Behavioral economist Dan Ariely says free things have a bewitching power over us. Just read the free 🙂 excerpt from his new book Predictably Irrational: The Hidden Forces That Shape Our Decisions. And if you want to read further, you can read Professor Ariely’s complete academic paper describing experiments he did to learn more about human behavior in this area (warning: here be math).
Dan Bricklin did a very interesting interview with Professor Ariely, in which he discusses some of these ideas. Professor Ariely also maintains his own blog.
If you’re writing copy for a website sale, be sure to mention the cents in your price discount figures; it will make the discount look bigger. Conversely, if you’re just stating prices, try omitting the cents; it will make the price look smaller.
Dealing with clients who “just won’t settle?” The case for settling for Mr. Good Enough might give you ideas on crafting some persuasive language.
A few years ago, Professor Barry Schwartz wrote a book called The Paradox of Choice, in which he argued that people making decisions could be classified as “maximizers” (those always seeking the best possible deal) or “satisficers” (those seeking the good enough deal). I thought this was a great framework for understanding the decision making process, and why it’s so difficult for some people. Of course, cognitive dissonance increases with the importance of the choice, but by training yourself to stop at “good enough” – and convincing others to do likewise – you can save yourself a lot of headache.
In case there was any doubt in your mind, read this New Yorker article on behavioral economics. According to behavioral economists, people reason that there’s no visible possibility of loss if a “free” offer is accepted, because it’s, well, free.
Embracing the diversity of human beings leads to true happiness … and profit. Here’s Malcolm Gladwell talking about how to squeeze an extra $600M out of the spaghetti sauce market.
I was just listening to a CFR Podcast on Preventing Nuclear Terrorism in which the speaker said that one of the problems with our current strategy is that it focuses on very expensive exhaustive test measures (100% inspection of all cargo ships), rather than smaller measures across a broader spectrum of vulnerabilities. Isn’t it interesting that the meme “anything less than perfect is useless” affects military planning as well as business.
New connections mean new opportunities and new business – be open and default to yes. January’s almost over. If you’re still looking for a New Year’s Resolution that will help you build your business, this is a good one. As we get older, there’s a tendency to be dismissive of the new as being “not how we operate around here.” Fight this tendency. Try something new, and make money.
No, not Charles R. Schwab the discount broker – Charles M. Schwab, the industrialist.
Charles M. Schwab was the first man in the United States to make a salary of one million dollars a year, while in the employ of Andrew Carnegie. Schwab’s motto was simple:
Be hearty in your approbation, and lavish in your praise.
How different this is than the common practice today of heaping on mockery, criticism, blame and sarcasm. Now I can’t promise you that if you take Schwab’s advice to heart that you too will make a million dollars a year, but I can tell you it will make you a more likable, pleasant person to be around. Why not try it?
If you’re running low on fresh ideas, try exposing yourself to new things – new creative inputs that might generate new pathways. Here are three suggestions:
- The blog KillerStartups.com gives thumbnail reviews of new startups – some of them are crazy of course, but many are ingenious.
- The website (and associated podcast) AccidentalCreative.com is a community for creative professionals which is just endlessly creating interesting content. Todd Henry does a fantastic job – check it out.
- Pick a few net.personalities that you find wacky – or better yet, annoying – and follow them. Seriously. Expose yourself to the irritation of reading what they write and thinking about their perspective. If you need a name to get started with, try Robert Scoble.
The Internet Merchants Association blog had an interesting post about how eBay sellers are forced to reduce prices to overcome the reluctance of suspicious buyers. Conversely, Amazon’s high trustworthiness allows them to charge a premium. How can the individual shopowner avoid being forced to give an “eBay discount?”
Probably the simplest way is to add trust-builders to your site. Easy to implement trust-builders are:
- Post an address and telephone number on every page.
- Make the telephone number particularly visible during the checkout process; encourage customers with questions to pick up the phone.
- Provide a “FAQ” page to answer common questions about the fulfillment process and an “About Us” page to describe your credentials and expertise.
Once you’ve taken these three low-cost steps, the next thing you might want to consider is buying a security seal. These have been shown to be trust-builders, but they come at a much higher cost than the three steps above.