The 8 Psychology Hacks Behind Apple, Amazon And Dyson

0:00Michael Aaron, welcome to the podcast. Thanks so much, Jack. Excited to be with you all. It's great to have you here. We kick off. We love open questions working in sales. I guess, who are you and what problem do you solve? My name is Michael Aaron Flicker. At 14 years old, I started my company Xenosci that I've now had for 28 years. And over those 28 years, we've done a lot of different things for a lot of different people. But the red thread that has connected all of those things is that we have found that if you have insight into human psychology, if you understand why people believe what they believe and act the way they act, you have an unfair advantage in your marketplace.

0:52that's helped us create nine different operating companies. We work to grow our own businesses, our own brands in the world, and we work with clients and companies to help them grow. And it's why I wrote the book, Hacking the Human Mind, because those insights that we had, we were so excited to share, we wrote it in a book so that others can learn with us. Nice. So I think we probably will get into some anecdotes and some examples later. But if we're thinking, if a business owner is listening to this today and they are doing the exact opposite of what you've done in your career and haven't used the kind of behavioral insights, what symptoms might they be facing?

1:34In the world of building brands, you have a few schools of thought. One school of thought is that it's all about performance. You find the right ad that just unlocks people's actions and you pump media dollars into it and you grow sales, grow sales. And you have another school of marketing philosophy that's about emotional residents. You have to make big Super Bowl spots, big campaigns, and that if you could be remembered, then you'll drive big sales. But what connects all of these philosophies, regardless of the type of brand you are, the type of owner that's running a business that you have, the insight is that humans are not as rational as they claim to be.

2:20They're not as cold calculating computers as they are when you ask them in qualitative or quantitative research. And because of that, because they're emotionally driven animals, understanding the biases that they have really can make a difference in how effective your work is. So if you think that your work should be working and it's not working hard enough, there's a good chance that there's a behavioral science insight that will reveal why, even if you're saying the perfect thing about your company, even if you're using all the right media channels, if it's not clicking, there may be something about how you're approaching the problem that you're missing, that behavioral science insights into human nature can help reveal.

3:07And so it may not be about throwing out your campaign or throwing out your work. It may just be about tweaking it. So if you're feeling your work's not working hard enough, that's a good sign that behavioral science is a good way to do it. If you feel that your business is marketing but not winning, if you think that you're advertising but not connecting, it's often smart to look at the human insights that drive people's beliefs and behaviors because that can help reveal why it may not be connecting. So I think this is good at work for anybody who feels their work's not connecting hard enough.

3:41Okay. So let's stick on that thread of thinking rationally. So there'll be people listening to this thinking, I think this guy's wrong. I think I am rational 99 % of the time. I don't get mad in traffic, things like that. So if the audience were five-year-old children, Michael Aaron, what is actually happening in the brain when it comes to making decisions and kind of thinking rationally or acting emotionally. So here's a human experience that could help us evaluate how rational we all are. You walk into a nice restaurant. Maybe it's a special occasion. You sit down at the table with the partner that you're going to share this special meal with.

4:24Overcomes the big book of wine. And maybe you're a wine snob or maybe you're not that experienced in wine. And what does every person on the planet do? They do exactly what Homer Simpson once said. I'll take the second cheapest bottle of wine. I don't want the least expensive, but I'll take one up. Now, whether that bottle of wine is$30,$50, or$70, you feel that you've made a good choice because you had a wild set of options. and instead of answering the harder question of what is actually the good deal of these 80, 100 bottles of wine, you answered a simpler question. What's the range available to me?

5:07And I'll take one up from the bottom. And that has nothing to do with the quality of what you're going to get in your bottle. It has nothing to do with the rational evaluation of those wines, but it says a lot about how we as humans solve problems in a quick situation. You use, We call that heuristics. You make a leap, you make a jump, and you solve an easier problem in front of you. We're chock full of stories like this, Jack. But the point is you have – you solve simpler problems rather than harder problems when faced with a choice. And so much of our human experience is about trying to use our brain as little as possible.

5:49I was reading something in Scientific America. The human brain composes 2 % of your body weight, but accounts for roughly 20 % of your calorie expenditure in any given day. The brain is the most energy demanding organ in your body. And so natural evolution will want you to use your brain as little as possible. We don't want to conserve energy to be a species at the top of the food chain. We want to use as little energy as possible. So we are naturally evolved to make mental shortcuts, to not use our brain where we don't have to. And so that's an example of we're going to solve an easier problem of which wine to choose rather than more complicated.

6:34it so thinking about pricing and thinking of the book hacking the human mind people will be thinking and and they might have heard it they might have heard alex or mosey talk about it like you want to anchor you want to give free offers all all of these different things so like pushing people some people's uh sales cycle is well it's a bit more consultative i can't just give you three packages some people are saying well here's bronze silver and gold can you think of any examples that that was a great one there with the wine but if if businesses are thinking right i want to price things up i want to build an offer how can we use human psychology and behavioral instincts to start packaging offers in the best way possible so uh if if anchor pricing is a more common thing that many of the listeners may heard of let me share a story from red bull that i think helps explain how pricing can be a signifier of quality all by itself.

7:33So Red Bull is launching and they're going to create this new category of energy drinks, but they're going to deliver their energy drink. They got to deliver in a can of some type and they make the decision. We are not going to deliver in a 12 ounce standard round can. I'm in America, Jack. So So we use fluid ounces, which may not be what the listeners – is it ounces that you all use to evaluate the size of your soda cans? Milliliters, I think. Milliliters. Okay. So in our world, all soda cans are in a standard round 12-ounce can. And the founder of Red Bull said, we're going to really struggle to be compared at that price.

8:23And so he chooses a skinnier, taller bottle. And rather than line pricing at the time,$1 for a can of Coke,$1 for a Pepsi,$1 for Red Bull, he prices his at$2.50. And his insight is that by breaking the packaging comparison, by not having it, his is I think 10.2 ounces versus 12. And by making the argument that this is all about the energy you're going to get in this can, he's able to charge$2.50 rather than$1 at the launch. And Sina is very successful. And there's lots of examples of how you can use pricing in what you compare your price to, to break the way consumers compare you to. When Nespresso first launched, they were very focused on explaining that a Nespresso was only 50 cents a pod.

9:25And 50 cents compared to a$4.50 Starbucks was such a great deal. You can make it at home. You can make it the way you want, only 50 cents a pot. But of course, the more common comparison would be towards ground coffee and a drip machine, which is about three cents a cup. And so by setting your comparison point and using your price to change who you're being compared to, you have a lot of power to change how people feel about the quality of what's in it. Nespresso much higher quality ground bean than regular ground coffee or in Red Bull's case, a much more potent drink, even if there's giving less fluid ounces, even if the price is wildly greater than their competitors.

10:09Okay. So it feels like it's less about the decision that you make when kind of building the product in terms of like pricing and things like that. But it sounds like it's a large proportion of the story that you actually tell with that. I think that's the right insight, Jack. What we're saying is there should be a business evaluation. What are my cogs? What are my input costs? What's a reasonable profit to make and what should the price be? But then what we're saying is that's the starting spot, not the ending spot of your price evaluation. The price you put on your product means something to the buyer in the market.

10:47And what we're saying is it means something much less rational than you might think. It is obvious to post-rationalize and say the Nespresso pod at 50 cents is much more expensive than ground coffee at three cents a cup. But when Nespresso comes to market and all their advertising is comparing to lattes that you can get at a coffee shop, and when they're talking about how it's a tenth the price of a coffee shop latte, your mind, irrational as it is, does not focus on how it's 10 times more than ground coffee. So we want to empower brand leaders. We want to empower owners to ask, what's the comparison you want to have?

11:34And know that folks are much less discerning when you set the frame for them. When you tell them how to compare, when you set the price that forces them to think that way, it gives you, number one, it allows you to set your competitive set in the mind of the buyer. And most importantly, number two, it allows you to really extend the profit margin. Because now you're deciding it's not just 20 % above your cost of goods. It's not just a reasonable profit. It sets the stage. Final comment on this. If you remember when the Apple watch was first launched they had three levels of apple watch a 399 entry level model for 499 you got some upgrades i think it was like a three or four millimeter larger screen but then they had a 1499 so it was 399 499 and 1499 and what was the difference well you got a hermei wristband for a thousand dollars more rational or not you have three prices now all of a sudden that 499 model seems a lot more reasonable because there was a 1499 model on the shelves 1499 models on all their ads and it gives you a centering spot our point is the emotions drive a lot more of the consumer decision making than most people give credit for it sounds like the same sort of logic of like uh rolls royce selling at boat shows because they're being compared to the boats uh so i guess to give you maybe like a close to home example then because this is where my head's going so i run a sales agency and i would say okay compare our prices compared to hiring a salesperson managing them the tech stack blah blah blah national insurance all of those things it's easier to outsource to a sales team so that's like the comparison if i was playing the inverse game and we typically don't play this but i'm keen to see like where you would take it when we think about hacking the human mind obviously there is a game of we would probably be five times more expensive than outsourcing it to south africa or the philippines or india so if we're trying to hack the human mind and um nespresso was thinking right well, we want to compare it to the ground coffee.

14:00There's a different story to tell there that we are more expensive. How can we use behavioral insights to tell a different story? In that instance, I wonder if focusing on what they're losing would be more powerful as an emotional driver than what they're getting. So you're making a rational argument right now, Now, Jack, you're saying, look, you can either hire an internal sales staff or you can hire an outside agency. And these are the two different options. If instead the messaging focused on this is what you're giving up by not choosing an outside sales store. Emotionally, people are much more resonant to what they're losing rather than they're gaining.

14:47There's a very famous psychological experiment that said, OK, we're going to flip a coin. How much money would you be willing to flip a coin to win or to lose? So if I flip a coin, I can get$10 or I could lose$10. And people say, no, no, no. If I'm going to lose money as much as I'm going to gain money, I have to gain$20 for the risk of losing$10. meaning that the fear of missing out is much more powerful than the fear of than the desire to gain. So by focusing on what they're going to lose in your example, Jack, like by not having an external sales team, you are choosing to only have you're losing out on four more people that you could have working on the account.

15:45Rather than you only have one, say you're missing out on four. By not having an external sales team, you're giving up the chance to bring five team members together from all different areas. And that fear from all different backgrounds, the connections that five sales leaders have, you're giving up hundreds of business connections by choosing an internal sales team. By focusing on what they're giving up rather than what they're getting, that's a much more emotionally resonant thing to focus on. hmm it's uh i'm thinking about i don't know if you've heard this experiment there was a maybe a rat or a mouse on a mini treadmill and you think about pain and excitement they put cheese in front of it and it ran so far and then when they put the smell of a cat behind it it ran even further so obviously i work in sales a lot of cold outreach cold calling things like that so if i'm selling like how much should i be selling towards pain and how much should i be selling towards excitement and pleasure?

16:42What is the split? So if I'm selling luxury goods, I'm selling a Rolex or a Rolls Royce, should I be trying to sell to pain and problems, or should it just be pure pleasure, excitement, adrenaline? What we know is that there's a natural state that we all gravitate towards. So if you want to grab people's attention and you want to break through, focusing on the pain or what the gap is, is going to get you more attention. But if you want to close deals, if you want to have people, you know, the question is, what's the goal? If you want to increase trust, if you want to increase willingness to cooperate, positive emotions generally have shown statistically much higher efficacy in working.

17:32So what we want to focus on to grab attention is some of those negative things, what they're missing out on to break through in the email clutter, what they maybe didn't know, what works better in those listicles that you see online. Here's the five things everyone knows, or here's the five things no one knows. Obviously, the fear of missing out is more emotionally attention grabbing. But once you find that list, and you're trying to bring somebody through a sales deal, I think more positive messaging is much more important. But whether it's positive or negative, I think one of the things we're really interested in is what is surprisingly effective.

18:14So we write a chapter on Pringles and Pringles has this phrase, one pop and you can't stop. Now it's a rhyme and maybe many people listening would say, well, Who cares if it's a rhyme or not? There's an academic study that we talk about in the book that says rhyming phrases are 16 % more believable than phrases that don't rhyme. Woes unite foes is more believable than woes that unite enemies. Well, why? Now, the same words, but when you make it rhyme, it causes less mental processing. And so it is more believable. So whether you're positive or negative, those are strategies you can use to get to your end.

19:04What we want to call out is if you make it easier for them to think about, you're going to be more believable. If you use a rhyme and a tag phrase, there's going to be higher trust. Like there's things that you could do to work with human nature to get to your ends faster rather than against it. And that's really these little hacks that help make you more effective, we believe, add up and can be layered on top of each other to make you more successful in your role. so let's so if we talk about trust obviously we know trust grows like a coconut tree and falls like a coconut i'm i'm of i'm of the opinion especially like being on the phones and selling if i'm trying to convince you michael aaron and i'm telling you like i'm i'm gonna grab your book and i'm gonna tell you this is why you should read this book it's the best thing ever i know that you've got a negativity bias so actually you're only hearing the skeptical bits or the bad bits or you're building your own story because that that's kind of how psychology works so how do we how do we tell stories that actually build trust that kind of bypass or swing out of the way of that negativity bias so i think first of all knowing that that exists is it already gives you an edge most people in most walks of life think if i if i if i if i come to you and i tell you how great my product is, you're going to listen as a neutral player and just believe it.

20:33And that right away is a false assumption. As you say, Jack, people have a negativity bias. They have a minimum they believe you're always going to talk in your own self-interest. Okay, so take that as a given. There's a lovely example from James Dyson who invented Dyson vacuums. And in his first ad, he puts out, there was 5 ,127 prototypes that I used to make the world's most perfect vacuum. And in fact, it's not only in his first ad. It's on their website. And in his autobiography, it was the first sentence of his autobiography. And he's tapping into something that is very emotionally resonant for us.

21:22And we call it the illusion of effort, which is that if you make the effort that you put into something visible, if you focus on it, we as humans are much more likely to give it credence and credit. So by making your effort visible, you believe that the product is going to be higher quality or that the offer is better. And if you think about in selling, you show up on a call and you say, I've been reading all weekend about your brand. I've done research on your competitors. And here is my point of view. It's always going to land harder than just saying, so I was thinking about you and I think you should try this.

22:03Right? I mean, that illusion of effort has no rational place in the evaluation process. It could be true or not true. We try to tell everybody, let's act truthfully. But true or untrue, it makes us more susceptible to the messaging. So there are tricks like the illusion of effort that can give you a more, that can help balance out that negativity bias, Jack, that you were talking about. It gives you an advantage to when someone feels like, well, you're only going to speak from self-interest, and it gives you a balancing act to work with. so that that that works obviously james dyson i imagine that the dyson marketing budget is in the millions if not billions at points if we are thinking about donald who runs a photocopier shop in ohio and only posts on linkedin three times a week can you think of any low stakes environment that that people can kind of take these psychological hacks and put them into play Let's talk about the illusion of effort first, and we can talk about other ones.

23:08But illusion of effort maybe feels really hard for an inventor like James Dyson. But Itzu Ramen is a chain of ramen shops in London. And they write on a little A-frame, a little sign that stands outside their ramen shop doors, 744 ,600 hours. Apparently, it takes 10 ,000 hours to master a skill. Our master ramen maker and his family have been making miso soup in Japan for 85 years. That's 744 ,600 hours, and they're still getting better. Now, that is a story. It's a story of how generations of a ramen soup formula can be on the pursuit of something much better. And anyone can talk about that. anyone can use that their expertise in a field, their passion for a subject can show that illusion of effort.

24:08And so it doesn't have to be an inventor. And for those that want to, that are running small businesses, which here in my home country of America, small businesses power the economy, super critical. We often find that small business owners are much more skilled at understanding human nature than their corporate America brethren and sisters and brothers, because they're in the front lines. Somebody who's selling hot dogs every day in New York City at a shop on the corner, people that are selling dog grooming businesses or plumbers or HVAC, they're on the front lines. And what we're trying to do is we're saying, you may have found something that works for you.

24:57You may have found a way to compel folks to choose an option or buy a service. And very often there's some science behind why that's working. And if you understand the science, it gives you more confidence to go and try to improve what you're doing or to think about what else you could use to try and grow and do more better. and you asked what anyone could do. Here's what's so surprising to me. In writing the book, we talked about a million things, but I think I didn't appreciate how the power of the name you choose for something can make such a big difference. There's a gentleman named Lee Lance and he was an American fish importer in the 1970s.

25:41And he comes up with this new fish that he wants to bring from South America into the American market. He knows it's the right flavor. He believes it's the right price. He goes restaurant to restaurant to restaurant and nobody is taking it in. And he can't understand why. Why will no one take in this fish? And then he says, wait a second, maybe it's the name. Patagonian Toothfish is not a very appealing name for a plate on someone's menu. He creates a new name. He calls it the Chilean Sea Bass. and in the 1990s alone Chilean sea bass sales grow 30 fold and the fish industry actually has a lot of examples of this originally it was called dolphin fish and in America it conjured up pictures of flipper and everybody's favorite marine mammal they rebranded as mahi mahi and now it sounds pretty good in tacos or mud bug linguine doesn't sound that appetizing but rename it crawfish Linguini, and it's a Southern delight.

26:45And this idea that the power of words makes a big difference may sound cute, but here's the science that backs it up. 1974, we have University of Washington professor Elizabeth Loftus, and she sets up this experiment where she shows everybody the same video of a car crash. And it's exactly what you're imagining, two cars hurtling towards each other, and they crash. But here, in showing everybody the same video, she makes one small adjustment. Sometimes she says, how fast were the cars going when they smashed into each other? How fast were they going when they collided, when they bumped, when they hit, or how fast were the cars going when they contacted each other?

27:35Those that heard the word contacted estimated they were going 31.5 miles an hour. Those that heard smashed estimated 40 miles an hour. That's a 27 % difference in how fast you think the car is going by one word that the researcher uses. And that's just proven over and over again. We as marketers, as brand owners can change the way people feel by the words that we use in our pitches, by the words that we use in our sales scripts. And so really being intentional about what we're making them feel when we use those words can have drastic outcome differences. So if I was starting a new business tomorrow and someone listening to this is starting a business, what question should they ask themselves when it comes to thinking of a name?

28:24So like, like you've demonstrated how powerful it is to use the right words. What, what, how should they be approaching it? Like if you were in a room with them brainstorming, what, what are you telling them to do right now, Michael Aaron? There's a lovely studies, I think it's from the 1970s, called Bulba and Kiki. And Bulba and Kiki is famous among psychology students for this very reason across 30 different countries, across almost a dozen languages. anytime you say Bulba, it brings up for people softness, agreeability, generally welcome. And anytime you say Kiki, that sound makes you feel more aggressive, more spiky, more sharp.

29:12The word that you choose to name your business will have an emotional impact on people. And we are no longer in the game of the 1980s and 1990s where you name it A-plus plumbers so you could be at the front of the yellow pages of your local phone book. So we want to think about what the name emotionally means to the people that choose it. Boba and Kiki just give you a little wayward that the word, the sound of the word matters. But I would advise for people that want to start new companies to think about what is the one thing they are best at in the world. Five guys, we have a lovely short story at the beginning of the book about five guys and the gold dilution effect.

30:00And what they realized when they created five guys, if we only did one thing, we'd just make burgers and fries. We could be seen as best in the world at that. And so to today, now Five Guys is a$1.6 billion a year franchise, 1 ,700 stores. They don't make chicken. They don't make salad. They don't sell ice cream. They only do burgers and fries. And that came from very humble roots. They were on the Maryland boardwalk and they saw the only food stand on the entire Maryland boardwalk that had a line was Thrasher's Fries. A local mom and pop store that only made French fries. They didn't do sandwiches.

30:38They didn't do anything else. And so I would say to new business owners, rather than selling everything to everyone, there is science to prove that if you focus on the one thing you are excellent at in the world, you will be more believable to your buyers. So if you are a plumber, be a plumber that's excellent at one thing above all else. It doesn't mean you can't sell all the services, but in all your marketing and all your materials, talk about how you're the best plumber for home renovations or you're the best plumber when there's a leak. Be focused on one thing that you're better at than everything else, and that will raise all ships.

31:14People will be much more likely to believe you if you say that you're excellent at one thing alone. So when I see that, and you're right with Five Guys, I think it must be the best burger in the world because that's what they do. like they beat Burger King because Burger King do all these nacho fried chicken dippers now. What story am I, because it feels like an unconscious part of my brain. I'm not logically, like you said at the beginning of the conversation, I'm not like rationally thinking, oh, this burger is better. So like subconsciously, what story am I telling myself? You know, it's an interesting question.

31:51I think probably this is conjecture on my part. You're saying, well, if they're in business and all they do is sell French fries, if Thrasher Fries can compete with everybody else on the Maryland boardwalk and all they do is make fries, man, they must be pretty good. I mean, I think that's the human experience that you have. The science comes from a 2007 study by Ayelet Fishback at the University of Chicago. And here's the setup she did. It's interesting to sometimes hear the science because you can listen to it and think how it applies. She speaks to a group of people about the benefits of eating tomatoes and the health benefits of eating tomatoes.

32:29She goes to one group and she says, it is excellent at helping prevent cancer. And then to another group of people, she says, tomatoes are excellent at preventing cancer and reducing eye degeneration. And then the participants are all asked to affect how effective eating tomatoes is at reducing cancer. shockingly the group that heard only one benefit rated as 12 percent more effective at defeating cancer at reducing cancer than those that heard both 12 percent difference in the effectiveness when you judge one benefit or two benefits and so it tells us that as soon as we give more for the brain to process as soon as we say well it's great at eye degeneration and it's great at preventing cancer, it lowers all ships.

33:19It makes us believe less both things. So staying focused on one thing, I think the human experience is, well, gee, they must be, if they're still in business, they must be good at it. And the science-backed thing is by focusing on only one thing, it's a simpler communication. There's less brain cycles connected to it. And therefore, it is more believable in academic studies. So we were talking about the power of words and interesting word choices and how they can affect thought process if somebody read your book and said to you well it's just manipulation tactics what would your what would your gut response be or how would you respond to that we believe that these insights are true insights into humans regardless of what you do with them.