways money is commonly labeled: expenses are grouped into budgets like food, rent, and entertainment. Wealth is separated into accounts (checking, emergency or "rainy day" funds, and retirement). And lastly income is looked at in categories: namely regular or windfall. [12:35] Much like regular accounting, in mental accounting, individuals will book and post any occurring or planned transactions to the mental account. [15:59] When businesses are reporting their year-end earnings and losses, they always want to have a positive year end, which could make it tempting to hold on to losses until the next year. [16:42] If you are looking like you are going to have a bad year and have no option but to take a loss, general wisdom is to throw in as much negative and expense as you can. If it is going to be negative, might as well have it all come in at once. (Known as "taking the big bath") [17:13] Adding a small amount to an already large payment doesn't feel the same as having that payment on its own. This is because of decoupling – where you remove the pain of the payment away from the joy of the purchase. [18:28] There are some times where people significantly prefer to prepay over delaying their payments. Vacations are enjoyed more when they are prepaid because they feel free. [24:10] The way the consumer uses their mental accounting transforms something that can be very expensive hobby (like wine collecting) into one that is seen as free. [25:24] People can and often do plan for expenses in one way and experience it completely differently in the moment. [26:57] Internalize how the brain is wired to make its decisions around mental accounting. Think about how this has impacted you and how it can impact your customers. [27:52] Expenses are thought about in budgets, and wealth is considered in accounts. [28:03] The most tempting and easiest accounts to spend from are the current assets, this is your checking account and physical cash. [28:13] It's less tempting to spend from the current wealth category, which is made up of other liquid assets – savings accounts, stocks, bonds, and mutual funds. [28:33] The next, even less tempting category is equity (like that in a home or car you own). Future income is the least tempting category. These are your retirement accounts. [29:27] Those who have issues with self control should set up accounts that are off limits and put together automatic transfers so they are not tempted. [31:03] An example of losing a movie ticket and losing $10 that shows when the loss is associated with the outing to the movies, it is aversive, but when it is not associated with the outing, it is still annoying, but doesn't impact the mental account for the movie. [31:22] Money that you earn in your paycheck is considered different than money you win in the lottery or find on the ground. [32:58] How will the mental account allocation impact the way the gift is used? And how does that line up with the intention behind the gift? [35:54] While losses should be lumped together, gains should be separated out to really feel their value - don't wrap all the Christmas presents in one box. [36:26] Brands can use mental accounting to their advantage in the way they advertise products. How can you use this frame on mental accounting in your business? [37:03] Mental accounting impacts more than money. [39:43] Context is important in the way that people react. [42:53] Being aware of how the sausage is made can impact your enjo

Welcome to season two of The Brainy Business. This episode is a special anniversary episode celebrating the first year of the podcast. I can't believe it has been a full year already. Year one brought us 54 episodes with over 60,000 downloads in 133 countries around the world. So much has happened this year. I've made amazing connections to listeners in person and on social media. I've had conversations with academics, students, business owners, and marketers. I also launched my column on Inc.com Today, I'm going to share the top ten episodes by downloads, some of your favorites – with clips from the audiograms you submitted, and a few of my favorite episodes – including which ones I share the most. I will also give some looks behind the scenes, with the top questions I get asked, the funniest thing people say to me now (that I had never heard before becoming a podcaster), my favorite books, and more. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [05:43] An audio clip featuring Nikki Rausch of Sales Maven. [06:06] The Business Bros are early adopters and find this podcast instrumental in their marketing. [08:59] I share the top 10 podcasts based on your downloads. [09:40] A message from Maureen about episode 43 and how she benefited from a discovery call and then working together. [13:15] Number 9 on the countdown was episode 42: A Behavioral Economics Analysi of Apple Card. [14:54] Episode 32 was one of my favorite episodes, and it includes the chocolate cake study. This one is about The Overwhelmed Brain, and I play a quick clip from Debby. This was also the first episode where I referenced the Texas A & M Human Behavior Lab. [19:27] Episode 3 about lead magnets was number 7. This was based on a popular video I did before the podcast launched. [21:03] Episode 47: The Behavioral Analysis of Costco was number 6. I have some more fun business analysis shows coming up. [23:16] Episode 35, which was The Introduction to Choice Architecture and Nudging. This episode is where I first started using my air conditioner example. This is a really intricate and complex topic. It's critical for any business to understand the complexity of choice. [27:03] Episode 45: An Overview of Personal Biases was the fourth most downloaded episode. I was a bit nervous launching into this rapid fire series. [29:10] Number 3 was episode 5: The Truth About Pricing. I also play a quick clip by Kadra who I was fortunate enough to work with. [32:47] The second most downloaded episode of all time is episode 2. This episode was the Top 5 Wording Mistakes That Businesses Make. Because of this episode I am now associated with cotton candy grapes. [34:40] Number 1 is also Episode 1: Unlocking the Secrets of the Brain. I write out full scripts for my podcast. I discovered this was the best way to work after episode 1 and 2 had to be recorded multiple times each. [37:38] Episode 11: Anchoring and Adjustment was also really popular. This is the episode with the story about the 38% increase of sales in Snickers. [38:48] Episode 23: Reciprocity and Episode 31 on Mirror Neurons were also popular with listeners. I got to talk about Sheldon Cooper and the Big Bang Theory in episode 23 (which I love). Mirror neurons are so fascinating and one of my favorite topics. [41:39] Kelly Ferguson, of Ferguson Avenue Photography said via Facebook that episode 8, What is Value? is her favorite. It was so much fun to come up with examples of what creates real value. [42:48] An episode I recommend often is episode 16 on Framing. I also recommend episode 19 on Herding and episode 17 The Power of Numbers. [44:00] I also loved talking about Time Discounting and my interview with Texas A & M. My online strategy session was also a favorite. [44:53] I also loved the episode on Booms, Bubbles and Busts because it was really fun to talk about tulips and Beanie Babies. [45:13] The last episode I want to talk about is episode 9 which was my very first foundations episode on Loss Aversion. I was concerned the foundations episodes would come across as too academic, but people loved them. [47:40] Where we hang out: A lot of people listen to the podcast on their commute or while walking their dogs. Some listen at the gym. One listener even listened while running a marathon. I'd love to hear where we hang out. [52:06] My rapid fire book recommendations with links below. [55:05] A quick shout out to the team at Pro Podcast Solutions. [55:20] I record my episodes with a USB microphone in my home office. [56:06] Brain is a custom creation made from a model. I added a little purple paint and we have Brain. [57:02] Thanks again for making this year beyond what I could have imagined. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Melina Palmer Behavioral Economics and Business on Inc. Your Sales Maven Business Bros Podcast Episode 43.

Today is our last episode in the series on biases – and the last episode of the first year of the podcast! Can you believe it? A whole year of behavioral economics and business. A lot has happened over this year and I look forward to sharing that in next week's anniversary episode. Today's episode closes out the series on biases by talking about our brains' penchant for novelty and story. You probably know that people remember better when they hear stories, and that they pay more attention, but this will explain the concepts of our brain that make it the case for everyone - and how you can use it in your business to be more effective. Show Notes: [04:00] Our brains like things that stick out or are different. This is called the bizarreness effect because things that are bizarre are remembered better than more common stuff. [05:13] We are also more likely to remember funny things compared to those that are not humorous due to the humor effect. [06:32] Incorporating humor into messaging is not always easy. If it is not done right and feels staged it can be detrimental to any brand. [07:32] Due to pareidolia our brains are primed to see faces in pretty much everything. No matter how vague or random the stimuli, it can be seen as significant when our brain gets a hold of it. [08:14] Illusory correlation is an inaccurate memory about the relationship between two different things. [09:17] Seeing faces on houses, trees, cracks in the sidewalk or whatever else (pareidolia) are deeply rooted in our love of story and of novelty. [10:51] Our brains' appreciation for stories impacts so much of everything we do. We often tell ourselves stories about other people because it helps us to understand them. [11:07] Due to the empathy gap, we are likely to underestimate how much feelings will influence decisions and how strong they can be – this occurs both for ourselves and for other people. [12:48] Due to the identifiable victim effect, people tend to have a lesser response to a large group of people than they do to a single person. [13:58] Giving a specific story can help form a picture in their brain, which means they are more likely to remember you in the future. [14:39] Survivorship bias is a way we can remember and focus on those who survived and ignoring everything else because it is less visible. [16:14] If you are not thinking about where survivorship bias could be impacting your analysis, you could be doing a huge disservice to your business. [16:33] The just world hypothesis is where we want to believe the world around us is fundamentally just, and we will rationalize some injustice that is otherwise inexplicable as being deserved by the victim. [17:20] Moral luck is the tendency for someone to use the outcome of an event to assign moral standing even when it is likely unrelated. [18:07] Authority bias is where we are more likely to believe and be influenced by the opinion of someone in authority. [20:35] The Ben Franklin effect shows that if we have done a favor for someone, we are more likely to do a second favor for them. [22:03] Social desirability bias is where we want others to see us in the best possible light, so we will likely overreport our own socially desirable behaviors and characteristics, while we will under report them for everyone else. [22:30] The courtesy bias is where we share opinions that are more socially acceptable than our true thoughts and feelings so we do not offend anyone. [22:47] Because of omission bias we will judge actions (also known as commissions) more harshly than inactions (or omissions) even if they are more harmful than taking an action. [24:18] The backfiring effect is when we have done something good, and are therefore more likely to allow ourselves to do something bad. [25:33] The stories we tell ourselves are impacting the decisions we make all the time, and it doesn't have to be as dramatic as these studies have made it out. [25:56] Once you understand how these biases impact you and your life, think about how it impacts the opinions others have of you (and you have of others). Then think about how understanding them can help you to make better decisions. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Melina Palmer Behavioral Economics and Business 1 Simple Brain Trick That Can Help You Overcome Self-Doubt Forever The Brainy Biz Facebook Page @thebrainybiz on Twitter The Brainy Biz on Instagram Behavioral Economics Foundations: Anchoring and Adjustment 12 Examples Of Pareidolia Simulating Pareidolia of Faces for Architectural Image Analysis Episode 24. Behavioral Economics Foundations: Sense of Sight The J. Paul Getty Museum Episode 19. Behavioral Economics Foundations: Herding Episode 34. Behavioral Economics Foundations: Optimism Bias Episode 18. Behavioral Economics Foundations: Priming Missing what's missing: How sur

We are getting near the end of our eight week series on all the biases. There is just one more to go after this one, which is about how our brains are biased toward novelty and stories. The first six episodes in the series, which are linked in the show notes, were on personal biases, how we are biased toward others (both individuals and groups), memory, present versus future, selective attention, and last week was all about how math is hard. Turns out we aren't so good with money, value, numbers, games and probabilities. So, why do we take shortcuts or accept something as a fact without actually doing the investigative work behind it? It all has to do with our lazy brain. The truth is we have the power to use our brains however we want. Learning some of the lazy brain biases will help us use our brain more efficiently in our life and our businesses - or at least help us understand the science behind some of our choices. Show Notes [04:58] The default effect, which was covered in episode 20 and again in episode 38 as part of the series on nudges. We humans are most likely to choose a default option when we are provided one, whether it is in our best interest or not. [05:39] Due to the decoy effect someone's preference for a choice or product will change based on the options that are presented. [08:05] We have an automation bias, which leads us to have an excessive dependence on automated systems, this can create a situation where those automated decisions override the choices of individuals that would be more correct and accurate. [08:43] There are lots of things automation can't do properly, so it is important to be thoughtful and take a look under the hood every now and then. [09:08] The law of the instrument, where we are overly reliant on a familiar tool. The old adage to explain this is, "If all you have is a hammer...everything looks like a nail." [09:26] Functional fixedness is where someone is limited to using an object only in the way it is traditionally designed or expected to be used. [09:49] Our businesses would be best served if we could look at a problem in a new way, from a new angle, and find a new approach. [10:49] A great example featuring the Apollo XIII story. [11:54] Our brains are looking for the easiest answer and solution most of the time, the way the information is presented – or the frame – can determine what actions we take. [12:44] When I talk about anchoring and pricing I always recommend to start with the highest price first. [13:00] The contrast effect makes it so different stimuli are viewed differently based on what was seen just before it. [14:12] Interoceptive bias is when we believe that input from our senses are used to influence our external decisions. [15:22] The ambiguity effect is when we avoid options and choices where we don't know the odds or likelihood of the outcome in advance, and we would rather choose an option with bad odds that we happen to know, than go down the unknown path. [15:55] Action bias is where we take an action to feel like we are in control of something. [17:38] There are two versions of illicit transference. The fallacy of composition is when you assume things about a group because of one person you have interacted with. The fallacy of division is where you determine each individual must be like the whole group. [20:59] When we are presented with tasks that are particularly daunting, we may become a victim of Parkinson's law of triviality, which is also known as bikeshedding. This is when trivial issues are given way too much weight and we can get stuck on the small stuff to avoid fixing the big stuff. [23:03] Lag effect is how we learn better if our studying is spread out over time instead of trying to cram it all in during one session. The levels of processing effect is where not all methods of putting information into our memory have the same level of effectiveness [24:07] The list length effect is where we can remember more items when given a longer list. Our brains are only as lazy as we allow them to be. [24:56] Take a limiting belief that you have and push the limits. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 45. Overview of Personal Biases Episode 46. Biases Toward Others – Including Groups Episode 48. An Overview of Memory Biases Episode 49. Present Versus Future Biases Episode 50. Selective Attention Biases Episode 52. Biases – Math is Hard Leave an Audio Review or Talk With Me Episode 20. Behavioral Economics Foundations: Defaults Episode 38. Behavioral Economics Foundations: The D in NUDGES – Defaults Episode 12. Behavioral Economics Foundations: Relativity Predictably Irrational Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment The Greatest Space Hack Ever This Is the Actual Hack That Saved the Astronauts of the Apollo XIII Apollo Expeditions to th

Last week we got to finally have the episode on time discounting, which was very exciting for me because as many of you know, it is my all time favorite concept. As you learned in episode 51, I call it the "I'll Start Monday Effect" because it is the bias behind all the times we commit ourselves to do something in the future (like starting a new exercise program on Monday) and when we wake up…we feel like a completely different person and hit snooze. As you have heard me mention on the show many times before, our brains are lazy, and they like to take the path of least resistance to get to what they believe to be a "good enough" answer as quickly as possible. We will get into that in more detail next week, but today I want to talk about how that impacts our interactions with numbers and math. Most people think math is hard and our brains are particularly lazy when it comes to hard stuff, so we often risk being wrong rather than take the time to do the numbers. I dive deep in the fascinating whys and why nots of this phenomena. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [04:34] Our brains are lazy, and they like to take the path of least resistance to get to what they believe to be a "good enough" answer as quickly as possible. [05:54] Our brains make lots of assumptions based on the little bit of information they are looking at. This combines with our brain's natural tendency to believe everything it learns to be TRUE first and ask questions later. [06:27] Because we are particularly lazy when it comes to math, we rely on the source of whatever is thrown our way, and the brain would rather risk being wrong than to take the time to do the numbers in everyday interactions. [07:27] Because of unit bias, you may have assumed the amount you serve yourself matches the intended serving size. [09:00] Calories are the main comparison people make when thinking about cereal. Most people don't take the time to do the actual math involved in the serving size. [09:54] Due to the less is better effect, our preferences change when we evaluate things alone versus comparing them against others (this is relativity in action). [11:16] Great quote from Thinking Fast and Slow, (which was actually a quote from Paul Rozen, an expert in disgust) "a single cockroach will completely wreck the appeal of a bowl of cherries, but a cherry will do nothing at all for a bowl of cockroaches." [11:48] MONEY AND VALUE Due to the money illusion, we tend to concentrate on the nominal or face value of our money, instead of thinking of it in terms of how much it can get for us. [12:09] Due to the denomination effect we are more likely to spend money in smaller denominations than when it is in bigger ones. [12:53] We still do a lot of mental accounting. This is where we think money in different places or accounts is not all accessible in the same way. [13:33] Why is $1000 not the same everywhere? Consider all the ways this is good and bad. [14:37] Due to the IKEA effect (yes, that is its actual name) people will value things more that they made themselves or partially assembled. [15:13] The endowment effect is where we value things we own more than things we do not. [15:43] For your business, remember that making people feel like they came up with the idea makes them more likely to support it. [16:11] Due to the Zeigarnik effect we will remember the tasks we did not complete – or where we were interrupted – better than the tasks we did complete. [16:43] Due to the disposition effect we humans will tend to sell assets that have accumulated in value and hold onto those that have declined in value. [17:29] Because of our time saving bias, when going at a relatively low speed, we underestimate the amount of time we could save by speeding up or lose by slowing down. [18:14] Perspective can make a huge difference for good and bad. [18:40] Duration neglect. This likely combines with the IKEA effect where we forget the 8 hours it took to put together that simple bookshelf and just see the glorious thing we have created. [20:05] Well-traveled road effect. We underestimate how long it will take us to go on roads or routes we have taken a lot, and overestimate how long it will take to go on less familiar ones. [21:37] GAMES AND PROBABILITIES The hot hand fallacy. ​It's a myth that "hot hands" are going to continue to defy the odds. [22:18] The clustering illusion is where we see phantom patterns and overestimate the importance of small streaks. [22:40] This is a lot like the gambler's fallacy. This is where we think the past has any impact on the future probability. [23:50] We are biased toward having zero risk if we can. This is much like ambiguity aversion, or uncertainty aversion, people are more likely to prefer the things we know. [25:46] Neglected probability territory is when we are uncertain about the options or outcomes and need to make a decision we completely disregard everything we do know about probabilities. [26:12] Berkson's paradox is where

Today, we are getting back to our behavioral economics foundations episodes to discuss time discounting. I hope you enjoyed the last three episodes in our series on all the biases, where I told you about memory biases, our biases toward the future and how that impacts our decisions today, and how our selective attention and focus can color our decisions. Time discounting is one of my favorite concepts. I recently did a research project centered around the concept of time discounting and saving money, and there is a white paper about it coming out this summer. Time discounting is the basis behind a lot of the future versus present biases which I talk about in Episode 49. In this episode, we will learn all about time discounting and why I love it so much. I tell people to think of time discounting as the "I'll start Monday effect." In this episode, you'll learn why. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [07:30] Have you ever said you would start your diet, or exercise plan, or quit smoking, or be more organized or whatever it is… "on Monday"? [08:58] So, what happened? Why do you feel like a completely different person when the alarm goes off than the person who set the alarm the night before? [09:26] When we think about ourselves, a certain part of the brain lights up, and it does this differently when we are thinking about ourselves versus thinking about someone else. [10:05] For most of us (and especially for particularly impatient people) when we talk about our future self, the brain lights up as if it is talking about a completely different person! [10:34] It's easy to talk about our future selves doing something early in the morning, but when the alarm goes off it's actually us who is waking up. [11:08] We have a hard time judging what is best for us today from what is best for us tomorrow. [12:30] We aren't inherently good are bad at this...more like we are great at this in some situations but terrible at it in others. [12:54] When looking at this from your business perspective (and in understanding more about yourself…which we will talk about both later on in the episode) try to think about the concept in general and how it could apply to you, your peers and current or potential customers. [13:16] The term hyperbolic time discounting shows us that the way we discount is not consistent over time, and studies have found it does not occur at a rate that is constant or linear. [15:40] Our lazy brains (which is the topic of an upcoming bias episode) don't take the time to do all this logical thinking, and the subconscious wins out with its present-focused mentality. [16:10] Think of some of the ways that time discounting has affected you, because I'm sure it has come up in many ways. [17:14] Just because it is hardwired doesn't mean you can't change it. On the contrary, understanding how this concept works and how it is genetically conditioned in your brain allows you to set up a sort of brain hack so you can work WITH your brain to change and accomplish your goals. [19:46] If a client came to me with this problem (of helping employees save more for retirement), the first thing I would do is recommend we dig into the current plans. What are the offering, how do they present it to employees, when do they get it, what are the options, how difficult is it, etc. And then I would remind them that just because a plan has always been set up a certain way…doesn't mean it is the right way or that it has to stay that way. [21:35] One other question to consider when thinking about the power of time discounting is opting in versus opting out. Forcing people to choose more often and consciously think of what they are doing does not always encourage them to make better decisions. [23:11] It's easy for the brain to commit when it is in a cold state. [25:17] BRINGING TOMORROW TO TODAY One other way to make the future self of you and your customers to be more visible in the present, is to look at renderings. Consider how you could help someone make tomorrow more real today with the help of technology. [30:02] OTHER BUSINESS EXAMPLES I once worked for a company that changed the review process for managers so that every manager's ability to get their full raise potential was dependent upon having their reviews done in a timely manner. [32:43] ​I also used to encourage my employees to keep lists of all their accomplishments throughout the year and would reach out to them a month before their review to let me know what they were especially proud of. [33:30] ​I would also recommend for companies to not stack reviews so they are all needing to be completed at once. [37:37] ​Vagueness can produce inaction even when people are informed about risks and potential improvements. What can you provide to your staff to help them find the blood drive or voting booth or get their flu shot? [39:03] Making the experience real and actionable (you can picture that today even if your day/time is not for a week or so) makes it more real.

This has been an amazing month as I spoke at eight different events across the country on 6 different topics, from pricing to change management, why consumers are weird and how behavioral economics is the future of branding. I love speaking at events like this and want to welcome all of you who are joining the podcast after hearing me speak at one of those events. I had so much fun getting to know and interact with many of you, and want to thank you for listening. Welcome to The Brainy Business Family! What do I mean when I talk about "selective attention" biases? If you have been listening to the series so far, you know we have talked about how our brains are biased toward ourselves, the way we think about others, our memories, and past versus future. Today, we are going to dig into all those biases that have to do with how we focus our attention and how that can color our impression of the world around us. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [00:04:25] We are going to dig into all those biases that have to do with how we focus our attention and how that can color our impression of the world around us. [00:05:34] I have broken selective attention into three categories: where we focus our attention, how that impacts the decisions we make, and how it colors our perception when looking back. [00:05:54] The most common concept and one I am guessing you are very familiar with even if you don't know the name of it, is called the frequency illusion, selection bias or the Baader-Meinhof effect. This is where after something comes to our attention it seems to be everywhere. [00:07:30] The recency illusion which would be if I thought the phenomenon of the word "panacea" being everywhere is because it is a brand new word everyone has just started using (instead of a word that was recently introduced to me). [00:08:30] This is similar to availability, which was the focus of episode 15. We humans put more weight and importance on things we can recall easiest. [00:09:43] This can lead to the availability cascade, which is a self-reinforcing process where hearing and seeing something more and more makes it feel more and more true or real. [00:10:14] Once we become familiar with things or concepts, we are much more likely to like or believe them because of the mere exposure effect. [00:10:53] Selective perception is when our expectations impact the way we perceive things. For example, if you expect a sales call to go badly, it probably will. [00:11:53] This is very similar to attentional bias, which is when our perceptions are impacted by recurring thoughts and the focusing effect, which is when we place too much importance on one aspect of an event. [00:14:12] The Von Restorff effect, is where something that sticks out is more likely to be remembered than everything else. [00:16:09] Due to the rhyme as reason effect, we believe statements that rhyme to be more truthful than those that don't. [00:16:45] Due to the belief bias, we also base the logical strength of an entire argument on the believability of the conclusion. [00:17:26] We also tend to focus on specifics and think they are more likely to happen than general conditions because of conjunction fallacy. [00:18:39] Base rate fallacy or base rate neglect, where we tend to ignore generic or general information (also known as base rate information) to focus on more specific information that only pertains to a certain case. [00:20:13] Exaggerated expectation is where people tend to predict and expect more extreme outcomes than what actually happen. [00:20:46] DECISIONS MADE: Our brains get what they expect. Because of the Semmelweis reflex, people tend to reject new evidence that contradicts their perspective, paradigm, or expectation. [00:21:27] Experimenters or expectation bias is the tendency for someone to believe, certify, and publish data that aligns with what they expected to see. [00:22:46] Illusory correlation is when someone will inaccurately perceive a relationship between two unrelated events. [00:23:40] Subjective validation ​is where someone sees something as being true if their previous beliefs demand it to be true. [00:24:09] Biases can lead to the backfire effect or the continued influence effect, which is when someone will disconfirm evidence that is presented by strengthening their previous beliefs. We also suffer from confirmation bias, which is when we search for, interpret, remember or focus on information that confirms our preconceptions. [00:25:16] The size of the space being searched can cause the researcher to observe something statistically significant that actually wouldn't be if the parameters had been set correctly because of the look elsewhere effect. This is similar to congruencies bias, where someone will directly test their hypotheses instead of testing possible alternatives. [00:27:25] Information bias is when we keep seeking more and more information even when it can't affect our actions. Distinction bias is when you are c

This episode is about present versus future biases. This is part 4 of our 8 part series about biases. We've already talked about personal biases, how we think about ourselves versus other people, and memories. When it comes to present versus future, people want their payoffs now, so humans tend to place a greater weight on the outcome that is closer to now. Other things that impact our decisions include losses and risks. We are impacted more by losses than gains. We are also biased towards maintaining the status quo. I talk about optimism bias and even pessimism bias. When you know the rules of the game, it can be easier than you think to trick your brain into doing more in your favor – whether it is making choices today that you will appreciate tomorrow, or helping to get yourself out of a negative spiral. This episode will help you understand why we tend to make decisions a certain way and enable you to make better decisions for your business and your life. Show Notes: [04:10] People want their payoffs as quickly as possible. We place greater weight on things that happen closer to now. [04:31] This is closely tied to time discounting (what I call the "I'll start Monday effect"). [04:39] We tend to make decisions today that our future self may not be as happy about. [05:39] Due to diversification or projection bias, we may think our future self will want more variety than we really want or will use. [06:07] You think you'll want options that are more virtuous - could be related to optimism bias. [07:14] Due to impact bias, we overestimate the duration of intensity of the impact of how we will feel in the future. [07:50] We are also victim to projection bias, which means we overestimate how much our future self will share the preferences we have today. [08:34] Reactance is the urge to rebel and do the opposite of what someone wants you to do to hold on to some form of control and power. [10:44] Irrational escalation – also known as the sunk cost fallacy – where people will keep spending and justify pouring money into a bad prior investment even though evidence shows it is bad. [12:43] As your brain gets overwhelmed your subconscious is more likely to take the reigns, meaning you will make more battery and present-focused decisions. [13:47] The hot-cold empathy gap finds that in a cold state it's much easier to make better decisions then in a hot state or in the moment. [16:01] The reverse is the cold-hot empathy gap where smokers underestimated their cravings to smoke when they were in a cold state. [17:26] People are impacted more by losses than gains – and it takes double the joy felt by a gain to equal the pain felt by a loss. [17:52] Dread aversion – dread results in double the emotional impact of savoring. [20:11] We tend to beef up the status quo and defend it more than may be warranted because of system justification. [20:33] Due to normalcy bias and not wanting to think about change, we may refuse to plan for or have the proper reaction to a disaster which has never happened before. [21:35] Due to a zero risk bias, we will prefer to reduce a small risk down to nothing than taking a bigger reduction in a larger risk. [22:47] Because of risk compensation or the Peltzman effect, we are more likely to take a greater risk when our perceived safety increases. [24:26] Because of the pseudocertainty effect we are more likely to make choices that avoid risk if the expected outcome is a good one, but seek out risk in an attempt to avoid a negative outcome. Which could lead to the ostrich effect or ignoring a negative situation. [26:06] A predisposition toward viewing the past in a positive way and the future in a negative way is called declinism. [26:21] The pessimism bias is to overestimate the likelihood of negative things happening to us in the future. [26:42] A zero sum bias is where you think that the only way one person gains is at the expense of another. [27:05] Look for the win win. For one person to succeed, it doesn't mean that another person has to fail. [27:25] Negativity bias is when it's easier for us to remember negative memories over positive memories. The worse than average effect is where we believe that we are worse at tasks than average people are. [29:06] Acting like a confident, optimistic person can create the benefits as if you are confident and optimistic. [29:44] When you know the rules of the game, it can be easier than you think to trick your brain into doing more in your favor and using these biases as your advantage. Thanks for listening. Don't forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. Links and Resources: Episode 45. Overview of Personal Biases Episode 46. Biases Toward Others – Including Groups Episode 48. An Overview of Memory Biases @wagsRJ Robert Parlange on Twitter Magic of Self Direction by David S. Schwartz @BusinessBrosPod on Twitter Rich Dad, Poor Dad by Robert K

This behavioral economics podcast episode is about memories. Specifically, it will be an overview of memory biases Last week, we took a little break from our series on "all the biases" for a behavioral economics analysis of Costco. Today, we dig into memory. This topic will be divided into three sections. The first section is general memory stuff, then we will talk about false memories and wrap it up with some tips on how you can use these biases to help you remember things better! When we think about our brains and all the amazing things they do, much of what we are accessing are memories. This episode breaks it all down with some fun facts and cool tips about our memories that a lot of you may not know. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [03:59] When we think about our brains and all the amazing things they do, much of what we are accessing are memories. [04:21] Most people think of our brains like a filing cabinet, but that's not how it works. [04:36] Our memories are basically inaccurate renditions our brains tell us...and every time we access them, we change them a little. [04:49] The more we think about something the less likely it is to be accurate. This is partially because of two biases called leveling and sharpening. [05:00] Memories can be distorted over time when details are lost. In this process, there may be selective recollection (where you only remember, sharpen and exaggerate certain portions of the memory). Or, it can be leveled out to fit some other biases that exist and just get a little dulled over time. Both of these are constantly reinforcing each other over time. [06:41] Our biases impact our memories and our present and future. [06:58] Because of the self relevance effect we find it much easier to recall memories about our self or things related to ourselves. [07:13] You are the hero of your own story, but even you don't remember your own story correctly. [07:20] Due to the fading effect bias, our brains like to feel positive emotions more than negative ones, so the emotions tied to bad memories will fade quicker than the emotions tied to positive events. This is likely tied to optimism bias and our ability to persevere through hardship. [07:54] Because of reminiscence bump, people do not remember things from all times of their life equally. Instead, people will have memories and be able to recall more personal events from happenings in early adulthood and adolescence than from any other time in their life. [08:35] We remember some time periods better than others, some items from years and years ago are able to be recalled "like it was yesterday." [08:55] Due to the telescoping effect, we tend to think of recent events as being further back in time, and those which happened longer ago are placed more recent in our minds. [09:14] The peak end rule – where experiences are not about the sum of that entire experience over time. Instead, it is about how it was at its peak and how it ended. [10:12] If something bad happened, it might be worth putting in some effort to make sure that is not the last experience and instead have it be a midpoint negative item if you can, that becomes outweighed by some very positive peaks over time. [11:05] The tip of the tongue phenomenon. I am sure you have had this frustrating experience at least once – when you can almost remember something…and the word or phrase or moment or name of that movie is "on the tip of your tongue" – right? This is thought to happen due to blocking, when multiple memories that are similar to each other are being called upon at the same time. [12:23] A false memory is when we accidentally think something we imagined really happened, and misattribute it as a memory. [12:55] Think about selling – confidence is key to selling. Try and imagine what it would be like if you had done this successfully already, think through the whole memory to help make it as real as possible. When you believe it, that could make future selling easier. [14:02] Our brains are powerful, but they are easily manipulated too. [14:40] The illusion of truth effect. Essentially, people are more likely to believe something they have heard before – or are familiar with – than something they have never heard before (or are unfamiliar with). [15:25] The opposite of a false memory is called cryptomnesia – when a real memory is mistaken as imagination because there is not the proper subjective experience of it being a memory. [16:54] We kind of smooth and average things out. This is why we tend to remember high values, likelihoods and probabilities as lower than they were, and low ones as higher. This is known as the conservatism or regressive bias. [17:39] You remember something that took a long time as not being as much as it really was, and because you are optimistic you will do even better the next time, you severely underestimate how long it will take. [18:12] HOW TO REMEMBER THINGS BETTER [20:04] Don't bog down your consciousness with stuff that ca

If you've been listening to the podcast for a while, you have likely heard me mention Costco before. They do so many things differently than traditional business might suggest is best or profitable, but they have found a way to make it work and their business thrives because of it. In this episode, I'm going to discuss how Costco rivals almost any store or brand, and how they don't do traditional marketing and advertising. I'll talk about how they invest back into the community, have a simple code of ethics, reward shareholders, and how having a membership model and plan can work if it's done right. Costco is the perfect brand for a behavioral economics analysis, because they do things differently, but in a smart, strategic way that makes their unconventional plan a huge success. Today, we learn why Costco is the powerhouse that it is (and what you can implement in your own business - even if your model is completely different). Show Notes: [04:19] Many consider Costco's biggest rivals to be Walmart / Sam's Club or Target – but depending on the section of the store…they pretty much compete with everyone: from Amazon, Home Depot and Best Buy to Expedia, Pizza Hut, Les Schwab and your local optometrist. [04:54] They participate in the community and reinvest in the company in a way that creates advocates, which reduces the need for traditional marketing. [05:32] That gets me to the core of Costco – their mission. It seems basic and generic enough, "to continually provide members with quality goods and services at the lowest possible prices." [06:06] But they differentiate with their Simple Code Of Ethics: Obey the law. Take care of our members. Take care of our employees. Respect our suppliers. And then, reward shareholders. [06:57] The Costco membership model. [08:01] A membership is good for the store because it encourages people to shop there to "get their money's worth" – this is loss aversion in action. And, this is not just triggered by perceived ownership…you actually have some real ownership because you have paid to be part of the in-crowd. [09:29] Costco has put a lot of work into making it a lifestyle choice. [10:22] Having time to slow down and experience with all the senses puts perceived ownership into overdrive. [10:54] This aversion to losses combines with the scarcity factor to encourage people to buy more. I'm sure items are scarce at Costco to encourage sales, but there is more to it than that. The high turnover of product and high efficiency model of Costco increases their profit margin and allows the whole model to really work. [11:31] They also have a very generous return policy. [13:22] The Costco food court is one of predictable beauty, which as you know is a perfect recipe for building habits. [15:28] And, of course, this increase in sales is made possible by one form of marketing Costco does believe in – free samples. Again, this is loss aversion and reciprocity at work. [17:12] If the item is an exclusive Kirkland Signature item, you know the exact thing isn't available in other stores. All Kirkland Signature products are carefully researched, tested, hand selected, or custom-created by Costco. They truly live their mission through the whole Kirkland Signature experience – of doing best by their members, employees and suppliers. [20:02] One reason samples increase sales at Costco is because there are not too many choices. [21:28] Happy employees means lower turnover, which reduces expenses. Happy employees also means a better experience for shoppers, which keeps them happy and coming back. And, knowing that you shop at a place that values their employees also makes shoppers feel good. [22:34] Costco also does a lot of work to support their local communities, with a focus on children, education, as well as health and human services for grants and donations. [24:00] Costco works with partners and uses the value of bulk buying with their suppliers. [25:09] It is about knowing profits matter, but they aren't everything. Squeezing out an extra 50 cents on hot dogs or rotisserie chickens – or allowing for a 16% margin on some products would make a huge impact on shareholder pockets, but it isn't worth the negative it would cost to the members, who come first. [27:04] No company's set up is something any other business can copy and paste. [27:29] Costco knows who they are and what their brand is there to do, and every decision they make is so easy because they can tie it back to the mission and code. [29:16] Is being a member of benefit that would work well in your business? Think about the value. [30:43] What do you stand for? Make it clear to yourself, employees, customers, and more. [32:04] Do you make it easy for people to buy from you? Are you encouraging them to get items or is it difficult? Can they get a test or sample? [33:42] Money back guarantees are worth it. [34:00] Should you incorporate a loss leader that benefits people and draws them in? [35:09] Think about the full experien

This is the second episode in the series on "all the biases" broken up into eight categories. Last week, I told you about all the personal biases (and the rules your brain uses to convince itself it is the most awesome and amazing thing in the world). Today, we are going to talk about all the biases that relate to other people and groups. We will start out with general biases, and then have sections about the biases that apply for people we are similar to and those we are different from. And, in case you are curious, the other six categories of biases we will cover in coming weeks are: memories, future versus present thinking, selective attention, math is hard, lazy brain, and finally novelty and stories. I'm so excited to break those all down for you! And as a reminder, this series is not about digging deep on any one topic, but instead giving you just a little taste of each bias and how you can use it in life and business. Each of these biases will likely get its own episode over time, but this will allow you to learn a little about them, and how they relate to each other, now. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [04:32] Intro to general biases toward other people and groups. [05:28] This first term is probably one you are familiar with: groupthink. This is essentially what happens when people are in groups, and either because they want to have a harmonious experience or not rock the boat…or just the herding mentality of humans, the people within the group start to make bad decisions. These could be irrational or different than what the person would choose to do if left to their own devices, and it is often in an attempt to minimize conflicts. [06:01] One way Amazon combats this is by having a silent start to meetings (and I linked to an article in Inc. about this in the show notes). Essentially, the leader of the meeting has to write a very well-thought out meeting prep document, which is presented at the beginning of the meeting, and everyone will sit and read it silently to themselves. [07:18] Shared information bias can be counterintuitive. [08:03] Bike shedding is when it's easier to talk about a simple topic instead of the one big topic that you should be talking about. [08:29] Be aware of the bandwagon effect in groups. [10:20] It's harder to build the snowball than to keep it moving so you will have more effort on the front end. [10:55] People look better and are more attractive when they're in a group then when they're by themselves. Remember, things are not always what they seem, so don't be intimidated. [11:57] Because of hostile attribution bias you might think that the group will be mean to you. [13:07] Stereotyping is a natural tendency and doesn't have to be hostile. It's expecting someone who's a member of a certain group to have certain characteristics. [15:04] Humans are complex and belong to all sorts of affinity groups that make up our identities. [16:09] The bulk of your perception of any person is based on their group affiliations and a stereotypical bias which may or may not be true or accurate for an individual. [17:52] Implicit association, which is how quickly a word comes to mind or matches with a previous word that was said. That can show how closely they are associated. [20:10] Because of the moral credential effect, if you have tended to not be prejudiced in the past…your likeliness to be prejudiced in the future is actually higher! [21:21] Fundamental attribution error is important to keep in mind when thinking about how we assess the actions and choices of other people. [22:10] When people experience the flip of this – thinking others' behavior is due to a situation and their own behaviors are more about their personality, it is called extrinsic incentives bias. [23:25] When you make an internal attribution error to the whole group instead of the individuals that make it up, it is called ultimate attribution error. [24:04] When we apply this bias to individuals instead of a group, it is called the halo effect. [25:50] And, my general advice is to be aware of it and try to think of other people as multidimensional, and remember that every group is made up of multiple, multidimensional people. [26:18] PEOPLE LIKE US 00:26:34] Alright, moving on to groups of people like us. In general, we like people who are like us more than people who are not like us. This is called the in-group bias, and people are more likely to give preferential treatment to people who they see as part of their own group, or who they think are like them. [27:57] Another place where in-group bias can come up is when hearing about a victim in a story. Defensive attribution hypothesis occurs when people assign more blame as their similarity to the victim increases – this can be both in physical attributes or situational similarities. [29:25] Anthropocentric thinking is when we use human analogies and thought processes when considering less familiar, non-human things. A common example would be notin

This is the start of a new series on cognitive biases. To present the series in an organized fashion I found around 200 biases and then categorized them in a way that would be relevant to what we do here on The Brainy Business. I came up with eight categories, and I will go over each bias in the category in a pretty quick succession. A cognitive bias is an error in the way humans think. It's a way that is often not in our best interest. These biases aren't random. They are predictable and that is the basis for behavioral economics. This week we are talking about those personal biases that lead us all to believe we are uniquely talented and awesome…and generally better than everyone else. As you listen to the list, think about yourself – how have you experienced this in your own life? And also think about other people – have you seen this in others? How could you use that bias in the way you message to customers or attract people to your business? Show Notes [10:48] EVERYONE IS UNIQUELY TALENTED Optimism bias: Humans assume they are more likely to have a positive outcome in life compared to other people. [11:28] You want to look at ways you can use optimism bias to your advantage when setting big goals, but your day to day tasks should be more realistic and less than you think you can accomplish. [11:32] Planning fallacy is the tendency to underestimate how long it will take us to complete a task. [12:30] Do you ever find yourself with a list of 10 things you "need to do" today and you only end up getting through two? Understanding planning fallacy can help you do better in setting more realistic tasks (and therefore being happier - and more productive). [12:48] Naive realism is the belief that unlike other people, we see reality exactly as it is. [14:21] Try to be open to the perspectives of others. Your curse of knowledge will make this hard because you know a lot about your area of expertise. [15:01] In order to be successful in life and business, you need to be able to understand the perspectives of other people and how they differ from yours. [16:09] The false consensus effect is our tendency to overestimate how much other people agree with us. [17:41] Illusion of asymmetric insight this is when people think they understand their peers better than those same people understand them. [18:15] If you assume that everyone thinks you don't understand them as well as they understand you, it could be beneficial to ask them questions that help them explain more about themselves to you. [18:49] Illusion of transparency: people also overestimate their ability to know others, and the ability for others to know them. [19:56] False uniqueness bias is when everybody thinks of themselves and their business as a special snowflake with unique problems unlike anyone else's. [21:17] When you are communicating what you offer, use the Forer effect (also known as the Barnum effect) to your advantage. This could also be seen as the astrology effect or the fortune telling phenomenon: people tend to think statements that are vague and general enough to relate to a large group of people are highly accurate and "exactly them!" [22:42] Generalities can inspire people to take action, so keep that in mind when creating your messaging. [22:57] Illusion of control, which is your tendency to overestimate the influence you have over external events. [25:33] Egocentric bias is when you feel like you do more than the other person and because of our naive cynicism, we also expect other people to have this bias more than ourselves. [26:47] It's important to praise others for their contributions without diminishing your own efforts. [27:28] Social comparison bias: Because of self-preservation and wanting to stand out and be the best, we tend to favor potential candidates whose strengths are not in direct competition with our own. [27:50] Self serving bias, where we want to claim more responsibility for successes than the things we might have failed on. We want all the glory and none of the blame. [28:23] The spotlight effect is the tendency to overestimate the amount that others are focused on our appearance or the things we say or do. [28:53] Because everyone else is the center of their own universe as well, you can relax a little. [30:07] Because of the 3rd person effect everyone believes they're less likely to be influenced by mass marketing than other people. [30:40] A bias blind spot is where we see ourselves as less biased than others and tend to be better at spotting these cognitive biases in others than in ourselves. [31:23] Illusory superiority is where we overestimate our own desirable qualities and underestimate our undesirable qualities. [32:14] Restraint bias: We all think we have more restraint than others and generally overestimating our ability to resist temptations. [32:53] Trait ascription bias: We think others have very predictable personalities, moods and behaviors (that they are more one dimensional) and that we personall

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

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

We are digging into Apple's recent announcements today, with a heavy focus on Apple Card. When Apple made its announcements and Apple Card was included…I knew I needed to create an episode on this topic. Apple made a series of star-studded announcements about their new offerings, which included the announcement of Apple TV+, Apple Arcade, Apple News+ and, of course, Apple Card. An interesting aspect of these announcements is that they didn't talk about anything that is available yet, and didn't include any pricing information. In this behavioral economics podcast, I'll tell you why this was their true genius. It's different from previous announcements, but they are also taking a huge turn by switching from products to services. As we dig in, I'll explain where Apple did some really smart things and took a strategic approach to these announcements and their shift in offerings. Plus, tips for you to take away and apply in your own business. Disclosure: Specific details were accurate at time of recording. Policies are subject to change. Find the most current details at Apple.com. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [03:02] When Apple made its announcement, I knew I needed to talk about the Apple Card. In last week's Facebook Live I also let talk of the Apple Card run the discussion a bit. I did tie it back to the topic of loss of version and anchoring and adjustment, though. [04:21] Last week, Apple made a series of star-studded announcements about their new offerings, which included the announcement of Apple TV+, Apple Arcade, Apple News+ and, of course, Apple Card. [04:43] People think it's weird that Apple didn't talk about anything available and didn't disclose any pricing. In reality, this is the true genius behind the announcement. [05:09] It's justified for Apple to make a shift, because they are changing their offerings from products to services. [05:30] People aren't logical. People say they think and will do one thing…but their subconscious will often think different (Apple ad throwback alert!). [06:15] When we look at the announcement from a behavioral economics point of view, we'll see a lot of smart things that your business can use or learn. [07:03] In the episode I will talk about building anticipation and expectations, the delayed pricing strategy, subscription models, framing, herding, how familiarity breeds liking, and the value of celebrities. [07:20] BUILDING ANTICIPATION AND EXPECTATIONS While it has generated a lot of complaints from our logical brains, I would argue one of the smartest things Apple has done is announced all the greatness of the services before they are actually available. [10:39] We thrive on the excitement of anticipation. [11:23] BUT having anticipation creates loss aversion and perceived ownership, which also means you are much more likely to feel the need to experience the treat at the end or to at least test it out and see how it meets or exceeds your expectations. [11:51] Being top of mind is key in influencing buying behavior. [13:06] Far too many organizations wait to announce a launch until it is actually launching. In reality, people need time to get really excited about things. [13:41] High expectations are okay (as long as the actual release isn't a total fail), because studies show that the brain gets what it expects. [14:44] Building expectations of greatness means people will expect this thing to be good – and we expect it to be really REALLY good if they went out of their normal strategy to announce it before it was ready. [15:12] THE DELAYED PRICING STRATEGY The truth about pricing is price never about the price. Everything that comes before the price matters much more. [15:36] Creating value is about framing and anticipation…which Apple is taking time to let ruminate before the pricing is announced. [16:27] HERDING This also allows for herding behavior to be triggered earlier than it would otherwise as people start talking about the products. [18:30] HOW FAMILIARITY BREEDS LIKING Speaking of herding behavior…our brains don't just herd behind others…we also do a sort of self-herding, and "get in line behind ourselves." [20:46] THE VALUE OF CELEBRITY Our brains love celebrities and we associate all their qualities with the brand of Apple directly now. [21:44] HABITS AND SUBSCRIPTIONS Apple is jumping on the subscription train. [24:57] Apple Arcade is an aggregator of games: all you can play, across all your Apple devices, with NO ads and a commitment to privacy. [25:21] FRAMING People have said what they want. Apple is framing their new offerings with the things that people have said they want. [25:38] Apple Card is a framing story more than anything. [25:57] A lot of the functions and features being touted in Apple Card already exist. [26:12] Apple asked a better question to uncover what people care about, and then (here's the kicker) they found a way to frame the product and message so it is within those parameters. [28:12] Why haven't other b

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

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

This behavioral economics podcast is another foundations episode where we discuss the E in NUDGES: expect error. I think this might be my favorite of all the types of nudges. This is really the reason we need nudges at all – and why choice architecture even exists. Choice architecture takes a lot of time, effort and strategy to do well and having a background in nudging is essential to helping your customers and employees make good choices. If we humans did not make errors, we would not need help in making decisions. We would be able to evaluate all the possible options and make an informed decision every time. Because we don't and can't…we need choice architecture. And it is all built on expecting those errors to properly build in nudges. In this episode, I talk about different types of errors with real life examples and how to apply this information to your life and business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [05:02] If humans didn't make errors, then we wouldn't need help making decisions. [05:16] We need choice architecture, because we don't evaluate all of the possible options and make the most informed decision every time. [05:36] When it comes to errors – we can expect humans to err on nearly anything. No matter how brilliant someone is, they will still make errors throughout their lives. [06:01] Quote from Nudge: "Beethoven wrote his ninth symphony while he was deaf, yet he would frequently misplace his house keys. How can people be simultaneously so smart and so dumb?" This is what makes us human. [06:42] Errors come in many fashions – as I said it can be as simple as forgetting your keys or leaving the card in the ATM. These are actually part of a subcategory of error called postcompletion error. [06:57] Postcompletion errors occur whenever we have a task to do, and once it is partially done, we mentally check it off the to do list. [08:41] The list of potential errors is truly endless. [08:59] The dinging noise your car makes when you don't have your seat belt on is a nudge, because manufacturers expect you to make an error at some point. [09:24] Check engine and filter lights are also nudges. [10:31] Try to incorporate all of the senses when creating a nudge. [10:52] Any time something is not consistent enough to become a habit (check out episodes 21 and 22 if you need a refresher) it is a prime candidate for error. [11:15] Consistency is key in business. [11:35] A good example of this is taking medicine every day at a consistent time. [13:06] Subscription models are really useful when an error is expected. They help the customer do what they are supposed to do, and it gives the business a built in reason to follow up and stay top-of-mind. [13:33] In the case of an air conditioning unit…it is important to have the ducts cleaned on a regular maintenance schedule. [14:16] I would recommend regular check ins with their customers – on more than just maintenance tips. That way, you can check in more than just once every three years (which is longer than you want to go if you want to remain top of mind). [15:24] People want heat when it is cold and AC when it is hot (this is availability bias – episode 15). [15:33] Send an annual check in or reminder in the fall and spring. The AC company could also create some type of certification program to prove that the unit has received recommended maintenance. This could help when selling a home and realtors could also be partners. [16:42] You get all this benefit from a little strategic foresight and understanding of when people will make errors, so you can step in and be the solution. [16:56] In any company, there are bound to be tons of places where people will make errors – both employees and customers. Dig deeper and look for more opportunities to solve errors before they happen. [18:28] Staff at the Ritz-Carlton have the ability to make things right for customers without having to ask for permission. [20:06] When you are trying to anticipate errors to nudge, you should be looking all over the company – not just at customers, but employee processes as well. [21:39] Busy or overwhelmed brain, which we talked about in episode 32. This is where postcompletion error comes in. [22:21] Our conscious brain can only focus on so much and the subconscious is making the vast majority of our decisions using rules of thumb (as you know – this is the basis for behavioral economics). When we get busy, we become overwhelmed and have more errors than usual. [22:34] Things that aren't habits are easily forgotten, but habits also get forgotten. Try to be present in the moment or nudge your team or employees to remember. [23:19] Too many nudges can become one more thing to not pay attention to. Try to get into the mindset of your customer or staff. [24:10] Things like auto-pay and subscriptions can be helpful nudges. [24:51] Stop trying to change the behavioral errors and force people into a system that doesn't work. Instead look at what you can be adding into the

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

Last week, I kicked off the different types of nudges and how they apply to choice architecture with incentives. The word NUDGES is an acronym for the categories of nudging, and we are breaking those down episode by episode over six weeks to showcase different aspects of choice architecture and nudging. Now that we tackled incentives last week, we will jump into understanding mapping – both what in the world that means...and how to use it to your best advantage in your business. In this behavioral economics podcast, I share how nudges and my 5 Steps for Mapping can be used in your business to encourage the buying process. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [02:56] Thaler and Sunstein describe a mapping as "the relation between choice and welfare" and use a simple example of choosing a flavor of ice cream in one of their papers on choice architecture. [03:30] At its core, the path from the choice and its outcome is called a mapping. [03:50] For ice cream, you have some mapping in your brain that let you know which flavors you would enjoy the most. [04:20] It's more difficult to see the mapping with more complex choices. [04:49] Their paper uses the options of surgery, radiation, or watchful waiting with a cancer diagnosis. Comparing the options weighs a longer life against negative side effects. [05:45] In spite of this, most patients decide which course to choose at the very first meeting when they are given the diagnosis. The option they choose also depends strongly on the type of doctor they see. [06:44] My five steps for a choice architect to make the mapping as clear as possible: 1) encourage thoughtful review and open-mindedness, 2) break it down, 3) make it relatable, 4) help them get there, and 5) call to action. [07:25] With big decisions it's important to understand your biases. [08:21] It's important for doctors as the choice architects to understand the way they are framing the options. [09:29] Our brains put more weight on the default or what we hear about first. [10:02] The best choice architect should know that a person shouldn't make a decision when they are highly emotional. [11:06] Breaking it down. If you want to make a map, it's important understand all of the options available. [12:41] That way you can anticipate the questions a potential customer (or patient or client) will have, the things they need to know, and guide them to the right recommendation. [13:11] Make it relatable using simple rules of thumb. [13:56] Use the customer's language and an example that they can relate back to. [15:16] Find the thing that customers care the most about. [15:50] The way you build your choice architecture is to think about how your customers will determine what to buy. What is the primary reason they are buying? [16:06] What do your customers need to know or hear, and what rule of thumb will make the choice simple and easy to make? [16:51] Once you know what your customers need, they still may require a little sample to get there. Incorporating the senses can help them make a decision. [17:44] Your call-to-action is the final step - it is important because it helps the chooser realize it is an appropriate time to stop analyzing and consider making a choice. [18:41] It's also important to prime all throughout the interaction. [19:15] To encourage thoughtful review, an air conditioning company should know that the customer has other options. [20:11] Frame the cost in a relatable way. [21:49] Relating their mindset to the right point is your "taste test" when they can't have a physical sample. [22:23] Ask for the sale...and then stop and wait. [23:52] If you use a script, understand the intent behind the script and know the content by heart in order to have a true conversation. [24:12] Price is never about price. It's about all of the things leading up to the price. [25:42] Here are some basic mapping examples (because the final installment of the series – the "S" in nudges – is for structuring complex choices). [26:29] Using a menu to break options down into manageable chunks. Well worded descriptions help you evaluate if the item is something that you would like. [28:10] One well chosen word can make your brain want to read the description. [30:00] Our subconscious brain can take in a lot of information and glosses over a lot of things. [31:03] These menu descriptions include some taste words as well as relativity, anchoring and adjustment, and framing. [31:55] A nail salon example. [33:47] Adding more may seem like a benefit, but when it doesn't have a useful map so the chooser can compare, adding more options can cause a lot more harm than good. [34:47] When creating a product website, consider what you present from the mind of the customer (think back to the menu example). [36:30] With a service website keep in mind the concept of incentives. [38:00] How our brain sees miles per gallon wrong, and why gallons per mile is better (yes, they are different). [39:54] How can you put numbers

The word NUDGES is an acronym for the categories of nudging, and we are breaking those down episode by episode over the next six weeks to showcase different aspects of choice architecture and nudging. Today, we are starting with the N of nudges…which is for innnnnnncentives. This episode will explain what iNcentives mean when it comes to nudges, I will reference some excerpts from Nudge by Richard Thaler and Cass Sunstein, as well as some of their research papers. The goal of this behavioral economics podcast will be to help you think about how to offer incentives and nudge your clients to look at things differently while using nudges in your business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [03:21] You are a choice architect if you present options to people and indirectly influence their choices – this is everything from where you place food in the line in the cafeteria to an opt in form on a website to doctors presenting treatment options. [04:23] A nudge is something that helps someone make a choice. This is everything from the order things are on a list of choices to the wording used to them, and yes, incentives. [04:51] Supply and demand fluctuate in predictable ways and are like two opposing forces in an intricate dance. [05:12] Proper incentives can help to encourage sales when you understand how they work. [05:14] The tricky thing about incentives is that they are never one sided and our lazy brains don't tend to think about all the proper aspects of the choice presented. [05:51] Good choice architects understand how to structure the nudges and architecture to do what is best for their business. [06:02] Ask these questions to figure out what all the incentives are and how they work together: Who uses? Who chooses? Who pays? Who profits? [07:17] I am going to use the example of air conditioning as a constant throughout the series. [08:36] My husband and I bought a house that didn't have air conditioning installed. The builder gave us the option of adding air conditioning whenever we wanted. We decided to test out a Seattle summer and see if it was really needed. [09:08] After one super hot summer, we decided to get the air conditioning. [09:19] We had someone come to the house and do the evaluation for air conditioning. I learned the standard formula based on the square footage of the house, the number of vents, etc. [09:52] You think the choice is, "Do you want air conditioning or not?" Yes or no. Of course…it's not really that simple, which is why this air conditioning example will be featured throughout the series. [10:28] For the air conditioning example, the person who uses is me/my husband. [10:57] Who chooses is my husband and I, but the choice is much more complex than meets the eye... [11:31] When cooling our home, we actually have many options such as using fans, staying in hotels, or filling our bathtubs with ice. There are also multiple companies to choose from once we decide we want air conditioning. [12:16] Who pays is my husband and I (note, payment is not always monetary). [12:45] The company that sells the air conditioning units (and their employee making the sale) are the ones who profit (as well as their manufacturers). There are different levels of profit. [13:57] I know there is markup on the items and I am paying for the convenience of not having to invent and build air conditioning. [14:42] What happens when there are conflicting incentives? [15:57] After we agreed to purchase the air conditioning, we were asked if we wanted a wifi enabled unit. [16:31] Wifi enabled allows you to adjust the temperature using your phone. [17:42] When finding this out my main question was, "Why would anyone NOT want this?" [17:55] It's also the same price as the unit without wifi. This got me thinking about what I would advise this company if they were a client of mine. [18:07] Why is it the same cost to the consumer? And why wasn't that choice communicated better? Where was the nudge? [19:32] Do I want my choice made by a guy who was influenced by his commission? (NO) [19:44] This happens all the time because of conflicting incentives. [19:53] The advice I would give this company is to align the incentives to find the win-win-win scenario. [21:13] If it was necessary to increase the price for the wifi enabled model, it should be the default option (the price you start with) and then let the person take away wifi if they don't want it. This is your choice architecture. [21:37] Now the question becomes, "Do you want the wifi enabled unit or not?" versus "Do you want AC or not?" This simple nudge and shift in the architecture completely changes the question in the mind of the consumer (for a way that is favorable for the business). [22:18] Sometimes as a company, you need to take a step back to understand what is worth paying for. [24:18] Salience, or saying something is salient, is the way an item "stands out" from other items. [24:44] The consequences of a choice are salient means that the

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

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

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

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

Mirror neurons are the topic of today's behavioral economics podcast. We are really going to get into what they are, how they work and why they matter in any business. Mirror neurons are the key to empathy and our ability to learn from observing others instead of only by doing things ourselves. Mirror neurons have done some amazing things for all of humanity – first of which is our ability to learn by observation and second is our ability to empathize. In this episode I explain the accidental discovery of mirror neurons, and talk about learning by observation, our other senses, facial expressions and empathy. I also include a lot of additional resources for further learning and explain how this knowledge can be applied to any business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [03:52] Mirror neurons are the key to empathy and our ability to learn from observing others instead of only by doing things ourselves. [04:21] Mirror neurons were discovered in the early 1990s. The whole thing happened by accident when scientists noticed that a monkey's brain lit up when one of the researchers walked into the lab eating an ice cream cone. [06:32] We humans have mirror neurons as well, and they greatly impact our lives everyday. [06:47] Mirror neurons have done some amazing things for all of humanity – first of which is our ability to learn by observation and second is our ability to empathize. [06:55] We humans tend to take for granted how quickly and easily we learn things simply by watching others. This isn't something every species can do. [07:46] Without mirror neurons, life as we know it would not exist. [08:08] Mirror neurons are how the species learned to hunt, gather, farm, build homes, and all the skills we use every day. [08:26] The collective intelligence of the species grows very quickly as one person learns to do something because others can watch and have their brain behave as if it has already done it once before. [08:45] We each have 100 billion neurons in our brains and each of those has 1,000 to 10,000 contacts with other neurons forming associations. [09:36] Mirror neurons are actually found in one spot in the brain – in the frontal lobes. The front of the brain is also home to our ordinary motor control neurons. [10:51] A study found that the mirror neurons were more active when the context was included – meaning both intentions and actions matter and relate for mirror neurons. [11:03] Mirror neurons will not respond to random, meaningless gestures – it has been found that they are specially connected to respond to actions with clear goals. [11:46] The processing of the senses actually happens in the brain. Because our brains bring context, interpretation and analysis to everything we experience…it turns out they don't really know the difference between what is physically in front of us, versus on tv, or a print ad, spoken into our ears or read in text. [12:54] Mirror neurons are what allow us to experience drinking spoiled milk when we see someone else do it. [13:55] Seeing things is the best way to trigger mirror neurons, but the other senses will trigger them, as well. [14:10] When someone smiles at you, your brain brain reacts as if you are smiling too. [14:32] You don't have to be consciously aware of what's happening, you just do it. [15:29] The response of mirror neurons is quick, intense, and automatic. [15:44] Mirror neurons may well be at the core of how we understand the actions of others and empathize with them. Without mirror neurons, we would probably not have any awareness of the actions, intentions and emotions of others. [17:38] All that separates us from other people and experiencing the same things they are experiencing at every moment they are within our proximity…is our skin. [17:53] This is why people with phantom limb syndrome can be helped by watching someone else get a massage. [19:45] Mirror neuron therapy helped a couple whose baby had a stroke at 10 days old regain body control on his left side. I've linked to the touching TED Talk. [21:16] BUSINESS APPLICATIONS - Video is effective. When you can show someone taking the action you want your customers to take, it makes it easier for them to follow suit. [22:54] Any time you can get someone to see another person experiencing your product, it is good. HOWEVER you need to be very careful of the facial expressions and all the slightest nuances of the person in the video. [24:44] If the subconscious can fill in the gaps when presented with a few images…that is important for using mirror neurons. [25:07] Our mirror neurons allow us to relate to what is being displayed in the pictures and we fill in the gaps to make sense of what we are supposed to do. [25:33] A well produced story with all the RIGHT details is better than a drawn-out, verbose explanation any day. [25:46] Great storytellers can hold conversations well. Our brains allow us to experience the words in the story as if we are participating ourselves. [25:57] Inc

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

I would like to wish you all a Happy New Year! This is the first behavioral economics podcast episode of 2019. Like so many of you, December is a time of reflection for me, and planning for the year ahead. I do like the "fresh start" that comes with a new year, new quarter, new month, new client or new project…but what happens when the newness wears off? Why is it so hard to keep our resolutions even when we have the best of intentions? That is what this episode is all about. I am going to dig into 5 ways we have all been approaching resolutions wrong, and give you the strategy you need to change that in 2019 once and for all. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [07:38] What do you think about resolutions? Personally, I have never been a big fan. [08:18] I have never enjoyed investing time in things that will fail. The subconscious brain makes 99% of your decisions. It makes those decisions based on proven rules of thumb which it has found to work over your lifetime or our genetic evolution as a species. [08:44] When you say you want to change something you can have the best of intentions, but there's a reason resolutions are easier said than done. [09:28] Our brains are constantly looking for rewards and many of the things that we find rewarding are the things that we want to change. [10:32] TIME DISCOUNTING - I call this the "Monday effect." Have you ever said you would start something "on Monday"? Then…in what seems like minutes instead of hours…the alarm goes off. Where did the motivation go? Why do you feel like a completely different person today than you did last night? [13:07] Maybe tomorrow is a better day to start. Then tomorrow never really comes either. This is time discounting. [13:31] Studies have found that when you talk or think about your future self…the brain lights up as if it were talking about a completely different person! [14:20] "Future you" is actually a different person than you. [14:37] The problem comes when I wake up on Monday morning and it is time to face the music. "Oh, you mean I need to do that stuff?" [15:02] Time discounting compounds with overconfidence and optimism to make a perfect storm against change. We overestimate how good we will be at something. We also underestimate how long it will take to accomplish something. And overestimate how our outcomes will be compared to other people's outcomes. [15:50] Making your future self "real" to you so that you see yourself in the commitment can make a difference. [16:21] People saved more for retirement if they were shown a picture of themselves that looked like they had aged 10 or 20 years. [16:55] 1. When you are making the commitments, ask yourself if the plan is realistic. Think about this in terms of yourself right now. [17:19] 2. When you feel like you want to hit the proverbial snooze button (and you will) remember the commitment you made and why it is important. [17:43] 3. When making your commitment, make it something you can turn into an "I don't" statement. [18:20] ANTICIPATED REGRET/COUNTERFACTUAL THINKING [18:25] Anticipation of regret is a huge reason people delay taking an action. [19:11] One reason regret is so powerful is because of counterfactual thinking. This is easier known as "what if" or "if only" thinking. [20:28] Your brain will combine the best features of unselected (and heavily evaluated) items into a "super choice" (which doesn't really exist) to make you feel even worse. In this example, your brain creates a super safe, awesomely stylish car that you "could have had if only you hadn't picked the stupid good deal" car. [20:41] Our brains want the immediate gains and benefits of "now" instead of waiting for something that is good for us in the future. [21:32] To make your resolutions stick, watch out for anticipated regret and all the times you start to think about "what ifs" and "if only's" that aren't leading to your goal. [21:52] Before you pick your resolution, be sure it is something you really want and are willing to make a change for. Think about why it matters and come to terms with the things you are going to give up in order to get it. [22:33] WILLPOWER (BATTERY VERSUS SNOWBALL) [22:40] There has been debate over the years as to how willpower and self control are created and maintained over time. [23:05] New research out of Texas A&M University's Human Behavior Lab has found that it is actually BOTH – a battery and a snowball. [26:59] When you try to commit to too much and come in too hard and too fast, you are setting yourself up to fail. [27:27] Setting yourself up with too many goals and tasks is also a recipe for failure. You can't focus on so many things at once. [27:48] What is the one thing that will change your business next year, and how can you put all your effort toward meeting that one goal? [28:40] Advice from Warren Buffett: Write down your top 25 goals for your life and business. Circle the top 5 most important goals. What happens to 6-25? They become your "avoid

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

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

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

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