← The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics
The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics
550. The Power of Questions: Avoiding the Biggest Mistake in Business
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- [00:01]
Melina Palmer
Hey there, Melina here. Really quickly, before we get into the episode, if you've ever wanted to level up your goals or your communication, I've got great news. Two of my most popular courses through Texas A and M's Human Behavior Lab are open now for enrollment. Setting brainy goals helps you to actually achieve those big plans, not just write them down and forget about them.
- [00:24]
Co-host or Guest
And creating better presentations will totally transform.
- [00:27]
Melina Palmer
The way you communicate at work and in meetings or on stage. They're part of the certificate in Applied Behavioral Economics.
- [00:35]
Co-host or Guest
But you don't have to commit to.
- [00:36]
Melina Palmer
The entire program to join either of these classes. There are no prerequisites, no fluff, just three weeks, all virtual directly with me and some other brainy folks from around the world. If you're interested to learn more and enroll, head to hbl like Human Behavior Lab, TAMU like Texas A and M University Edu, and click on certificate program to learn more and enroll again. That's hbl, tamu Edu and click on certificate program. I can't wait to see you in class. And when you're ready, let's start the show. Welcome to episode 550 of the Brainy Business Understanding the psychology of why people buy. Today's episode is all about the biggest mistake I see companies make and how you can beat the competition when you shift your focus. Ready? Let's get started.
- [01:39]
Narrator or Announcer
You are listening to the Brainy Business Podcast where we dig into the psychology of why people buy and help you incorporate behavioral economics into your business, making it more brain friendly. Now, here's your host, Melina Palmer.
- [01:54]
Melina Palmer
Hello. Hello, everyone. My name is Melina Palmer and I want to welcome you to the Brainy Business Podcast. Can you believe this is episode 550 of the show? What a super cool milestone. Over these past seven and a half years, I've gotten to read so much interesting research, work with amazing companies, and talk to so many brilliant academics, authors and practitioners. And if there's one lesson that comes up again and again and again, it's this. The quality of your results depends on the quality of your questions. So for this special milestone episode, I wanted to bring back a foundational lesson I teach in every keynote, workshop, class, and client engagement. How to truly understand the problem you're trying to solve. Because whether you're working on a brand campaign, a pricing strategy, or or an internal change initiative, success doesn't come with a solution to the first problem you see. The biggest mistake I see leaders make is jumping straight to fixing before pausing to define what really needs to change. And which behavioral levers are best implemented to make it happen. That's what this episode, which originally aired back in November of 2020, is all about. It's one of my absolute favorites, and I and I hope you enjoy it too. Whether it's a revisit for you or your first time checking it out, I'm willing to bet there's at least one golden insight waiting for you in the episode that'll hit you at just the right moment today.
- [03:24]
Co-host or Guest
Really quickly.
- [03:25]
Melina Palmer
Before we get into the episode, I want to be sure you know there are links in the show, notes for my top related past episodes and books, ways to get in touch, and more. It's all within the app you're listening to and atthe brainy business.com 550.
- [03:42]
Co-host or Guest
Now.
- [03:42]
Melina Palmer
Let'S jump right in and learn about Understanding the problem One of the things.
- [03:47]
Co-host or Guest
I say most often is that it's really easy to find the right answer to the wrong question. But when you do that, you end up putting a lot of effort, time, money and other resources into fixing something that isn't going to actually get at the root of the behavior. It's like treading water or being a hamster on a wheel and then moving to a different wheel all the time, sometimes bigger or smaller than the previous wheel, but you still aren't really making any headway. We like to say that change is hard. You've said it and thought it a million times, but is it true? Does it have to be true? Remember that your subconscious brain can process through 11 million bits of information every second, compared to only 40 bits of the subconscious brain. If your confirmation bias is keeping you.
- [04:40]
Melina Palmer
Thinking that change is hard and the.
- [04:42]
Co-host or Guest
Focusing illusion makes it so all you can see is proof that it's difficult to change, then of course that's what you will experience. The ratio of 11 million to 40 means that for every piece of information the brain lets through, 275,000 other things were filtered out. What if you had looked for ways to see that change is easy? What if you had looked for another way to understand the problem at hand, to find a different path to solving it? I've talked about question storming several times on the show before. You all know how much I love questions. That's because great questions are amazingly powerful and in general, people don't spend enough time asking questions. And that's the whole problem. When asked, if you have one hour to save the world, how would you spend that hour? Albert Einstein reportedly replied, I would spend 55 minutes defining the problem and then 5 minutes solving it Einstein was a pretty smart guy, right? And he felt the need to look at a problem from many angles and devote the majority of his allotted time to understanding the problem before thinking about.
- [05:55]
Melina Palmer
How to fix it.
- [05:57]
Co-host or Guest
Now I want you to think about the last problem or project you were working on in your business. This could be anything from getting more customers to increasing conversions in the website, to deciding what modifications to make to a product or service, or trying to encourage employees to sign up for the retirement program. There are countless problems we're confronted with in our businesses every day. Pick a sample of 5 or 10 recent or not so recent projects and problems. How long did you devote to thinking about them before jumping into problem solving mode? How long was it before you were working to put the plan together to get to the other side of that assumed problem? Were you, like Einstein, devoting 55 of your respective hour or more? Like the reverse of that? Maybe five minutes if you're lucky, considering the problem, and then it's off to the fix. This is what most businesses and people do. But what about the people who change the world? The ones who come out with the products and services and companies and methods that take over? Most of those people think longer about the problem before they start fixing. Because you're here and listening to this podcast, I already know that you want to be that second kind of person. You want to make change happen, to do amazing things. And one of the best ways to do that is to spend more time thinking about problems and instead of just accepting the first or second thing you think is wrong. Let me give you a couple of examples from past episodes on the show. Remember the literary I love this example because it really reiterates that when you work with the brain, change doesn't have.
- [07:47]
Melina Palmer
To be hard after all. In case you haven't listened to that.
- [07:51]
Co-host or Guest
Episode yet, or don't remember, I'll give a little recap. And of course there is a link for you in the show notes. As I said, for most of us, the idea that change is hard has been ingrained in us. We don't question the fact that people do not like to change and that it's difficult to get anyone to do anything new. This is true, but not necessarily in the way you think. I want you to imagine it's now your job to ensure that every person on earth will throw away and properly sort all all their trash every single time they have something to dispose of. Are you excited about or dreading this prospect? After all, there have been campaigns for decades encouraging People to reduce, reuse, recycle, and letting them know if they litter, it will hurt. But with the consequences so distant, it's easy to ignore and not change behavior. You now have your task, but I've left out one important detail how we will determine if you were successful. We'll monitor real people in movie theaters over a full month to see if behavior has changed. In case you've never been to a movie theater or have simply forgotten what it's like, this is a place where even the most environmentally conscious individuals feel entitled to leave their popcorn containers, empty cups and any other sticky garbage behind after the movie ends. Now, how do you feel about your task? Does it feel insurmountable? Doomed to fail? As you may have guessed? This is not a hypothetical example. It's based on how the Literary proved that their incorporation of behavioral economics and working with the brain got people to willingly throw away and properly sort their garbage.
- [09:41]
Melina Palmer
How?
- [09:42]
Co-host or Guest
The answer is in the name but Turning Litter into Lottery Tickets Today when you walk down the street and see a gum wrapper or an empty bottle, you think gross. Some people are so inconsiderate and probably continue walking. What if the item on the sidewalk was a lottery ticket instead of a gum wrapper? Would you be more likely to pick it up? Of course you would. Your brain is programmed to wonder what could be optimism, bias and fear for what might happen if you choose to leave it there and it was a winner loss aversion. That's why the Literary created smart garbage cans that can tell if you properly sorted and threw away your trash. Do it right. Get a lottery ticket.
- [10:26]
Melina Palmer
Do it wrong.
- [10:27]
Co-host or Guest
Like putting paper in the trash instead of recycling. You get a notification of how to adjust for next time. You might have guessed that their proof of concept was conducted in four movie theaters over 30 days in Sweden. And and there was 100% compliance. People were even seen running through the aisles after the movie trying to find additional trash to throw away. They were disappointed to not find any, and women were rifling through their purses for additional tissues or tidbits to toss. The top prize in that case was €5,000 and others won free movie tickets. Can you imagine the opportunity for state or countrywide lotteries with prizes in the millions? Now when you walk past that gum wrapper or empty bottle on the street, you might just pick it up and be excited to throw it away. The lesson Change doesn't have to be hard. Changing the natural rules of the subconscious brain that have been developing for generations is hard. Understanding them and working with those habits can make it so seemingly insurmountable changes like getting people to throw away and and properly sort their garbage become easy. And this highlights that most common mistake I see businesses make when looking to solve problems. Not properly understanding the problem before taking an action. When you look at how every other person or company has tried to get people to stop littering or to recycle, what's the approach they take?
- [12:02]
Melina Palmer
It's logic, right?
- [12:04]
Co-host or Guest
They say things like people just don't understand. If they knew XYZ and ABC they would definitely do the right right thing. I'll put together this big brochure and long email and website and 10 minute video explaining all the ins and outs of the problem and their step by step guide to solve it. And how well has that been working out? Not so well. When you use your conscious brain to try to explain to people how they should change their habitual behavior within the subconscious, logic isn't going to do it. You you need to understand what does motivate people like a lottery and incorporate it into the behavior so it's easy for them to change on their own. They do it without thinking about it. You've made it easy and natural by understanding the problem and working with the subconscious rules of the brain to nudge people so they can do the thing they know is right and would likely say they want to do anyway. For another example of this, when I spoke to Elad and Michael from Colu, we talked about how this same application could be used to encourage mask use and social distancing during the pandemic instead of threats of fines and trying to explain the logic behind taking these precautions to help motivate those who are pushing back against the idea. What about a chance to win something? If you're abiding by the guidelines, a store could announce that they'll be doing a random drawing every hour and everyone who's wearing a mask is eligible to win or using a little surprise and delight. So if you're wearing a mask in the store, a representative might just give you a free lottery ticket or special coupon. This has an added bonus of making it more relaxed and fun for the staff at a difficult and high stress time and can make it so even the biggest naysayers may be excited about participating. Again. By taking a step back and really thinking about the way the brain works and how to align with it, you're able to make it so change is much easier than it seems seems on the surface. Another example of how I used this when I was running the Marketing department.
- [14:14]
Melina Palmer
At the credit union was when people.
- [14:16]
Co-host or Guest
Would come and ask the team for supporting materials. More often than not, the request was, I need a brochure. It doesn't seem too surprising. We were the marketing department, after all. But I've learned over the years that the way I responded to requests like this was unique and very much incorporates the behavioral elements I'm talking with you about today. Instead of taking that ask at face value and assigning my team to make a brochure for whatever branch or department was asking for one that day, I would follow up and say, tell me more. When do you want to use this item? What are you trying to accomplish? Over the years, I learned that brochure was a word people would use as a catch all for marketing support. This was the word they knew. And while it means something incredibly specific to a person in marketing, what the asker really wanted was help. This person had found a gap in their process. Their job was to bring it to my attention, which was done. Now my job was to understand their problem and help provide the proper solution. This was almost never a brochure, by the way, and no one ever lamented over not receiving a trifold sheet of paper because the solution that we provided solved the problem that was underlying what they were asking about. And I do want to point out that the framing of the response that I gave was just as important as anything else in the process. If every time someone came to me and said, I need a brochure, I said, no, you don't. You don't know what you want. Take this instead. I would have had a lot of unused marketing materials thrown back in my face. Being curious and asking good questions allowed me to appeal to the subconscious brain so I could learn about the situation while helping that person feel valued and involved in the process. Taking those few extra moments to understand the problem made all the difference. The department received something that solved their real problem, even if they didn't know exactly what it was when they came to me. And someone inside of that department was now an advocate for that solution, increasing its chances of success. This is the IKEA effect in action. And also, my team wasn't wasting time making something that wouldn't help the staff and knowing they'd have to just redo.
- [16:41]
Melina Palmer
It next week or next month.
- [16:43]
Co-host or Guest
The real big lesson here is that even when someone asks you explicitly for something or you're sure the minute you hear about a problem, you know exactly what the root of it is, it can usually benefit from a little more thoughtfulness. Remember that our brains are biased to believe we're right. They also believe that if someone asks for something explicitly that they did the due diligence to determine it really is the thing they want before asking for it. Unfortunately, this is often not true these days. A common question I get from current and potential clients is what's the best way to structure our offers? And and similar to the tell me more response with the brochures, I respond with that depends. What do you want people to do? As you heard me say on the show before, choices are relative and heavily context dependent. There's no one best layout. There's no perfect concept of behavioral economics that will work in every situation. There's a great deal of art in this science, which, if I'm honest, is my favorite part. And it's at the root of the challenge we're discussing today. This is your opportunity to be like Einstein and spend 55 minutes of your hour thinking about the problem instead of jumping on the task exactly as it was presented to you. When you consider the problem in a vacuum, or assume the problem you see is the only true problem, you'll often end up finding that right answer to the wrong question. The best brochure in the world won't solve a deeper, unrelated issue. Me telling you a bunch of ways to structure your offers might work, but it doesn't mean they're aligned with your goals. If we don't understand those in advance, I could be giving you advice that's going to send you down a wrong path. Even though the concepts work, taking the time to think it through whatever it is up front can save a lot of trouble and headaches and money down the line. Working with the brain will allow you to increase conversions, raise prices, and help initiate change initiatives within the company. But if you don't take that time up front to understand what you're trying to accomplish, you'll just be throwing noodles at the wall. Like I talked about in the episode on Apple, Card financial institutions had known for years that people don't like fees. They're much more sensitive to them than they are to interest rates. Reframing the revenue the financial institution will make, which is good and reasonable. Financial institutions are businesses and need to make money for the services they provide, but reframing it in a way that people don't mind so they're happier with their cards instead of forcing it to be a fee that they hate and which makes them upset in a way that reflects negatively on your entire brand. It's a simple change that can make a huge difference in adoption and satisfaction scores. When you take the time to fully evaluate and understand the problem, you can make this simple shift of having no fees ever and a slight change in the interest rate and have a thing that people are going to be really happy and excited about, even though it essentially costs them the same from one card to the other, but their brain just understands it differently. In preparing for this episode, I was also reminded of episode 101 when Dan Ariely joined me to talk about Shapa. Creating a scale with no numbers and that doesn't actually tell you your weight seems crazy to a logical brain. But when you take the time to evaluate and test and research, you can find that the mere act of stepping on the scale is important in healthier behaviors, and that weight fluctuates so much that it makes super accurate digital scales become demotivating for many. Looking at health differently allowed the team at SHAPA to create a numberless scale that's changing the lives of so many people in a way that feels easy for them because again, it works with their brain's rules. While I was writing my book, I came up with the metaphor of thinking about this process as if you were learning to bake the same basic ingredients. Sugar, butter, eggs and flour can be combined in different ways to make all sorts of things. First, you need to know what each does before you find simple recipes to follow. After mastering a few, you can get creative and start to experiment with other seasonings or spices and things to make up some of your own new recipes. No matter how advanced you are, if you don't know whether you want to make cookies, cake, bread or a pie before you get started, it's going to turn out a dreadful mess at the end. Through the Brainy Business podcast, I'm teaching you about the ingredients, also known as the behavioral economics, foundations, concepts and how they work. Other types of episodes, like some of the interviews referenced in today's show, and those like the Truth About Pricing or the one on subscription models and membership groups, explain ways those core concepts can be combined to create all sorts of outcomes. The foundation of today's episode is looking at that first, most critical step in the process of applying behavioral economics in business. And it's based on something you hear me End every show with Be thoughtful. Give yourself permission to spend longer thinking about problems. Reflect on them, ask questions, poke holes in them. Are your known truths like change is hard or People who want to lose weight need to track their weight actually incorrect just because everyone else does it one way or assumes something doesn't mean you need to follow the herd. It doesn't mean they're right. It'll take practice. You're training your conscious brain to do something new, and that's always going to take time. Remember learning to drive a car? It was slow and tedious at first, but when once it became a habit and moved to your subconscious brain, now it's simple. Give yourself the space to focus on this skill. Spend the next month picking a few key problems or things you take for granted as known truths and ask what if this wasn't correct? Or what evidence can I find to prove this wrong? Or how might I change this for the better? Once you begin to see the options within a problem, you can you'll find your own testing and application opportunities. Over time, you'll develop a skill and understanding that will allow you to create your own unique recipes for solving problems. But again, for now, just focus on finding one thing a day where you can challenge an existing belief or problem.
- [23:40]
Melina Palmer
So what got your brain buzzing as you learned about the importance of understanding the problem today? For me, I always love talking about how often great work begins not with an answer, but with a better question. If you know me at all or have been listening to the show for a while, you've probably heard me say it's way too easy to find the right answer to the wrong question at least three times. And it's because it's so true and important. In business, it's common to fall into the trap of trying to do more, but the real magic happens when you pause, reframe and make sure you're solving the right thing. That simple shift can save massive amounts of time, money and cognitive space for you and your team. It's so worth it and why I wanted to revisit this episode today on this milestone occasion of 550 episodes and as we close out the show, I invite you as you think about your next big initiative. Whether that's a pricing strategy, a brand experience, a leadership challenge, or even day to day decisions to ask yourself have I asked enough questions to truly define and understand the problem, or did I just jump to a solution? That simple reflection can save enormous amounts of time, money and frustration down the line. And if you're interested in applying this in your work, either to an upcoming internal change initiative for pricing and sales or on your customer experience journeys, I'd love to talk and see if we're a fit for each other. Send an email to melinathebrainybusiness.com or schedule a discovery call from our website the brainybusiness.com I can't wait to connect with.
- [25:20]
Co-host or Guest
You and wherever you are, whatever you're working on, come share your thoughts with.
- [25:24]
Melina Palmer
Me on social media. What resonated with you in today's episode? You're going to find me as the Brainy Biz pretty much everywhere and as Melina Palmer on LinkedIn. There are links in the show notes to make it easy as well as links for my top related past episodes and books, ways to get in touch, and more. It's all waiting for you in the app you're listening to and atthe brainy business.com 550 and just like that, episode 550 on understanding the Problem is done. Join me next time for another brainy episode of the Brainy Business Podcast. It's going to be a lot of fun. You don't want to miss it. Until then, thanks again for listening and learning with me and remember to be thoughtful.
- [26:12]
Narrator or Announcer
Thank you for listening to the Brainy Business Podcast. Molina offers virtual strategy sessions, workshops and other services to help businesses be more brain friendly. For more free resources, visit thebrainybusiness.com.