The Hidden Persuaders: Unlocking the Secrets of Sales Psychology with Behavioral Economics

Your Dream Business

In this episode I interview behavioral economist Melina Palmer. We chat about how behavioral economics can enhance sales strategies using techniques like price anchoring and framing. The episode also tackles ethical considerations and the psychological principles behind decision-making. Melina shares actionable insights to help course creators, membership owners, and coaches improve their business communication and ultimately boost sales.

KEY TAKEAWAYS COVERED IN THE PODCAST

1. How behavioral economics can significantly impact sales: Understanding the psychological factors that influence decision-making can help businesses tailor their sales strategies for maximum effectiveness.
2. Why price anchoring and framing are powerful techniques: By strategically presenting prices or options, businesses can influence customer perceptions and increase sales.
3. Why ethical considerations are essential: It's crucial to use behavioral economics ethically and transparently to build trust with customers and avoid manipulation.

If you enjoyed this episode then please feel free to go and share it on your social media or head over to Apple podcasts or Spotify and give me a review, I would be so very grateful.

LINKS TO RESOURCES MENTIONED IN TODAY’S EPISODE

Connect with Melina on www.thebrainybusiness.com, LinkedIn (Melina), LinkedIn (The Brainy Business), Twitter , YouTube, Instagram, Facebook Connect with Teresa on Website, The Club, Sign up to Teresa's email list, Instagram, LinkedIn, Facebook or Twitter

Transcript

Teresa: What is behavioral economics and why on earth should you care? Well, the short answer is because it helps you communicate better to your customers and ultimately helps you to help them make a buying decision. My guest today is a behavioral economist and she shares the most amazing tools and strategies and just generally super smart stuff that we can do in our businesses, such as things like price anchoring and framing that will help us help our customers make that buying decision. If you need to sell something in your business, which is everybody, then do not miss this episode. Hello, and welcome back to another episode of the Your Dream Business Podcast. I am your host, Teresa Heath-Wareing. And I hope you are really, really well. Okay. Today, I've got a great episode for you. I first heard today's guest on someone else's podcast and I listened to the podcast twice. In fact, I think I even gave it a third listen because it was so good. And so much of what she said was just genius and really, I totally geeked out on it. I absolutely loved [00:02:00] it. And if you are trying to sell things in your business, which I hope to goodness you are, then this is definitely going to be an episode you want to listen to. My guest today, Melina Palmer, is a behavioural economist. She is a globally celebrated keynote speaker and author and the CEO of The Brainy Business. Now you might be wondering what on earth is behavioural economics, I've really struggled saying that, got to do with us as business owners. Well, basically it's all around how our customers buy from us and how we can help them with that buying decision. Now, as you will hear in this episode, I get a little bit nervous at the beginning of some of these things, you know, how, like, you know, we all know bro marketing tactics. We all know like real scammy, horrible ways, NLP ways in which people get people to buy. And My worry was, is that what people do with this? And it isn't. And as Melina kind of demonstrates really early on, it's about using it for good. [00:03:00] Like, you know, as if you're a superhero and we'll give you these powers. Now only use it for good. So, so yeah, she talks about so many cool things that, like I said, your brain might hurt a little bit at the end of it, but it'll be a good hurt and you'll be so glad. She talks about things like price anchoring and how having a price anchor can actually help you then sell something else. She talks about things like framing, where how you say something matters more. Sorry. Yeah. How you say something matters more than what you say. She talks about social proof, but in a different way. She talks about it from a herd mentality point of view. And again, some really cool stuff. Basically, I don't want to waste any more of your time. I want you to just jump in, listen to this. This episode is full of super, super smart takeaways, and I know you're going to get a huge amount from it. So I have two tiny favors to ask. First favor. Please tag me and Melina in on [00:04:00] social and let us know what you thought of this episode. It means the absolute world to me when someone does this. I think I've said to you before, I sit in a room in my office recording these to myself, other than my two dogs by my side, but it To then hear your reactions and find out what you think about it is brilliant. And if you're feeling extra generous, then why not go ahead and give me a lovely five star rating over on Apple or wherever you listen to the podcast. Okay, let's get on with the episode. Here's Melina. I am super excited to welcome to the podcast today, Melina Palmer, Melina, how are you doing? Melina: I am doing fantastic. Thank you. Glad to be here. Teresa: I am very happy for you to be here. It's actually now in the UK while we're recording this, it's about coming up to 6pm. And normally by this point, I'd be like, hanging would be the official term. I'd be like, okay, we're nearly done. But honestly, Out of all the calls I've had [00:05:00] today, you are the one I've been looking forward to the most. Melina: Aww, well, thank you. Delighted, honored to hear it. And I know, yeah, end of the day interview too, especially depending on what you've been doing through the day. It's like bringing the energy for the interview is, is a thing. I get it. So. Teresa: Yeah. Yeah. Which I somehow managed to have this good, and I guess When you do a job like I do, where you do have to be on camera, when I come off though, I'm great when I'm on, and when I come off it's like, don't speak to me. Don't look at me. Don't have a conversation with me. Like, my husband is like, how? How are you so nice on the calls? And then you are so mean when you get off them. Well, it's just because that's my job. So, yeah, sorry about that. Anyway. We are going to talk about something very smart today. So like, just be ready people to just get thinking because this is going to make you think. And I've heard Melina on another podcast, which I listened to [00:06:00] multiple times, which is unheard of for me. But I was like, this is so good. I feel like I need to write it all down. I feel like I need to listen to it again. So we are going to be talking about Behavioral economics, which doesn't sound the most sexiest subject, but it is, believe me. So what even is that? And why should we care? Melina: Yes, other than, you know, a field that needs some rebranding, perhaps, but that's not really the Teresa: Maybe. Melina: So essentially, I just like to say, you know, if traditional economics and psychology had a baby, you would have behavioral economics. And the reason that the field came about is because traditional economics assumes logical people making rational choices in everything they do all the time. And as we're all human, we know that that's not really the way that it works, right? We have the best of intentions sometimes and still end up, you know, we know we should eat right and exercise and we find ourselves, you know, [00:07:00] binge eating a bag of Cheetos while binge watching Netflix or something. Teresa: Were you, were you here last night? Melina: I know, right? It's like, not from personal experience, of course. Teresa: I've never actually done that, but I've heard people do it. Melina: Yes. And so, you know, what you end up with are these models that are built on bad assumptions. And so it's predicting what someone somewhere decided people should do versus what we actually do. And so over time, you had psychologists, economists, neuroscientists start working together, entering into another's fields, trying to do research to see if there are these common threads in the brain that can be used to better predict what people will really do. And thankfully, you know, there are and lots of them and that's where behavioral economics comes into play and my role as an applied behavioral economist is helping people in their businesses to be creating communication that's more brain friendly so [00:08:00] that customers buy and employees buy in. Teresa: I love that and I love the way you just said brain friendly because you know what kind of comes to mind sometimes when I think about behavioral and understanding kind of how people buy and what they do is when do we worry that it tips into like a manipulative like I've seen it, you've probably seen it, in the online space it can happen a lot of like NLP type things and just like a few things that you're like, Oh, interesting. I see what you're doing there. Like, how do we, how do we know the difference? And is there even a difference? Melina: Well, the thing is, so couple things about our brains and, and some stuff to know before I answer your question directly would be, so one, research shows that we humans make up to 35,000 decisions a day. Each. Just do not. So many things that we're dealing with really are, life [00:09:00] is just a series of micro choices, micro moments all strung together. And if I ask you, you know, how many decisions do you remember making yesterday? Teresa: It's barely one. We had peas with dinner as opposed to a cauliflower. Right. I remember making that one. Melina: Yeah. Right. But not anywhere near the thousands of choices that we're making throughout the day. And the reason is because our brains are really separated into two systems. I just talk about it as conscious and subconscious because I think it's easiest for people. So, in this way, that subconscious brain is making the bulk of your decisions. Every single day. And it has the rules that it's using to make those decisions. It likes predictability. It likes the status quo. It's using habit to say, if when this happens, probably should do this thing, right? And so those are the rules of behavioral economics, behavioral science. [00:10:00] So. You as a human person, when you're creating the content for your website, when you're doing the sales pitch, when you're writing what you're going to put in the ad, when you're doing the subject line of your email, how you put the information in the email, and everything in between, whether you think about it or not, the way you present information is impacting the decision that someone is going to make. So you are what we would call a choice architect, whether you want to be or not, whether you think about it or not. And so what I say is, well, yeah, people can use any sort of knowledge for evil. I trust that you're all not going to, right? And you're here to, Help people to know what it is that you sell and why it's a good fit for them and to make it easy for people that are saying like, Yeah, that's not for me, right? I'm not in it. That they can find out before they book the call, before they have a conversation and don't want to be a part of it. It's just win wins all around. So, you know, if it is happening, whether you think about it or not, I say [00:11:00] better to be thoughtful about it in advance and make it better for everybody. Teresa: Yeah, and I think we've all been in that situation where, and I know I for sure have many times, where someone has been in your world a while, they, you think they know what you do, they like you, they, you know, they consume your content, they follow your stuff, and then you are, I've had a conversation with them, and they've gone and bought from someone over here, and you're like, why? You, like, you follow my Insta, like, why not me? And they're like, didn't, didn't know you did it, or it didn't. And it's like, it's so frustrating that you, I think, the good in us wants, want people to make a conscious decision about the purchase they're making, but we need to help them, and I really truly believe that because otherwise someone somewhere else is helping them make that decision and they're going off and buying someone else's thing and not your thing. Melina: Right. You want to make sure you're not getting them all primed and ready to buy someone else's stuff. Right. Teresa: And I think [00:12:00] in my personal experience, that has happened because I thought, you know, they haven't bought. I thought, okay, that's fine. It's obviously not right for them or not for, you know, the price or whatever. And then I found out they spent just as much or the same with someone else and I'm like, I don't quite understand why that didn't convert. This is such a hard thing because I just want to go, what do we need to write? What do we write? Tell us what to put on a page. How do we get people to buy from us? Are there some kind of rules or some thoughts or some kind of things we need to bear in mind in order to help that? Melina: Yes. And so, of course, you know, I always joke I need a mug or t shirt or something that says it depends on it because. Context really matters. And we need to know, you know, where people are coming from and everything, but, but really, so in my first book, what your customer wants and can't tell you, I have, you know, kind of what I call a recipe of steps of things to, to do and think about as you go through any sort of sales process. And so, you know, first piece here being, you know, What [00:13:00] do you want people to do? First question to answer. And if, if you only get one thing, what is the one thing that matters most? And knowing that you don't, you're not going to go from point A to double Z in a process, right? So we're thinking again in those micro moments, micro decisions, if it's just like this, Email we're going to send, let's say, right? The subject line, like first we need to make sure it lands in their inbox, right? But then we say the subject line, I just need them to open the email. And if that worked, then what's next? And then what's next? And then what's next? And break it down into smaller bits. And know, like, this piece of content has one job. What is it? What are people naturally doing and how are we getting them to like keep moving along in the process? So first, just even knowing that we want to be thinking in those micro moments and know that some moments are more what we would call nudgeable than others. So in behavioral economics, we work in a [00:14:00] space of nudges and nudging. And so, you know, I just like to give the example of if somebody had been using your services and they've canceled. And they're gone. That is a lot, not really a super nudgeable process to bring them back. It's a really hard sell. But there was a moment, something happened, probably multiple somethings, further back in their experience, like, When they used a chat or they sent an angry email that you didn't want to deal with and ignored because it felt scary or they called and were on the phone and said that they were upset about something like those moments were maybe more nudgeable. There was something you could have done there to save it. That that's different, right? So as we're in that, you know, buyer mindset and we're trying to get to the next step, they're like, How likely are we to get them to, to nudge to the next piece or to stay on track is an important piece as you look for what you want to be optimizing on your [00:15:00] language or, or imagery or, or anything else. Teresa: So that's a really good point and it really resonates with me. Cause one of the things that I talk about is not trying to get people to marry you on the first date, you know, and it is a nudge thing. However, recently I. I actually interviewed someone recently who talks about, and they're not the first person I've spoken to, about making people, or not making people, getting people to make a purchase as soon as possible. Because they came at it from a point of, they're at their highest intent when they first discover you and they first consume your content, so get them to do something immediately. But of course, one thing that I've always learned, and I have a degree in marketing, and my background's in marketing. So, you know, I've, I've done a lot in marketing. So, but mine was always that nurture process. So is it that one's right and one's wrong, or is it like, because the, the micro moments and the kind of, okay, the next best step and next, the whole dating analogy makes real [00:16:00] sense to me. So, Is it that that is the way to go about it, or is there also a thing where you could just get someone to part...