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.
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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 with their cash straight away?
Melina:
So, once again, we have the it depends answer for this, and what I would say, looking at it, would be, you know, if you’re selling, if you have a small, Like loss leader type of a product that you’re trying to get people into. That’s the first piece to something larger, or you sell, you know, smaller ticket type of items that that is likely a good way to be going.
And I think the question is, you know, Getting them to buy, you know, how are we defining buy, right? So like I said, I use the same principles when it comes to getting employees to buy in because you know Whether you’re or not, you are having money exchange hands You’re selling someone on an idea that you need them to buy in on, right?
And so getting them to buy in [00:17:00] on the idea of you as a thought leader And say yes to you and maybe signing up for your newsletter or other drip campaign or to follow you on social media or to do a little something may have the same value that you need based on what whatever your sales cycle is. And so, you know, if you’re selling 20, 30, 50,000 dollar, programs, is someone just like, where’s my credit card?
Right? Probably. Yeah. It’s like,
Teresa:
Hang on a minute. Just go straight in, yeah, and sign it up.
Melina:
Ta da! Right? Like, it’s not necessarily the process that someone’s going to be going through there, but There may be a moment to capture on, you know, capitalize that excitement to get them to buy in again to the newsletter to get a free gift or something or what, you know, you can see what makes sense for you, but getting someone to opt in at that first moment could [00:18:00] be really valuable, but it might not be that, you know, again, you’re trying to get them from, Oh, like who’s this person to here’s 100, 000 like, yeah, yeah, yeah.
Teresa:
So one of the things that I see in lots of different places as well as in the online world is that whole kind of confirming the yes. So like almost, I don’t, I’m not explaining myself very well, but like having someone say, yes, I can do it. Yes, I want this. Yes, this thing. And then at the point, When they buy, they’re already saying yes, and they’ve already got, is that a real thing?
Is that one way of helping people make that decision?
Melina:
Yes. Ah, right. Like, so, yeah, yes, you can. Right. So, and being able to make it to where people are associating you with that positive framework and that, that win sort of mindset of like, yeah, I get it. I agree with you. You get me. You see me, you know, that they’re feeling like it’s part of something and they’re kind of naturally like, [00:19:00] do you feel this way?
Yes, I do. Like, do you want this? Yes. Then do you want this thing? Like, yeah, I want that thing. Right. Like that can definitely work. It doesn’t mean it’s the right approach for everyone every single time. And there is, you can choose the approach that’s more on a kind of a negative side of things, if that’s your, your jam.
Teresa:
Well that’s what I was going to ask.
Melina:
If that’s where you want to go. Right. Yeah. Like, so you just want to commit. Pick one and commit to it.
Teresa:
So when someone does a lead magnet, we often talk about Obviously, you need to create a lead magnet that is going to give them an element of a transformation that they want.
And often, the more negative connotation of something seems to attract, certainly in my experience, so I once did a podcast episode many, many, many years ago, that was like the five things I would never do on social media, or a business should never do on social media. And that seemed to get way more traction than if I’d [00:20:00] gone the five things that you should do on social media or the five things I love about social media.
Like, is, is one better than the other do you think? Or, or is it a bit horrible coming from the negative?
Melina:
It’s definitely not horrible, and it’s important to, I, I refrain from saying it depends again, but this piece of understanding that, you know, you want to be able, so we humans are loss averse, for one, so, and this is where things like FOMO, of course, come into play, so it’s one thing to say You know, I, I, so I have an example from a financial institution, you know?
Mm-Hmm. that it’s pretty common that you would say something like, you know, if you swipe, you use your card 20 times this month, we’ll give you a hundred dollars or something. Okay. Like a promotion that’s getting someone to use their new card, or you get the bonus points or whatever, right. And you go like, woo, like a hundred dollars.
Like, that’s not nothing. I want to do that thing, but then [00:21:00] maybe you put it in a drawer and you kind of forgot about it because like that’s how our brains work. We’re busy, we’re distracted, things happen and it just sort of floats off and then you see it three months later and say, did I do that? Maybe not.
I’ll wait for the next one. I’m definitely going to do it next time, right? And so that’s where some of that, like in the future, we might do this, you know, this game based is a little bit less sticky for us. So if instead you were to say. We’ve put $100 in your account, and if you use your card 20 times this month, you get to keep it.
And you see it in this case, it’s in the, like, it’s not in the available balance, it’s like a pending balance, so it’s not like you’re getting people to overdraft their accounts or anything, right? But you can already feel, I saw it in your face, like, you feel how bad it, that hits different, as they say.
Right. Or when you say for, you know, people trying to get sales goals and instead of saying you’ll get the bonus at the end of the quarter, if you do this [00:22:00] thing, if you say, Hey, we put that 5, 000 bonus, like it’s yours. And if you don’t, earn it, right? You have to give us that money back. Yeah. We don’t want to give up the thing.
I hate that idea. And I, my brain is already starting to think about like, Ooh, with a hundred dollars, I could go buy that pair of shoes or I could do this thing. Like you start to see what it could really be.
Teresa:
Well, it’s almost belongs to us. Already does.
Melina:
Definitely.
Teresa:
It almost feels like, Oh, it’s us. So I don’t want you taking something of mine away from me.
Melina:
Yes, yeah, it’s called, so the endowment effect is a lot of what comes into play here as well, that we take ownership over something very, very quickly, our brains are constantly, it’s like the seagulls in Finding Nemo, right? And they’re like, mine, mine, mine.
Teresa:
Yeah, yeah, yeah, yeah.
Melina:
All over the place.
Teresa:
I love it.
Melina:
Yeah, and so we know that that’s what our brains are doing all the time, and so if, but on this like conscious level, if you think about how you would like to be sold to you as a human, you’re thinking about what you [00:23:00] would like, right, you say, I would hate if someone said that, I wouldn’t like that, and I would be mad, you know what, I wouldn’t like it if you did that, that wouldn’t drive my behavior, I’m not going to send that thing, but you test it.
You know, like it shows up a little bit differently. So this is why it’s just really important to try and test different stuff and things that you consciously think as you sit down and say, if I was a human buying this, what would I like is a different mindset that when you’re actually buying the thing, right?
And so if you can kind of separate from that and to know that sometimes the things that you think you would hate. There’s a reason and actually when it comes to motivating behavior, they’re very compelling and that loss aversion is one of them and the thing is to when it’s done, right? It doesn’t feel super negative, right?
Because I know there are a lot of brands, myself included, I try to stay out of that really like where it can get fear based really [00:24:00] quickly. And I know for a lot of people, we don’t want to go there. And I get that. That’s fine. You think about like an overnight test drive for a car, right? So they, If you’ve ever had that experience, they say, Oh, take it home.
Maybe they give you a gift card or like test out, you know, put the car seats in, take the family out to dinner or whatever. Yeah. Wow. That’s so nice of them. Like the chances that you’re buying that car are much higher when you experience it and you touch it and you smell it and you can see it and you know, if it’s in the garage and it’s like become part of your identity now and now your old car looks really bad by comparison.
Right. Yeah. But. If you choose not to buy it, you’re not mad at them about it, right? And you feel like it was this gift, right? So it can be done in a way that still feels positive, even if you’re leveraging something like loss aversion.
Teresa:
Yeah. It reminds me of a great quote that I just buy, which is, if I’d not seen such riches, I could cope with being poor.
And it’s kind of that, [00:25:00] exactly. It’s like, you’ve had it, you’ve had a taste of it, you’ve experienced it, You don’t want to give that up. Like, it’s like the car. Once you’ve gone to a good car, you can’t ever go back to an okay car. You’ve, you’re always thinking I need this. So let’s talk about one of the things.
And one of the things I teach and I talk about a lot is webinars. So launching, so launching a digital product, launching a course or a membership or something where you go on a webinar and you do it. And there are certain things that we do that I would love to kind of get your feedback in terms of like, you know, is this the best way to do this?
So for instance, one of the things that we do is we often start with reminding them of their pain points. So we will say, you are in the right place if, and then we list the pain points. So, Is that a good thing to start with?
Melina:
Yeah, yeah, I mean, to, one, so the person who does resonate with it is like, yep, that’s me, that’s me, that’s me, and I’m [00:26:00] now primed and ready to hear about what’s going to be, how you can help me with this.
Someone who goes, Huh, I guess this isn’t for me, right? Maybe they’re going to leave, but know, it doesn’t end up wasting some, some time there. So, yeah, and I would look to, you know, there’s opportunities to, you know, if you can leverage it as a question is something that can be very impactful for people.
You can also look for opportunities to where you can incorporate social proof into this. So we humans are a hurting species. And so seeing that other people like us are feeling this way where we might not be ready to like fully admit or, you know, if we have a hesitation about whether we should move forward or not.
So if this was say a live webinar, whether it’s just the first time it’s live and you do replays or whatnot, but you’re able to say, Hey, like, you know, let’s see some thumbs up, get some, some hearts in here. Like who agrees with this, who resonates with this? And you see a bunch of [00:27:00] them. Hopping up. Yeah. In there, you go, Oh, like this has like, there are other people like me that are feeling this.
The energy comes that person feels more safe when, when you can showcase that sort of social proof aspect.
Teresa:
You know what’s so funny is I do that, but I did it what I thought for an entirely different reason in my head. So I normally read out six type of pain points. And then I get to a slide with all six of them on and I say, well, I take a drink because I normally need to drink this.
But while I take a drink, let me know in the chat, which one of these resonates the most with you. And I thought I was doing it to keep their attention, to get them used to being in the chat. But actually, I’d never even thought about that kind of herd mentality. You give a really good example in a podcast that I listened to about this.
About, and, and I’m interested to how we can use this. So you talked about, and I’m going to get this really wrong, but hopefully you’ll know which example you gave. It was something to do with a billboard and saying [00:28:00] so many amount of people did this, but they changed it like, and like to make it, Like they’re the one that isn’t in the pack.
So what was that example?
Melina:
So when it comes to a billboard, and I don’t know that this was necessarily social proof example, but it has to do with framing. So I will say the thing that comes to mind for me here that I know as a billboard example, I use a lot and maybe it’s, it’s on point and maybe it’s wrong.
And we’ll, we’ll find another example, but so. Framing is this, that how you say something matters more than what you actually say, right? And so the example here being, just imagine you go to the grocery store and you’re going to buy some yogurt, we’ll say, and you get there and there are two, they’re almost the same, but one is listed as being 90 percent fat free and the other is 10 percent fat, right?
Which one do you want, right? So of course, yeah, 90 percent fat free. We, logically it’s the same, right? [00:29:00] But it doesn’t feel the same at all. Right. So that is where framing comes into play. So in this case, it was a financial institution that was, had a new rewards checking account that I was working with them on for this messaging.
They were super excited about the message they were going to be putting and that all the billboards and everything was going to say, earn up or earn 1. 26 percent APY for up to $25, 000 in balances. Like what’s going on the billboard, which, you know, they’re in Southern California. And so going down the freeway in L. A., that’s obviously turning heads, right? Yeah. Like, how? Ooh, right. So it’s just not very compelling, even if you like, understand the math and you’ve been looking at that’s definitely one of those things you’re like, Oh, like if he even registers, you’ll think about it later. So what I was able to do, we did a reframe on that.
Instead and it say, did your checking account pay you $315 [00:30:00] last year to where can very quickly say either. Yes, it did, or more likely no, and like, Hey, who’s, who’s talking about that? Right. That’s interesting. I want to go learn more about what that is and find out their name. So that curiosity building is really key in that.
And it’s, you know, 315 is the 1. 26 by the 25, 000. Like it’s the same number, but your brain is not doing that math and having it feel tangible for you at all into what that, you know, sort of cashback scenario is. And so being able to do that reframe in that case, they didn’t change the media buy. They didn’t change, you know, anything other than, you know, we, we redid, you know, the messaging and that approach and they had a 60 percent increase in month over month account openings when they launched with that account.
We also did For their social campaigns with it, that it was, you know, being able to see people that liked [00:31:00] photography. We found items that cost about $300, like a lens or something for a camera. And did where it would be like an image and say it’s like a gift from your checking account. And if it was this, you know, at the like, you know, the spa that you’re there, it’s like this gift from your checking account because it’s about $300 cost for those.
So yeah, that turning it into something tangible that I can relate to, like layering in that gift piece, you know, that all can come into play.
Teresa:
That’s so clever, isn’t it? Like, and like you said, it’s not, it’s, it’s the same thing, it’s just saying it in a completely different way. How do you do that then? So let’s say, and this is where I get super selfish because it’s my podcast and I want to know your answers to things that will help me.
But like, let’s say you are offering a course for like a thousand pounds. And, and when you, you, can’t guarantee the outcomes that they’re going to get. So they’re in a position where, so let’s say [00:32:00] they have an online business. This is what I teach. I have an online business that isn’t growing and isn’t bringing in the money that they want.
And there’s still having to do one to one work and this lot done for you work and the course will enable them and give them all the tools they need to grow that business and earn the money that they hope that their online business would earn, but obviously that depends on them. So like, how can I kind of frame that in a way that tells them what is available to them, but when I don’t actually know what is available to them, because I don’t know what they’re going to do with it.
Melina:
Yeah, so one of the concepts that I lean into just always when we’re looking at some of this pricing and sales approach is to look at a concept of anchoring and how our brains look at numbers. And so if the biggest number and the thing you get to is to say, and it’s a thousand pounds to buy this thing.
You want it, right? Like that’s kind of a hard.
Teresa:
I mean, I wish people would just buy it. Do [00:33:00] it now. Yeah. Yeah. Great.
Melina:
Yep. But if we have some additional numbers to help make that value clear to where it feels so much, you know, very reasonable for the stream we’re going to get. So if we kind of layer in all of what we’ve been talking about here of that loss of version frame And helping them to imagine what the world would be like or what it will be like when, right?
So this is a common reframe I use for things too, is so we say if a lot. So, if we get out of the if mindset and look for where we can when things, so like, if, if you complete the course, if you do all the things, you know, you might be able to have something versus when you finish, you will see this, you know, that feels very different when we hear that language.
So that’s one simple, very much right.
Teresa:
It feels confident. And you know, I know this.
Melina:
Yeah, so you, as the person selling it, feel confident in it, which helps me to feel [00:34:00] safe in it. And then it’s saying like, when you finish, like, I bet a bunch of people finish this thing, like, and I can see myself finishing this thing. It’s kind of helping me be like, I’m in the right spot.
Right. So, yeah. So that’s one aspect to this. But also you can say. I just want you to imagine. So from what I heard and what you were saying, this has to do with their business success of some sort, right? They’re going to have some sort of a lift that they’re going to get from the course. And I would imagine that typically comes from an increase in sales, right?
Or that’s, that’s likely at the core of what we’re talking about, you know, with 90 percent of the people listening, this is sort of what we’re going to be selling, right? So if you say. You know, I want you to think about how much money your business made last year, right? And you probably have a goal in mind of where you want to be going.
Maybe it’s 10 percent or 20 percent above what you made this past year, even 5%, right? What’s that number in your mind? Imagine if you were confident in your sales and you knew you were going to hit that number, maybe even get to that [00:35:00] stretch goal. What’s that gonna mean for you and your business? What can you invest in?
What are you able to do? Are you getting another team member that’s able to help you? Are you able to get that new website? Imagine that. And what if I told you that was possible? From this course. We’ve had so and so who went through and look at this amazing thing. She had this level of success and we had so and so and she was able to get this amazing thing and saw this increase in her revenue and for just a thousand dollars to be part of this course, you get all the support and you have the community and you go through and do this and you get one on one time with me and you can make that dream, your dream, a reality by this time next year.
Yeah, that, that’s how I would approach that.
Teresa:
Yeah, and I think that reminded me of the getting them to imagine the amount there’s been some I watch FYI people’s funnels and people’s launches, like people watch Netflix, like I’m sat here [00:36:00] watching someone’s launch, right? And the, and I see some of this stuff and I’m like, it’s genius.
I don’t necessarily know the psychology behind it, but I just know it’s genius. And one of the things I’ve seen is when people do calculators. Okay. So, and I’ve seen it a few times where you put in how much your course is going to be, or how much your membership is, and then you, Work out, you know, a percentage of, so average kind of sales is like, you know, one to three percent of your email list, let’s say.
So it’s like, okay, so if I can double your email list and that, is that how much would them bring you? And it’s kind of saying, getting them to work out the math in terms of, oh, okay, that’s what it could be possible for me, even though, you know, there’s many steps that it takes to get to that. But almost having them do the calculator thing makes them go like, again, almost a bit like, I’ve already got it.
Like, it’s like if you’ve ever sold something and you’re working out, what could I possibly get from it? You want that then, like, [00:37:00] even if that was way beyond your dreams. So let’s say you’re like, Oh, okay. So I’m selling something for a thousand pound. If I could get 10 people to buy it, like that’s 10, 000 pounds.
Or if I could get 30 people to buy it, that’s 30, 000 pounds. And then suddenly it’s like five people buying it feels really disappointing because in your head you want 30, 000 because you’ve just put the number 30. So again, for me, it’s, is it that whole. Putting the, the figure in their head already that makes them go, okay, yeah, that’s me.
Melina:
Yeah, and just to see what’s possible, it’s one thing to say, like, so and so had a million dollar launch. Like, okay, well, good for so and so, right? Like, I don’t know that mine’s going to do that thing and that doesn’t make me necessarily feel great about what I’m being asked to invest here now. But if it’s to say, especially.
You know, so if the number, like you said, it’s like, we’ll say 1 to 3%, you know, the email list is going to convert. So if you can just assume that 1 percent of [00:38:00] people are going to buy this, this looks like how many people, like what’s on your list, what does this look like? If the number is more than this, it’s probably worth it.
And like, I did my own math. I was a part of the process. I went concert. You told me to be conservative when I was picking it. And I’m still good, but I’m going to look and say, like, well, what if it was 5%? What if I’m? Right. I start to look at this in just that sort of different approach. And if you’re smart, when you’re the person that’s making the pitch here, right, and when you’re selling on that, You want to know that the thing that you’re selling on that pitch point being, you know, it’s not one that they have to have a huge stretch to be able to get it.
So this only works if 25 percent of your list converts, like, well, that’s not how that works. So, yeah, so don’t do that. And you know, that. That technique doesn’t necessarily work if you have people that have a very small list and you’re asking for them to invest in something that’s five or ten [00:39:00] thousand dollars or pounds or whatever, right?
So, you just want to make sure that the logic of it makes sense and, and as we talked about at the beginning, have it be, Very ethical and very go. If you go for the conservative approach here, right? Like the most conservative value point that somebody can get from this. And if most people that are coming to you should have, if they’re a fit for the thing, they have a number above this, then that’s great.
And this also allows you to be really authentic and transparent to say, if you’re doing the math on this and your number is coming up and it’s not. Learly, you know, five, 10, 000. Don’t invest in this right now because you’re not quite ready yet, right? And that’s okay. But you know where to find me when you are ready.
And what I would advise to you is to work on growing that list and getting, you know, some authentic engagement and, hey, we’ve got this other freebie for you to help you to be [00:40:00] working on that. Take this thing, work on that, and then I’ll be here when the time comes. So those moments of authenticity, telling people.
You’re not a fit, and that’s okay, but don’t invest in this yet, that’s not the right space. That also, when you can very authentically, clearly do that, helps someone to say, alright, like, I feel okay with this, right, versus just trying to make, we’ve seen the thing that feels like a really obvious money grab from anyone that’s willing to give you something, and just don’t, don’t be that, don’t be that person.
Teresa:
No, and I, and I am fully on board with that in terms of like, being realistic and being, if it’s not right for you, then I will still be doing this in a few years time. You can come back to me. I will be here. That’s not a problem. But you know what is funny is someone I, I was on someone’s webinar when they did this and they basically got you to do the math in terms of what you could end up getting.[00:41:00]
And what was so funny is they gave the percentage between like three and she and she said we’ve seen all the way up to like seven or eight percent. Of course, when I was working out, what did I do? I obviously went up to seven or eight percent, right? And she made it really clear and really obvious that the majority of people they see at this percentage, but we have seen. And even just saying that suddenly made me go, Oh, well, if it was that, and you know, what was funny is actually I went ahead and worked with this person and I did the program they were talking about. It was a summit and I didn’t get the higher percentage, but I wasn’t disappointed.
I wasn’t, I wasn’t annoyed at her. I was like, well, no, she said that this is this and this is it. But it helped me get over the line. It helped me go, okay, let’s do this. And, and it, worked out great. Like it was, she delivered on what she promised. It was a brilliant program and it was well worth every second and every penny.
So, but it [00:42:00] was interesting that I immediately went to that. Oh, okay. Well, I couldn’t, this could be it rather than doing what she actually said, which is the right amount. I’ve got another couple of really quick questions for you because I’m really conscious of your time.
The whole, well first off I want you to explain the pros anchoring just a little bit more in terms of how do you not sabotage or cannibalize your own sales by price anchoring. So let’s say you have a program for 5, 000 and a program for 2, 000. And well, first off, do you have to know as you go in which one you want them to take? Is it the low one you want to take?
Melina:
Yes. So the, I’m going to jump in to, to answer kind of where we are with this.
So the problem I see often is, so someone will make the 5, 000, I’m assuming in this scenario, the person wants people probably to buy the $5,000 option, and they also have a 2, 000 option that they can like lean on if they need to. [00:43:00] And the problem is, one, people tend to present them in that order where you say, well, we have this 2, 000 thing or there’s this 5, 000 thing, right?
So you’ve now set a low anchor on 2, 000. 5, 000 sounds and feels really expensive. I feel like I’m going to start low and like, maybe I’ll deal with something else down the line. Right? So generally, so for one, whatever you want to sell, you should make it to where it’s really clear that it’s the best offer.
Right? So if it’s 2, 000, then having a 5, 000 other thing. It’s a really great way to make it to where that feels like an easier buy, right? You have something more expensive and some people will get that, but you know, you’re trying to make that 2, 000 thing look good. If you want people to buy the 5, 000 thing, this is your best offer.
You need to create a wingman for that item, right? And so often this ends up being a high anchor, [00:44:00] something that’s more expensive, but it, but is something that most people don’t need. And something you would be delighted if people bought because I’ve had so many people over the years, you know, you create the wingman thing and it, what’s great is it helps you feel a little bit free in like throwing out this thing that’s more expensive because you don’t, you’re not really trying to sell it.
It makes it easier to sell that 5, 000 thing that was the most expensive. And. It’s amazing how many people end up buying the wingman when you do this the first time, which is really cool, right? So.
Teresa:
Not if you’ve created it just to get them to buy the $5,000.
Melina:
But if you make it and it’s like, and I’m going to be, you have 24 seven boxer access and I’m going to be holding your hand every day.
We have a daily phone call and you don’t.
Teresa:
Come and cook dinner for you.
Melina:
Right. Be, be real thoughtful. Make sure it’s a thing you would want them to buy. Right. So. But let’s say, [00:45:00] you know, there’s the version of, so if you have the course itself, that’s 5, 000 or whatever, you know, this program that you’re selling, that’s 5, 000.
And then you say, but we’re, we’ve made the. You know, there’s only, you know, 10 people that can get this super extreme, awesome version to where I’m gonna take your landing page and critique it and show it to the whole group and you get to be showcased for feedback and you get a, you know, one on one session with me and something else, whatever.
And that’s 9, 000 or something, right? So if you start and say, but, and again, there are only 10 of them and they’re going to go fast, but we have that set aside and that is 9, 000 to do that. And we have the full program. That’s just 5, 000 where you’re going to get this and this and this and this, because we started with the bigger thing at nine and like delighted if people buy that, hooray, right.
That’s great. And you’ve priced it in a way that it’s good, but for most people, [00:46:00] that 5, 000 is the thing that you’re looking to sell. So you set the high anchor at the bigger thing. And if you do like, you know, we do a deep dive together and, you know, if you come, you come to me and we do the thing or whatever, and it’s 10, 000 to, for the day, you know, to do that.
And if you want the version where we go to Italy and we’re there for like three days, that’s 25, 000 travel, right? Like, I would love it if everybody buys that one. That sounds great.
Teresa:
Let’s go to Italy. Yay!
Melina:
Right? Yeah. So that, that’s a way to be using that. So that again, you don’t want, the thing you want people to buy should not be the most expensive thing that you offer.
And then start high and work your way down to that.
Teresa:
Okay. Yeah. Yeah. So what immediately comes into my head, and I bet lots of people listening to this will come to their head is, okay, so what if you go in with, I’ve got the 5, 000, I’ve got the 2, 000, I’ve only got three spots for the 5, 000 or five spots or whatever it is, you don’t even sell them, like, or you don’t, [00:47:00] like, what if it feels like unrealistic that someone’s going that many people are going to buy it?
Like, is it just a case of, well, no one needs to know, or is it a case of, you just have, you know, You’d still go with it or how do you manage that if you don’t know that anybody’s gonna buy that.
Melina:
So, you know set it up to where so the question again is what its purpose is, right? So if the point is that you want to sell that thing out, then it’s not necessarily the wingman anymore.
Yes, right. Yeah. Maybe, right? And it’s great if it does, but if we instead say, like, did that thing make it so more people bought the 2, 000 thing, and by offering it, did it, did it, exceed, you know, so you sold 20 of the 2, 000 thing in your last launch. And then when you talked about it this way, you’ve now sold 30 of that thing and you didn’t sell any [00:48:00] of the 5, 000 thing, but like, that’s okay.
Yeah. Yeah. Yeah. Yeah, and so knowing what it’s there for what its job is and what your your goals are and you should design it for that if you need people to buy that for everything else to work, then you want to look at the design, you know, of what you’re actually selling. And so maybe it’s, you know, now you can incorporate some surprise and delight.
So like, nobody bought the other thing, but you have now more people that are in the larger community. And so you can, you know, reach out to, you could do like, we did a drawing and like, your stuff’s going to be showcased this week. Congratulations. And they feel really appreciative or, you know, you can, or maybe just like, Nobody, you don’t have to deal with those one on one sessions and like, okay, cool.
Teresa:
And no one knows that that’s the case. Right, yeah, yeah, yeah. Okay, I’m super conscious of your time but I’ve got one, hopefully, fairly quick question. The number [00:49:00] thing, okay, 47, 97, 57, 1997. Like, is that really a thing? Because I think I have gone through periods of going, I came into the online space about eight years ago and I was like, yeah, yeah, yeah, yeah, this is brilliant.
This is genius. This is great. And then I saw it being used in a really like, that makes me want to shower in bleach. So then I completely rebelled against it. And now I’m kind of like, like you said, some of these things work. So am I biting, like cutting off my own nose to spite myself? Is that the right phrase?
Yeah. Like, is that a thing I’m doing or does it actually work and should we be doing it?
Melina:
Yeah. So the, in my third book, The Truth About Pricing, I talk a lot about Figuring out what type of business you are and draw the line in the sand, say we’re quality or value. And yes, quality and value are both good things.
And it’s not to say, you know, if you pick value, you can’t sell [00:50:00] quality items and vice versa, right? But the quality side is if you’re, you have a lot of extra credentials or you invest in R& D or, you know, you’re selling, To luxury space or what have you and in that case really this round number pricing and not doing a lot of discounts not having a lot of sales so being 500 or 1000 is different than 999 or 997 you can just hear the difference in it right if you are on that value The bargain, the deal, the discount, and it’s such a great thing that you’re able to, like, for just 997 for just this thing, right? Like, and it’s showcasing what a good deal it is to help you get to, you know, this greater space, this, like, dream life. And, and a lot of courses, actually, and I get that you’re hearing it, and you’re like, [00:51:00] but I’m low quality all day. A lot of courses are a value based offering because it’s not like one on one time with you or like a full program.
It’s something that I’m doing the little bite of a thing. And so potentially that rounded down pricing makes sense. And if you do choose to go that way. Whether you are 97, 99, 98, it doesn’t really matter, pick whichever one speaks to you and that’s okay, but whichever side you want to be on, if you say no, I am quality, and I’m owning quality, and that’s where I want to be, then it’s a $500 course, or it’s a 1, 000 investment, or whatever that is, and don’t do a lot of discounts and sales.
You can use things like scarcity and, you know, a free gift versus a 10 percent off sort of, right. There’s different ways that you can showcase that once you pick a site.
Teresa:
And. [00:52:00] So being slightly controversial, can you have both? So for instance, I do one very occasionally, I do one on one stuff.
So my one on one stuff is just a straight price, like no additional numbers, like straight 10 grand done. But could I then sell a course at one or 997? Is that contradicting myself? Or is that Okay.
Melina:
It depends. And I would typically advise to say, you know, you know, stick with, with one, but if you’re really clear in the way that you are setting it up and, you know, you don’t necessarily showcase the different prices right next to each other and whatnot, you know, there are opportunities to be able to, to do that and say what I tell people is, you know, try it on, right?
So if you’re. All rounded down and you think about if I was going to own and be even number on all of this what might that feel like and the reverse if you’re even on it and you were to [00:53:00] round it down what does that feel like and to see you know don’t feel like you have to do it any way that you have done it or what you see everyone else is doing you just want to make sure again that everything that happens before you get to the price that all matters more than the price itself so you want all those psychological elements to be lining up to where it feels natural. When you get to that number.
Teresa:
Okay? Melina, this has been brilliant. Obviously, I was good of characters. I told you for ages, I basically would like you to come and just review everything I do and tell me how I’m getting it wrong. That’d be awesome. That was amazing. And I know that my audience, get so much from it.
Where can they come and find you online?
Melina:
Oh, thank you. So the best place is just to go to thebrainybusiness.com. You can find my books, podcasts, learn about, you know, consulting and speaking and see my TEDx and all that sort of good stuff. And you can also find me on all the socials as thebrainybiz or Melina Palmer on Linkedin.
Teresa:
Awesome. Thank you so much, [00:54:00] Melina. It’s been a pleasure having you on.
Melina:
Of course. Thanks for having me.
