It’s Not the Price—It’s What the Brain Thinks About the Price With Melina Palmer

Episode 58 Melina Palmer
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[00:00:00] Cold Open
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[00:00:00] Melina: Whether or not people buy it, not about the price. That's not what drives that behavior. Everything that happens before we get to the price, that psychology matters more than the price itself.

[00:00:11] Melina: If you aren't thoughtful about the psychology, if you make it overwhelming, if it doesn't feel very clear, if you're not tying into that customer persona, what they care about, value propositions, all those things, uh, sure they may tell you they picked something else because you were too expensive. but that's not typically what did it, ?

[00:00:29] ​

[00:00:34] Meet Melina Palmer: Expert in Behavioral Economics
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[00:00:34] Allan: Welcome to the Lean Marketing Podcast. I'm your host, Allan Dib. Today with me is Melina Palmer, and she's an expert in applied behavioral economics, which for us as marketers, she helps us understand why people buy and why people buy in. She's the author of multiple books, including What Your Customer Wants and Can't Tell You, What Your Employees Need and Can’t Tell You

[00:00:58] Allan: And the one probably I'm most [00:01:00] excited about is the truth about pricing. You know, pricing, packaging positioning is something that I spend a lot of time thinking about. I spend a lot of time talking with clients about. And so, uh, welcome to the podcast, Melina.

[00:01:11] Melina: Yeah, thanks. I'm super excited to be here and pricing is one of my favorite things too, so I'm excited to talk about it.

[00:01:19] Allan: Amazing. We're gonna geek out, on this episode, so, for those who don't know you who are you and what do you do and who do you do it for?

[00:01:28] Melina: Yeah, well, um, my work is in applied behavioral Economics, and I have though a background in marketing and brand strategy. I like to say, essentially for everybody's like what is behavioral economics?

[00:01:41] Melina: What does that even mean? Right? Is like if traditional economics and psychology had a baby, essentially you would have behavioral economics, and it's really looking at how humans actually make decisions instead of what someone somewhere thinks people should do, it's, what do people [00:02:00] actually do. And how can we understand how people make decisions so we can help, nudge the best decisions for people.

[00:02:07] Melina: And so, my work is in understanding how the brain really works and helping people in business to better communicate so that customers buy and employees buy in. And we do that with the books. We have courses and consulting programs and things where I work with people and do keynotes and trainings and podcasts and YouTube and all the things right.

[00:02:30] Allan: Awesome.

[00:02:30] The Psychology Behind Pricing
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[00:02:32] Allan: So, Melina economists would have us believe that price is a function of supply and demand, and that people behave rationally and they buy based on rational reasons. What have been the most surprising things in terms of buying behavior that you've come across in some of your research as to what are some of of the buying triggers?

[00:02:50] Allan: What are some of the things that would surprise us where people are buying irrationally and not behaving according to the supply demand curve that [00:03:00] economists give us in their 101 textbooks.

[00:03:02] Melina: Yeah, in the truth about pricing, I think I give you the answer to what the truth is on page three which is essentially you know, whether or not people buy it, not about the price. That's not what drives that behavior. Everything that happens before we get to the price, that psychology matters more than the price itself.

[00:03:21] Melina: If you aren't thoughtful about the psychology, if you make it overwhelming, if it doesn't feel very clear, if you're not tying into that customer persona, what they care about, value propositions, all those things, uh, sure they may tell you they picked something else because you were too expensive. but that's not typically what did it, right?

[00:03:39] Melina: And when we look at so many brands and things that people buy where, it's like, functionally makes no sense, right? It's really so much where you can tie into identity, when you can understand those deeper motivations that people have by slapping a logo on something and it [00:04:00] goes from being worth $5 to being worth $50,000 dollar with the right emblem. It's really a fascinating, experience that comes in there. Of course anyone can use, powers for good or for evil in any experience, right? And with any knowledge.

[00:04:17] Melina: But one of my favorite quotes here is from a friend of mine, his name is Matt Johnson, he's written a few great books. And in one of them the way they say is if I believe that these shoes make me run faster and jump higher, who's to say that they don't? Right? So what's really cool is when you have the identity of a brand, so we'll just use Nike as an example there.

[00:04:43] Melina: It could be another shoe brand. But like by talking about how it's gonna help you to be the stronger athlete. If my mindset now changes because I feel like I've got my Nikes on, I'm a Nike person and I'm gonna go run my fastest and I can do [00:05:00] it because this brand is here to support me because of the way that our brains work.

[00:05:04] Melina: You might actually get that PR, right? You might run faster that time. It's like, was it the shoe? Was it your brain, was it both? It doesn't always matter. But where we can have this fusing of identity in a way that then would make someone love that brand even more. I think it's a really cool thing that any brand can build if they wanna be thoughtful to that in a way that's really exciting.

[00:05:28] Melina: And again, that person's gonna buy Nike's kind of no matter what. It's not about that price for them, it's about the performance. And so, yeah, that, that's my favorite thing about all of this.

[00:05:40] Luxury Branding and Consumer Behavior
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[00:05:40] Allan: I've been absolutely fascinated by just things that are essentially ordinary products that can be positioned as luxury. So, I mean, when we think of luxury, we think of maybe, very expensive brands like a Rolls Royce or a Louis Vuitton or whatever. But I mean, I'm seeing even things [00:06:00] just that are ordinary kind of functional products that are being positioned as luxuries.

[00:06:05] Allan: For example Aesop soap Right? Just hand soap. Right? And that's, in a positioned in a store and looks amazing and all of that sort of thing. Most recently, uh, I came across Touchland, a Hand Sanitizer brand. And I mean, I think they sold for like $180 million. And again, it looks like some kind of luxury thing.

[00:06:25] Allan: I recently came, saw in my Instagram ads. A brand of Norwegian beanies that were hand knitted or whatever, they're a little beanie for $200. And I'm like, it's just incredible, the normal, ordinary kind of products that can be positioned as luxuries if they're positioned right, if they're packaged correctly, if they're priced correctly as well.

[00:06:46] Allan: So I think, that's really, really fascinating how you can go from just ordinary to extraordinary and the product be essentially functionally the same.

[00:06:55] Melina: Right. Well, and you look at even where you're saying like Louis Vuitton, right? [00:07:00] Uh, functionally a plastic bag would do the same thing, right? There's no need for this, right? Um, whatever. Brand of handbag you pick.

[00:07:12] Scarcity and Exclusivity in High-End Markets
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[00:07:12] Melina: But I actually give an example, I do a case study on Hermès and the Birkin bag in the truth about pricing in that, what I love about the Birkin specifically is that, so it's this incredibly expensive bag.

[00:07:26] Melina: It is something that they are hand stitched. They have a very limited quantity that they put out every year. And while you can buy other things from Hermès throughout the year, you can't just go buy.

[00:07:38] Melina: it's a limited quantity and it's up to the. Sales associates to determine who to invite to buy the bag, and so many other brands would say it's like the free gift of something.

[00:07:50] Melina: We're gonna encourage people, but like, no what they have done is that you get the opportunity to pay $10,000 to buy a bag and you don't get to pick the color and you don't get to pick the size [00:08:00] and you just like are thankful that you were given the opportunity to buy this thing and shell out the money for it.

[00:08:06] Melina: What I really love about it though, is they have then built it to say, so the sales associate has to choose you, which encourages you to be nice to people. So it's not just that you have a bunch of money and you get on the list. You know, potentially that's part of it, but you also then now have to buy enough other stuff from Hermès to be even eligible to buy a Birkin, which is a cool way that they have that set up, across their brand.

[00:08:36] Melina: And just to show that even if your brain, feels like people are only gonna wanna do it if we give them something free. Or if we do the discount, we have to bundle. I see other people doing a sale, so I guess we have to do that too.

[00:08:48] Melina: Humans are a herding species, so that's important to know. When you think about customers and people buying this is why social proof, ratings, reviews, testimonials, those things all matter. [00:09:00] And when you think about your own self as you are pricing and marketing, the way that you feel you have to communicate because this is what everyone in our industry does.

[00:09:10] Melina: Or I see this across my TikTok or Instagram or whatever else, so it must be the way we have to do things. I encourage you to break free from that mindset. You don't have to do anything. You can choose to change up whatever you want, and once you feel that you have that freedom, you have the blue ocean of, yeah, the great news is if everyone else is doing this and no one's ever done a membership model in your industry, or no one has ever done whatever.

[00:09:40] Melina: Everything else is value discount and you wanna be the quality $200 beanie like cool. There's a market for it, right? Not everyone's gonna buy it, but you don't need them to, right? So know your market, you have that scarcity working for you, the effort going into it. And you can position it, but you have to go all in.

[00:09:59] Melina: If you're kind of [00:10:00] walking the line that like sometimes it's quality, but we also do big discounts and you can get one for $10 and the next day it's $200. Not gonna work

[00:10:09] Allan: Well, price is very much a signal. I mean, if you have no other information about a product and one is priced dramatically more than another that in itself is information that tells you, wow, this product is probably a lot better. And I wanna double click on something that you said similar to Hermès.

[00:10:26] Allan: So I follow a lot of car forums and particularly Porsche and Ferrari. You can't just walk in and buy the high-end version of a Ferrari or the Porsche 911 GT2 RS. You have to be on a waiting list. You have to already have bought some of their lower end models before you'll be considered for the high-end models.

[00:10:45] Allan: And often the resale value of those cars are more than the retail value that you buy.

[00:10:50] Allan: So you want to be always oversubscribed. You want more demand than supply. It's when you've got those dynamics wrong, then that's a [00:11:00] massive problem.

[00:11:01] Melina: Right? Yes. Yes. Scarcity is a very important aspect for any brand but knowing kind of which side you're on.

[00:11:09] Quality vs. Value: Choosing Your Brand's Position
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[00:11:09] Melina: A first decision I encourage people to make as you're listening here, pick whether you want to be a quality brand

[00:11:17] Melina: that would be like we're talking about Ferrari, Louis Vuitton but it doesn't have to just be those right or huge luxury. But if you're gonna be built on quality, to where maybe that's in it's handmade items or it's very sustainable, you have a lot of expertise. You do wanna be a luxury item.

[00:11:34] Melina: Whatever. Right? That being quality brands or if you're value, right? And if you wanna be on the value side, then you're gonna do more discounts. And you would be like a Costco, right? And Costco has so much that they're doing to signal price being part of it, but also it's that warehouse feel. They're not investing in ads and big things because everything they do is about value to their members.

[00:11:57] Melina: And you feel it, right? And so [00:12:00] once you pick a side, you can go all in on it and you just don't wanna live in that gray area. That's a really important thing for anybody to do in a brand.

[00:12:07] Allan: Yeah. It's that barbell strategy. I mean, if you wanna be the lowest cost discount or whatever, great. If you wanna be the high end, fantastic as well. It's that messy middle that where everyone is trying to kill each other. They're unsure. it's very much a gray area, as you said.

[00:12:21] Applying Behavioral Economics in B2B Sales
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[00:12:23] Allan: So with that I know that one of the objections I'll hear people say to this is like, oh, well that works in consumer brands or that works in luxury, or whatever, but we do software, we sell to CEOs, we sell to businesses where B2B or whatever.

[00:12:38] Allan: How would you respond to that and what are some of the strategies you might employ there?

[00:12:44] Melina: Yeah, well, believe it or not, it's not the first time I've heard the, that same question, right? So I am ready for this one. So at the end of the day, you still have humans buying those products or services on the other side. And yes done work with and provided [00:13:00] different aspects of advice and had students and all that from Google, from Apple from large that you're selling to multimillion dollar contracts, these things all still apply. It's still humans on the other side at the end of the day. The difference really is that it's more complex and actually the human behaviors matter even more when you're looking at those service-based sales in a larger contract when you're looking to sell into an organization because you have multiple people that are decision makers.

[00:13:31] Melina: And so, the big advice I give to people is to know who really has the influence inside of that organization. And you want to be aware of there are like multiple people throughout the process that really matter. So maybe the CEO loves the idea and you've sold them on it and like amazing. That's great.

[00:13:50] Melina: They're interested, but you might have a power user in there somewhere who is using an old software system that they have a status quo bias for they [00:14:00] are familiar with. And even though they're lower down the ladder within the organization, they might have a lot of sway where they say, Hey, you know, it's me or the software.

[00:14:10] Melina: And if they're the only one that's trained on the thing and to say, I'm not interested, I won't do it. I don't care. So you can do it without me. Then, uh, that can kill a whole sale from like one person who's not interested. And if you didn't know about that and understand how their status quo bias and feeling toward change and loss aversion is going to impact that experience, you could lose that sale.

[00:14:34] Melina: But if you do know who they are and you're able to be thoughtful about how you position for those sales, it can make it so that person is now a big advocate instead of an adversary.

[00:14:43] Allan: Yeah. The other thing that I found in those kind of selling environments risk is a huge factor, right? So you don't want to be the dummy who's saved a few bucks on the software or whatever. And now data is corrupt or whatever, and you are either [00:15:00] looking at down the barrel of getting fired or looking stupid to your boss or explaining to someone why you did that.

[00:15:05] Allan: So for you choosing the safe options, kind of like no one ever got fired for buying IBM right? And I come from the IT industry. Back in the day, IBM was never the best performance. It was never the best value. It was never the best price. But, it had that safety factors. It's like, well, I bought the leading vendor right in the space.

[00:15:24] Allan: so, you couldn't be blamed for something that went wrong. So risk is definitely a, a huge factor whether you are in the C-suite reporting to the board, or whether you are someone in the middle management or whatever. You are reporting to someone and you are either gonna look silly, or you are gonna be the one who chose a good, safe option.

[00:15:45] Allan: And often there's very little upside in you saving a lot of money, but there's a lot of downside. If you messed it up and you chose a bad vendor and it all went to hell.

[00:15:55] Melina: Right. Well, and in that way what's great is as this, say you're trying to [00:16:00] compete with the IBM, whatever that would be But when you're not the status quo. You're trying to get someone to take a chance on you, like you're saying it, it doesn't necessarily, it's not about saving those few bucks, right?

[00:16:12] Melina: But it may feel like that's the thing you have to lead on. But if you were to say, Hey, like, what is it that you're able to do that they really care about, that they are not getting from your top competitor. So if that's maybe it's about customization, maybe it's about response time. What would be something that other people are gonna have concerns about?

[00:16:33] Melina: How quickly you're responding, what's the, you know guaranteed uptime or how quickly things are gonna be coming back online. How safe are the protocols that you have in place? Like if you can be calming those fears in a really clear way and being able to tap into something that is difficult for them that they might not be thinking about.

[00:16:53] Melina: I absolutely love, I just had someone on my show and he talks about poking the bruise for someone, [00:17:00] right? So bruise is a really great example in that. So those customers like potential clients for you, they might be a little bruised from whomever they're working with already, and you can ignore a bruise for a really long time.

[00:17:12] Melina: But if I know you have a bruise and I go, hit it on your arm, or whatever it is, that is gonna be something that you think, oh yeah, I do hate that. Like stop. I don't want that anymore, right? And so if you can find that right bruise. Poke at it a little bit. It might be the thing that's gonna actually nudge that change in behavior for someone.

[00:17:32] Melina: But you have to understand that customer, where they're coming from, and the true value that you provide. Again, all the psychology in this conversation and pitch in a clear way that shows that you understand them and what they're in it for to help them feel safe and to where it's saying like, man, we can't stick with this thing we've always done. It sucks compared to this and, and they're gonna help us solve this problem.

[00:17:55] Effective Pricing Strategies and Common Mistakes
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[00:17:55] Allan: What are the small hinges that kind of swing big doors that you've [00:18:00] found in your work where, hey, this is a very common pricing, packaging positioning issue that you come across on a daily basis when you're working with clients, like for example, from a marketing perspective, one of the most common things is like, hey our target market is everyone, or having a very wide target market or not very, being very clear from a messaging perspective. So from a pricing, positioning, packaging perspective, what are some of those small hinges that really swing the big doors that make a lot of difference for your clients?

[00:18:30] Melina: Yeah, I mean, a top thing that I see most often, right? A really key thing that comes up a lot is in the way that you just present your options. And so, this is leaning into a concept of anchoring and how the way that we hear numbers impacts the choice that we're gonna be making. And so, it may feel like when you're selling something, what feels right often is to start low and then work your way up to the [00:19:00] most expensive thing that you're selling.

[00:19:02] Melina: And the double mistake here is the thing they really want people to buy what they think is the best is also the most expensive thing that they offer. So those two mistakes put in together are really hindering how much people end up spending with you and what they end up buying, if anything at all.

[00:19:22] Melina: And so the advice I have here, and this is a combination again, of anchoring and another concept of relativity and how we compare things. So start high and you also need to know what your best offer is the thing that you want people to get. And it can be, and I know in the same way where you're saying like, but it could be for everyone.

[00:19:42] Melina: And there's all the options. Get over that. Like 80% of who the best people are, if we were gonna have 80% of people buy this, one thing will be the top thing we want most people who are our people to buy from us and let's build that package, right? So we know this is the thing we're gonna sell here.

[00:19:59] Melina: We want [00:20:00] most people to get this. You then need to price it properly, right? So it's profitable for you. That's good. And work you really wanna do. And then you need to create what I call a wingman for that product or service. The thing that is more expensive, similar, but like just obviously a little bit of a worse deal than the thing you really want people to buy and know that that wingman its job is to help the best offer look good, right?

[00:20:27] Melina: If someone buys it, cool good for that. But that's not its role. Its job is to help people choose that best offer. So In this way, you think about if you do graphic design, right? As a simple example here, right? So there are some people who are gonna go with the value thing and say, I can get a $5 logo off Fiverr.

[00:20:45] Melina: Like, yeah, sure, buy, right? Like, you're not gonna convince that person to spend a bunch of money on a logo. They're not ready yet, or never will be. Doesn't matter, not your person. But if you are coming in and saying, well, I can do just like a simple thing [00:21:00] for 500 bucks, but really you should get this $5,000 package is what I recommend.

[00:21:05] Melina: Like, eh, no, I think I'll stick with the $500 and then I'll see about working my way up. But if you instead were to build a bigger package, right? So if you have the $5,000 option has, two color process, and a couple of options, two rounds of revisions, whatever the thing that most people want.

[00:21:22] Melina: But then you build up this other thing that will say is like $10,000 and that's gonna have four color process and it's got a movie version of the logo and we're gonna build out PowerPoint templates for you. And like. What most people don't need. But you can start with that option. And then if you say, and this is 10,000, and you know, but we have, you know, for most people this $5,000 option's gonna give you two logos, two process of revision, like amazing stuff that you need.

[00:21:50] Melina: Most people go with that one. Does that feel what feels like the right fit for you? Right. That 5,000 now feels reasonable. 'cause we started at 10. If somebody does pick that $10,000 option, [00:22:00] amazing. Maybe you have some a la carte stuff so they can find something in between, but it makes it much easier to sell when you start high and the thing you really want to sell isn't the most expensive thing.

[00:22:11] Allan: I totally agree. in the direct marketing world, we call that really ultra high-end version, like a slack adjuster. I'm not sure exactly what the origin of that term is, but it's basically where you want that top option to be a minimum of twice as expensive, but often 10 times as expensive.

[00:22:28] Allan: So it's doing that anchoring, but it's also making the other stuff look really reasonable by comparison. One of the, um, biggest mistakes I see people making with pricing is in their different pricing tiers, they're two close together. So like, in the example of your graphic designer, someone might have a $3,000 option and a $5,000 option.

[00:22:46] Effective Pricing Strategies
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[00:22:46] Allan: And to someone who needs a logo for their business, and it's gonna be everywhere. It's gonna be on billboards or whatever, $3000 and $5,000. It's kind of the same thing, there's no difference. So, my view is you need a [00:23:00] good pricing gap between the different pricing options I've seen software companies tend to do this really, really well.

[00:23:05] Allan: You'll often see they have the free trial or the free version that's kind of very limited. You can use it, you can try it, you can use it in a very limited way. Then they'll have the $20 a month option. Then they'll have the $200 a month option, and then they'll have, Hey, talk to our sales team for the enterprise version.

[00:23:23] Allan: So the price gaps start to get quite big and that really segregates customers into their different segments. So we've got our enterprise customers who are gonna pay us squares of dollars. We've got the people who are kind of just trying it out. Then we've got the small businesses, and then we've got the kind of normal sized businesses or the mid-sized businesses.

[00:23:43] Allan: So it's really segmenting people well. And the features that you know enterprise customers are gonna use, that's what you, you charge tons of money for. But functionally, the product between zero and thousands of dollars a month is often very, very similar.

[00:23:58] Melina: Yeah. And how [00:24:00] you stack those and how much space to put from one to the next. I would say really depends on what it is that you're selling and where you're trying to nudge someone for the decision you want them to make. Right. So while I just did say that the most expensive thing shouldn't be the one you want people to buy, but, uh, if you, this graphic designer did wanna go from three to five or four to five and make it feel like it's really easy.

[00:24:22] Melina: You think about like, when you go to get popcorn at the movies. And so the small, that's $4.25 and it's like the smallest thing you've ever seen, or there's the giant bucket of popcorn for $8. When those are the only two options, people may stick with the small because it's like, well, from four to eight, like that's a huge jump and I don't know that I need that much popcorn.

[00:24:43] Melina: I'll just stick with the small thing. When you just have those two choices, when you put in a medium that's $7 and 50 cents, that's like less than half the size of the $8 one. Then because of the comparison point there and you put in this thing, most people won't pick the [00:25:00] medium. because it's like, well, I'll just pay an extra 50 cents and get the big one.

[00:25:03] Melina: At least, here in America, right, where we get super sized, all the things as they say. Right. But that sort of aspect. And so there are some things to keep in mind. One of them being, which thing do you want people to buy and what is the wingman, right? So if the $3,000 thing is a wingman to make it so you say, well, like why just do three when I can get five and it has all like just for five, I get all this other stuff.

[00:25:29] Melina: Like, then you might bump up. So knowing what you are nudging people to what you're hoping they're gonna buy and helping to showcase it so it looks like that best choice, then you can determine if it's that I need to do five times the amount or just $5 more or whatever, depending on what you're selling.

[00:25:47] Allan: Yeah.

[00:25:48] Subscription Pricing Models
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[00:25:53] Allan: Um, I'd love to know your thoughts on subscription pricing and some of the different ways to do that. So, for example, one of the things that we've experimented with is charging people monthly versus [00:26:00] annually, and I find that annually it massively reduces churn because people are making a buying decision only once.

[00:26:07] Allan: They're only seeing the thing on their credit card once. But it also like if you are paying monthly for something, you're expecting something monthly. Whereas if you've paid for it annually, you're like, you know what? Yeah, maybe I didn't use it this month. That's okay. I've got another 11 months to use it or another 10 months or whatever else.

[00:26:25] Allan: Also has the added benefit of not having credit cards expire and you've gotta chase people for a new up updated credit card and all of that sort of thing. But I, I'd love to hear your thoughts around what are some of the best practices from a subscription pricing perspective.

[00:26:40] Melina: So it's definitely another of the, uh, it depends as everything does with context, but so there are pros and cons on both sides, like you already have said a couple of them here. So if you are gonna be offering something on a regular basis, like where you're, so talking about like annuals may be better if we're not updating it [00:27:00] all the time.

[00:27:01] Melina: If we know that maybe it's like quarterly or something, we'll add a new training, but it's not like you're gonna be consistently getting new stuff every month or that there's not something to do to where you feel like that value's not there. Not there consistently enough to where we might start to question if we're paying each month, then potentially annually makes a lot of sense.

[00:27:21] Melina: And it's pretty common so many organizations now want to get people to commit to a year where if you also, if you have something that it takes a while to get enough momentum to see any sort of a result, it, you wanna have some sort of minimum first term.

[00:27:41] Melina: So in that way, having it be an annual buy-in can be really good because it's committing people to actually do that work and see the result. If you were having a lot of people leave after say, like two months but you know that really the delight comes at month four and you need them to get over that hurdle.

[00:27:59] Melina: Like [00:28:00] then definitely having that longer term, whether you have pay up front for the first six months and then it's monthly, or however you want it to do that, or if it is annual or something along those lines. A lot of times then people will do very stark differences. Right? So $25 a month or you can get the whole year for $200 or something, or $150 or so, or the whole year I mean, for this lower amount. And where they go. Okay. Like, why would I do the monthly? That doesn't make any sense. So you're gonna just like jump in and pay 'cause it's not that much more to get annual. But if you do have something that you are providing consistent benefit or value kind of along the way, typically as you wanna like break up that price point. So if you did have a number that was really, really high and if you break it down into a monthly payment, it actually gets you under some sort of a threshold. So, it's [00:29:00] only $250 a month instead of having to pay this many thousands or whatever that you'd pay at the time for an annual amount where you might feel that pain and question it.

[00:29:12] Melina: Whereas if it's just auto pulling in a way, I don't have to think about it, it becomes a habit and I feel like, oh yeah, I got something outta there because it's renewing enough information for me. So really would be thinking about how you wanna be positioning, whatever that is. If it's something that you want it to be kind of a set it and forget it, I'm getting a little something, I'm giving a little bit of something, there's some value, and I don't wanna have it be some big decision I have to make once a year.

[00:29:40] Melina: And when I sit down and go, do I wanna pay this $5,000, but I wouldn't have even noticed it if it had been coming out every month. Then that can be something that comes into play. And you can then be thoughtful about what sort of elements of delight and big delivery you're giving to people as they're either [00:30:00] coming up on a renewal point, uh, or something along the lines as the business to help them feel like they just got a lot of value right before they're gonna be asked if they want to renew.

[00:30:10] Lean Marketing Ad
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[00:30:10] Allan: Hey, it's Allan here, ready to dive deeper into today's marketing insights. Head over to lean marketing.com/podcast. To get a full summary of today's episode, including all of the resources mentioned, go to lean marketing.com/podcast. Now, back to the show. I.

[00:30:27] Behavioral Nudges for Success
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[00:30:27] Allan: I wanna switch gears a, a, a little bit. You are an expert in behavior and how to nudge people whether it's employees, whether it's customers into essentially doing what we want them to do, right? But especially with customers, where them getting the result depends on them.

[00:30:45] Allan: For example, I mean, if we were to use maybe fitness coaching or even any kind of coaching where we really need them to implement something to get something done, to make some sort of change for them to see a result. What are some of the best nudges [00:31:00] you've seen that will help? Help see them through, because a lot of times programs like this fail not because they're bad programs, but because the person, the client, whatever, just doesn't get the stuff done.

[00:31:12] Allan: You know, they've gotta come to the gym and work out. They've gotta show up to calls, they've gotta do the homework, they've gotta do all of those things. What are the best ways to really help nudge them to success?

[00:31:22] Melina: Yeah I love anything in this like mindset, habit, productivity, space. It's some of my favorite stuff. And actually I would recommend for anyone who is particularly interested in this, please do check out my TEDx talk is called, there's nothing magical about Monday. I'm gonna give you a couple of things here right now, but we've all had that, like, I can't wait to go start the thing.

[00:31:42] Melina: Monday, like Magical Monday land. Right? Uh, but then it's like, you think you're gonna do it and you're gonna train for that triathlon and eat healthy and get up at 5:00 AM and do all the things, and then you wake up and like, eh, like I, I dunno, I'm gonna hit snooze. Tomorrow will be a better day. [00:32:00] Right.

[00:32:00] Melina: So research actually shows when we think about ourselves in the future, our brains light up like we're thinking about a different person. And so committing Monday Melina to get up at 5:00 AM is really easy for me because it's not me I'm committing to do that, but when the alarm goes off, it is me and I hate that idea.

[00:32:20] Melina: And even just hitting that snooze for a few moments to kick the can to future me again makes it to where it feels like there's a benefit there. We humans also have an optimism bias. So you think you're gonna be better, faster, stronger, smarter, more capable tomorrow, next week, whatever that is. We also then pair in a bit of what's called planning fallacy.

[00:32:41] Melina: You don't think about all the extra stuff and distractions that come up. So even though I only got one of the things on my to-do list done today, like now that that's out of the way tomorrow, I'll get eight things done. And then also the last kind of aspect that comes into play here is we tend to do something, it's called [00:33:00] bike shedding since you come from kind of IT and software, potentially you've heard of this concept before, but I know not everyone has.

[00:33:06] Melina: But I like to think about it as productive procrastination, um, and when you have a goal or some sort of change or something you're gonna do magically stuff that is not important at all is gonna feel like the most important thing in the world and you can't do anything else until you do the get this one thing right.

[00:33:25] Melina: And in this case, it was a, the reason it got the name, there's a team that was supposed to be designing a nuclear power plant and they wasted tons of time designing the bike shed, which is not important at all, uh, but it felt very important to them and also it doesn't have consequence. So it's like safe to focus on something useless kind of in that way.

[00:33:43] Allan: Your office suddenly needs cleaning. Um, when

[00:33:46] Melina: Oh my gosh. The, uh, and that's what I say, like my, like kitchen is never cleaner. I never feel more compelled to do laundry unless I have a big deadline. Right. Like, gotta do it. Now is the time I have to do reorganize the shed right as you have, [00:34:00] uh, whatever.

[00:34:00] Melina: So knowing that though, right, people are gonna overcommit, they're gonna be more optimistic if you work with someone, and when they're talking to you about what they plan to get done this week or, but until they meet with you the next time, whether it's like fitness and saying like, oh yeah, I bet I'm going from zero, but I, I'll work out five times next week. Or whatever that is. Or if it is, if you do more personal coaching or executive coaching, things like that. And someone says, oh yeah, these 12 things, if you say, what are you gonna have done by the time we meet next? I'm like, these 87 things will be done by the time I see you on Tuesday. That is something where you can know that you need to help them to set more realistic goals and celebrate some small wins.

[00:34:43] Melina: And so a favorite way that I look to do encourage people to do this is to actually use loss aversion to your advantage. So we humans don't like to lose stuff. And so I have this, uh, thing I talk about, I call it the loss aversion jar. So if I did coaching and like let's say I had a clear [00:35:00] jar behind me, it has your name on it, Allan, I am coaching you.

[00:35:04] Melina: You're gonna tell me what you're gonna do. I've built into my pricing to say that every week, let's say we meet on a weekly basis. You're gonna set, you know, a commitment of what you're gonna do for next week. Every week you do the thing you said you were gonna do. I'm gonna put $20 in the Allan jar and it will be there for you, and you can see it right behind me, right?

[00:35:24] Melina: So when you do whatever it was, even if you just said like, there's one really important email I have to send this next week, and that's all I'm gonna do to get my 20 bucks, right? Every time you do it, I'm putting $20 in your jar. But if you ever miss. I'm gonna empty the whole thing out and you have to start from zero.

[00:35:41] Melina: It's not just that you don't get $20 that day, it's all gone. And at the end of the year, whatever's in the jar, I will give you, I'm gonna give you all that cash,right?

[00:35:49] Allan: I love it.

[00:35:50] Melina: So are people gonna set more realistic goals when they don't wanna lose what they've already been building up in the jar? Yeah. Right?

[00:35:59] Melina: That they're [00:36:00] more likely to do that. And you can remind them when they say, well, I know it's gonna be a busy week, but I can get these five things you say, eh, don't forget, right? And it's a clear jar for a reason. Like we don't wanna lose out on that. So that's one of my favorite tactics, and I think everyone should use it.

[00:36:16] Melina: You can do it for yourself too, by the way.

[00:36:18] Allan: I love that. I love that. I mean, if there's one thing I've learned so much of success is subtraction, not addition. You know, a lot of people come into coaching or consulting or whatever and they're like expecting what extra stuff are we gonna do? What campaigns are we gonna run? And often it's like, we're gonna remove these five other things and we're just gonna focus in on that one thing.

[00:36:39] Allan: And people feel like the value of coaching and consulting is the information, but we can't out information Google, we can't out information Wikipedia all of these sources. Often, a large part of the value is. Don't do these dumb things. These things don't work. And often, that can really make a huge, huge difference.

[00:36:58] Melina: Absolutely. And, [00:37:00] there's a, a guy, his name is Leidy Klotz he wrote a book called Subtract. And when I interviewed him for my podcast, one of my favorite things he said is, less is not a loss. And it might feel like it, but actually when you do take things away, it gives you space to do other things.

[00:37:16] Melina: One of the tips I recommend here, so I know too, like hearing no or like stop or don't do that is a thing that we humans don't tend to like either.

[00:37:26] Melina: And so what I recommend is to go instead with not yet. And I, not yet so many things, where when I was working on my first book, I had to say not yet to YouTube, to other things that I was interested in doing. Uh, but until that one thing was done, it was the most important thing, but not yet.

[00:37:45] Melina: And I might never get to it, but I have not yet folders in my email. And you can set things aside and then pick them up when you're ready, if you're ever ready. But it helps you get over that emotional hurdle to put things on pause. And yes, if [00:38:00] something is holding you back taking, whether you pause it or you actually turn it off to make space for that bigger, more important thing, it psychologically can actually be difficult to do, and it's still important to get over that hurdle and do it anyway. Yeah, in our program we call that the parking lot. So we'll put a of Yes. in the, in the parking lot, that way they don't feel lost. We'll get to them or hopefully, or maybe, they become obsolete. The thing that we are working on just crashes and we don't even worry about them. We just double down on that thing. So,

[00:38:31] Melina: For sure.

[00:38:33] Employee Motivation and Retention
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[00:38:33] Allan: Well, I wanna finish off on employees. So obviously, business owners, entrepreneurs, we're kind of essentially running a two-sided marketplace. We've got clients on one side, we've got employees or team or contractors or whatever on the other side.

[00:38:45] Allan: It's a challenge to attract both. It's a challenge to keep both. So from an employee side, and you know, I've. kind of gone from one side of the spectrum to the other, being, you know what, people just want a, a reasonable job, be paid fairly [00:39:00] and show up and forget about all this nonsense with culture and ping pong tables and all of that stuff, versus well if people do want more than just a paycheck, they do want meaning, they do want be motivated by what they're doing. And so, where are you on that and what are some of the things to kind of attract and retain top talent that you've found that are really big levers.

[00:39:22] Melina: There's definitely a balance of those things, but understanding intrinsic and extrinsic motivation of what's getting people motivated in and of themselves, achieving the goals and having that purpose. And there's lots and lots of scientific evidence and research and showing like when people do have a purpose, when they feel like they're connected to a larger meaning.

[00:39:43] Melina: Even if it's kind of one of those common examples being a janitor at nasa and you ask him what he's doing, what his job is, and he says, so, we're putting people on the moon, right? And it's like feeling connected to the purpose.

[00:39:55] Melina: Like I did that. Like if I wasn't keeping the floors clean, we couldn't do that. We're a [00:40:00] team, right? We made that happen. And someone who has that drive and connection and is seeing that value is going to outperform those who don't just all the time, right?

[00:40:12] Melina: So as a small business owner, understanding where the value is and what motivates that right person to be willing to often work for less of than what they could get somewhere else. It might be in flexibility in their schedule. It might be in that they actually love being able to work with a small business and they're excited about the impact that they get to have.

[00:40:37] Melina: Knowing what's gonna be that value driver for someone to help them like they wanna follow you too, right? So you understanding what you're about, what your purpose is, and getting people that are gonna wanna like, rally behind and, and feel that is really important. So that you're not gonna be having a lot of churn for people.

[00:40:57] Melina: And so in that way, having a vision [00:41:00] and your own purpose about why you're here. And the value that you bring to the people that you work with and why you care about it and why they should care about it in a way that's really clear and they can easily rally behind is a very important thing to be able to know and be able to say in that way. The thing that I know and like I've made this mistake when I've had people that I've brought on early on too, right? As a solopreneur entrepreneur or someone who's building up a business, there's a lot of stuff in this brain that you got that you're able to just like get by with it all being in your head, and then you go to hire someone and realize that nothing is written down.

[00:41:43] Melina: And it's a very frustrating and difficult process. So investing in those clearer processes knowing that the way that you communicate information to people is gonna be so much more so impactful on whether or not they can actually [00:42:00] deliver. And know that how you think about it might not be what they're seeing.

[00:42:04] Melina: There's a reason you have this genius in you that you were able to start this business. So being able to translate that for other people and not have too many competing priorities that feels like their time is stretched really thin. Because when we do have too much going on, too many priorities.

[00:42:19] Melina: We're constantly doing rework and things along those lines, we are more rooted in the status quo. People are less open to change. They're less likely to wanna help and support, whatever it is you're working on and may get burnt out. So, when you can provide balance and support and help people to wanna be a part of the dream, like it's great.

[00:42:38] Allan: Yeah.

[00:42:39] The Importance of Personal Branding
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[00:42:39] Allan: I've always felt, and I don't know if you feel similarly, but the culture of the business is often derivative of the founder or the leader of the business. I mean, I think of Apple as kind of Steve Jobs company. I think of Virgin as kind of Richard Branson's company and they're often got their personality or brand or whatever derivative of the personal brand of [00:43:00] the founder.

[00:43:00] Allan: I'm finding personal brand is now more important than ever before because a lot of this stuff now with automation, with globalization manufacturing, with AI, all of that, the stuff you do is kind of a commodity. So the thing that's going to make all the difference is the brand and often the brand of the business is now derivative of the personal brand of the founder or the leader.

[00:43:24] Melina: Yeah. We have a, course, it's called Keys to Thoughtful Leadership for this reason, right? And in understanding how we can better communicate with other people, how we can be asking better questions and knowing in the future, right, the, and like future being. Yesterday it feels like in this case, but really being able to ask better, thoughtful questions, understanding a bigger purpose so that you are good at prompting whether that is human team members or machine based team members that you're building [00:44:00] in to be able to consider varying aspects and ask those thoughtful questions will make the difference in who succeeds and who doesn't.

[00:44:09] Melina: And as you said, when you think about being a leader that people want to follow. And these days everything is public, right? So, brands are the people who lead them. And some of it gets kind of buried along the way. You don't have to be visible as if you don't want. But as you grow, like you're gonna be more visible. And so you wanna think about those things if you can upfront.

[00:44:35] Allan: Yeah.

[00:44:36] Conclusion and Resources
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[00:44:37] Allan: Melina, thank you. I really appreciate your time today. It was really excellent speaking with you. Melina is at thebrainybusiness.com. Your books are The Truth About Pricing, What Your Employees Need and Can't Tell You and What Your Customer Wants and Can't Tell You. So, we'll link to all of those resources.

[00:44:57] Allan: Is there anything else I haven't asked you that I should have asked you, [00:45:00] Melina?

[00:45:00] Melina: So I would say for people who do want to hear more regularly, if you go to the brainybusiness.com/join, you can check out our newsletter. I am always sharing content, through our newsletter, LinkedIn, things like that.

[00:45:12] Melina: The Brainy Business Podcast. So, lots of information to help people apply all this great stuff and, yeah, be better at work.

[00:45:19] Allan: Awesome. Thank you so much, Melina. It has been a pleasure to have you on.

[00:45:23] Melina: Thank you.

[00:45:23] Allan: Thanks for tuning in to the Lean Marketing Podcast. This podcast is sponsored by the Lean Marketing Accelerator. Wanna take control of your marketing and see real results with the accelerator. You get proven strategies, tools, and personalized support to scale your business. Visit lean marketing.com/accelerator to learn how we can help you get bigger results with less marketing.

[00:45:47] Allan: And if you enjoyed this episode, please leave a review or share it with someone who would find it helpful. See you next time.

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