The Psychology Of Demand

0:00The biggest lies in business. People buy logically. No, they don't. People justify logically, but they buy emotionally. You kind of know that about yourself and about the others around you. See, every major purchase decision contains emotion. Every single one. Not half of them, not some of them. And yeah, I know that you and your friends probably use logic to tell the story, but people buy things like status. They buy certainty. They buy belonging. They buy identity. Maybe it's security that they're buying. It's the sizzle, not the steak. Maybe it's, let's think of some others, significance, progress, freedom, clarity.

0:41You know, they're buying their time back. The product is often secondary. The emotion is primary. And we want to today look at how to get that emotion into your marketing system, into your demand engine, because with the emotion, you move sales even faster. So today I want to dive deep into that psychology of demand, not just the process of demand creation, but the psychology. Because once you understand the why behind people buying, marketing becomes a lot easier, sales becomes easier, and the growth of your business becomes easier. And of course, what do we want? If we're scaling a business, we don't want to scale complexity or chaos.

1:15We don't want to scale genius. We want to scale it easier. It's got to get easier and cheaper as it gets bigger. That's the definition of scalability. And that's why you're on the$100 million podcast. So people don't buy products, they don't buy services. Let's start with the biggest lesson behind all of this. When I say they don't buy products and services, they buy outcome. And beyond outcomes, they buy the feeling that the outcome brings them. So nobody buys a Rolex to tell the time. A$50 watch still tells the time. Nobody buys a Ferrari just to get somewhere. You know, Toyota will get you there too, if that makes sense.

1:51And even like for me, nobody buys coaching to receive advice. They buy the confidence, the certainty, the growth, the identity, the results of that type thing. So you think about it, the product or service is really the reason. The transformation is the biggest reason people are buying things. So this comes back to the identity principle. And when you think about a person who's making a major decision or even a small decision, it's all moving further into that identity. And it's possibly one of the most powerful concepts in marketing today. people buy products that reinforce who they believe they are the harley buyer the apple computer buyer uh the person who buys better running shoes you know they're they're reinforcing it might even in fact it probably goes one step further it could also be who they want to become type thing think about it people don't buy on shoes they buy the identity of being an athlete i would have said nike there but you know nike's dropping down and on's crushing them type thing But back to the Harley, people don't buy Harleys.

2:52They buy that illusion or that idea of freedom that they're in. They buy the rebellion. They buy the community of that thing, the guy that waves to you on the other side. People don't just buy Apple products. They buy the innovation, the creativity, the status. Identity drives demand. And so I think that when we really want to understand how we create better marketing for ourselves, we have to ask the question for our customer is who am I becoming? Who does your customer want to be? Like for me, it's they want to be a more successful entrepreneur. They want to be a more creative, better entrepreneur, better business owner.

3:28I think every purchase asks a hidden question. Who does this help me become? The more clearly your marketing answers that, the stronger the demand become. Like for me, again, people don't buy coaching. They buy becoming a better entrepreneur, a better business owner. People don't buy gym memberships. They buy becoming healthier and fitter. People don't buy education. They buy becoming more successful, more knowledgeable. The identity matters. matters. And so you've got to look at your products and services as an identity question. Who is it that they are reinforcing that they already are or who are they reinforcing that they are becoming?

4:07And that brings us to, I guess, the next part of that is the status side of it, the status principle. Status is one of the strongest forces in human behavior. And most people don't like admitting it, but it kind of is true. Humans care about status, not necessarily money, it's status, recognition, achievement, position. In different groups, status is regarded differently. In a group that has tattoos, the best tattoos get status type thing. In a group that's fit, the one with the fastest time might gain status type thing. The position, the significance, all of these things are kind of status. And that's what many purchases are actually status decisions described as logical decisions.

4:48So if you think about your decision that a customer is making with you, what status will it give them when they make it? How will they acknowledge themselves? How will it, again, reinforce their identity or expose and give status to their identity? And Rolex is a prime example of this. If we go back to Rolex, nobody actually needs a Rolex, right? Yet millions want one. And I'm here talking about it on the pod. Why? Status, achievement, success, recognition. I know I already own four of the dang things and I don't even wear them type stuff. But the watch isn't the product. The signal is. And people buy signals.

5:24They buy the status type stuff. It then also adds to not only do I get the status and the identity, but I also bring the belonging principle in here. What group do I belong to? Because humans are tribal, if that makes sense. And I guess we always have been. Maybe we always will be. People want community belonging. They want acceptance. They want connection with others who have similar thoughts, beliefs, values, ways of being. The runner hangs out with other runners. The tattoo person hangs out with other tattooists. The person that likes certain hairstyles hang out together. The band, you know, you create that.

6:02The strongest brands today create tribes. If you think about the examples we've already given you, Apple, Harley. But then you go into like CrossFit, amazing example of that. CrossFit creating communities. Even Tesla, the online communities for Tesla are phenomenal these days. You wouldn't call them a customer base. You'd call these tribes and people belong and belonging creates an extraordinary level of demand. So where do you know you belong? What's a business where you feel like you belong? You're part of the tribe, you're part of the group, and that helps you stay a great customer, but also helps them with referrals, repeat business, all of these different things.

6:40If I use Action Coach as an example, one reason Action Coach works so well globally is the community. Business owners often feel isolated. They feel overwhelmed. Sometimes lonely is a big thing. You know, business ownership is one of the loneliest jobs on the planet. Once they enter a community, suddenly they're not alone anymore. Suddenly they're part of a group of people where they belong. It's like the old cheers where everybody knows your name and that belonging becomes really valuable sometimes in fact the belonging with action coach is more valuable than the coaching itself being around other people seeing that you're not alone knowing that hey other people have been through this challenge before me i think also within that if if we break it right down humans value belonging but i'll also add in the scarcity principle that we've discussed before humans value what is scarce not what's abundant.

7:31And the less available something becomes, the more valuable it feels. And again, this is why waiting lists work, why limited editions work, why sold out events work, invite only communities, VIP tables, all that sort of stuff. Scarcity creates a level of desire, just the name badge of VIP, having the sticker on your thing, having all that stuff. And that's, again part of why sold out works is this so let's get back into the mindset or the psychology of this imagine you got two restaurants right restaurant a empty restaurant b wait list it's full there's people in line which one do you want to get into which one feels more valuable type thing when you're walking by and taking a look at it of course you know it's restaurant b okay that scarcity creates a perception or it changes people's perception.

8:24People often assume demand equals quality. And that, my friends, is what I mean by the psychology of demand. That's what we're looking at. And that's where, you know, we've heard of the term over the years, FOMO, right? And the FOMO effect, fear of missing out, FOMO. I mean, they even made songs about this stuff. One of the most powerful psychological drivers for human beings is they hate losing opportunities like that. Oh, no, I didn't get to have it. Oh, no, I didn't get to go. Oh, no, I didn't. And often more than they enjoy gaining it, they fear the missing out type thing. Think about limited offers, deadlines, launches, even event registrations.

9:06You know, when people fear they're going to miss out, there is a definite thing about taking action. Only five seats left. only, only, only. We only accept two new customers a week. People don't want to miss out and that does create action. Scarcity has been around for a long time in marketing and it's going to continue because it actually works. So you take that to the flip side and you go to the certainty principle, right? Because people buy certainty and not products. And that goes back to our initial discussion around what emotion are they buying when they're buying your product or service.

9:39Certainty in the mind of a prospect reduces their risk. That's why guarantees also works. I don't just think scarcity, think the other side. Guarantees work, testimonials work, reviews work, case studies work, awards that you've won. If you're not submitting for awards, how do you expect to have that up on the board type thing? Those things create certainty. Your ratings create certainty. The more certainty you create in the mind of a prospect, the easier their decision becomes. You've got to make it easy for them to decide and not just easy logically. Again, back to the psychology of it, the sizzle, not the steak.

10:16Trust is like psychological safety. Trust tells the buyer this will work. Trust tells the buyer you're going to be okay. You're not going to lose your job by buying from this company. This is a good decision. And trust, in essence, reduces their anxiety. And the anxiety is often the biggest barrier to buying. It's not, you know, the price or that. It's like, oh, I'm not sure if this is going to work. And that anxiety is something you've got to remove for people, right? So, but on top of that, there's the pain principle. People move away from pain faster than they move towards pleasure. Like if you got a bit of an ache in your arm, you're not going to the doctor.

10:52But if you broke the bone, you're going to the doctor. And it's one of the oldest psychological truths that business owners often market benefits. and the stronger approaches usually address the pain. Like think of some examples, frustrations that people have. You might like to make a list for your business. What are the frustrations you solve? What are the stresses that you reduce? Where's the time that's wasted that you take care of? The lost money, the uncertainty. Your pain creates urgency. The broken bone is getting treated urgently. The sore arm or the sore shoulder, not getting it. And remember, urgency creates action.

11:31Urgency creates value. Urgency creates a different price point. So on top of that, you can then go to the next level and you say, if we balance that out with the dream principle, right? Pain gets attention. Dreams create that commitment. And people buy toward things. So not only move away from the pain, the urgency, but people move towards the freedom, the growth, the impact, the wealth, the contribution, the lifestyle, the camaraderie, like they move towards the positives. And the best marketing definitely combines both pain and possibility, current reality, future vision, back to my change formula, dissatisfaction multiplied by vision, plus the first steps has to be greater than resistance, go back on that pod from a year or so back.

12:21The transformation happens. See, people don't just buy a thing or a product or information. They buy transformation. Nobody wants, like if I use me as an example, nobody wants a course or a book or a webinar or a podcast or a coaching session. They want what happens because of it. And that's why I hope you take action every week from this part. And you know, always market the transformation, not the transaction. Remember that transformation, not transaction. In fact, write that down somewhere. You're selling transformation, not transaction. You're selling the having fun in your backyard, in your swimming pool with your kids and all of the family coming together.

13:04You're not selling a fiberglass pool or a concrete pool. You're selling the transformation. And let's add into that the social proof principle because people trust crowds. If enough people believe something's valuable, then we all assume it probably is. This is again why I'm harping on you about testimonials, customer accounts, reviews, success stories, awards won, acknowledgements given. All of these things work so well. Take a look at your LinkedIn right now and see how many people have recommended you. That is important on your Facebook, all of these things, your Google, every single one of these, you need that.

13:40Humans follow signals from other humans. I feel like you add to that the authority side of it because the principle of authority is that people trust experts, right? Not because experts are always correct, but because expertise reduces uncertainty. Authority creates confidence. Confidence creates demand. That's why books, pods, speaking, thought leadership articles all work so effectively. Again, look at your LinkedIn and see how many articles have you written. How often are you writing articles for your LinkedIn to prove that you know what you're talking about sort of thing? Let's do a few more principles first, and then we'll get to the action steps, okay?

14:16The commitment principle is about small steps lead to larger commitments. So yes, yes, yes, big yes type thing. This is why in my books, the Raise Your Hand Marketing works so well. If you haven't read that book of mine, dive in, read it, Raise Your Hand Marketing, get on Amazon right now. So the first commitment, do a download, register for a webinar, subscribe to a newsletter, Watch this video. Raise your hand. Then later, score your business. Do a price tool. Fill in a questionnaire. Do an analysis of your business. Then later again, tell us that you're ready to buy. Book a phone call. Make the actual purchase.

14:54People rarely jump from stranger to customer. They move step by step. So take a look at your nurture and see if you're allowing people to take steps or if they have to jump straight to the purchase. And remember, emotional decisions happen. If we simplify everything from the decision-making model to the emotions, people buy because of, as we've mentioned, identity, status, belonging, certainty, scarcity, trust, pain, dreams. They buy because of emotions. okay all of those words are emotion the sizzle knot the steak and that my friends is what really drives demand yeah you have to have a machine for demand you have to have all of those things but what drives it the product or service simply becomes the vehicle for them achieving what they want to achieve reaching the status enforcing the identity removing the pain increasing the pleasure so ask yourself these questions from this week's pod what identity does my business help my customers create, okay, or reinforce?

15:59What status does it signal to the marketplace, okay? What community does it build or do they get to join when they become a part of it? And what certainty does your product or service provide someone? Certainty that they will X or achieve Y? What pain do you remove or solve for them? What dream does it bring them closer to or fulfill in some cases? What transformation does your product or service create for that person? Those are the big emotive drivers. Again, the mistakes that I see happening is the selling of features, the selling of information, the selling of a product, ignoring the emotive identity, belonging, ignoring the psychology behind the purchase or behind the decisions to buy.

16:46Remember, people don't buy logically. There's a small percentage that's logic, but they justify logically. So you still got to have the logic, but the emotion is where they make the real decision or the real movement in this case. That's the huge difference. So look at your marketing this week. Let's give you an action challenge for this week and think about it and look at it from an emotive standpoint and think, what emotion am I selling in this? Not what product or what service, what emotion am I selling here? If you can't answer that question immediately, your marketing needs work. Okay. So go back through and, you know, yeah, rewind the pod, make a list of all the different emotional types and start thinking of identity status, start thinking of the clarity that you bring, all the pain, the pleasure, all of that stuff.

17:36Make a list, do the work. Don't just listen to the pod, do the work. Remember this, people rarely buy because of what something is. Okay. They buy because of what it means to them or means in the world. The businesses that understand psychology don't need to pressure people into buying. They simply align with how humans naturally make decisions. Demand isn't created by features. Demand is created by desire.