Subscribe
Share
Share
Embed
Killer Quote: "Pricing is not just about the numbers; it's about the psychology and the framing of the message. The way you present your product's value can turn a simple sandwich into an exclusive, $214 experience." — Melina Palmer, The Brainy Business
Welcome to The Chemical Show™, where chemicals mean business. If you're looking for insights from business leaders of mid-market to Fortune 50 companies, this is the place to be.
Featuring interviews with industry executives, you’ll hear about the key trends impacting chemicals and plastics today: growth, sustainability, innovation, business transformation, digitalization, supply chain, talent, strategic marketing, customer experience and much more.
Episodes are published every Tuesday.
Host Victoria Meyer gained her industry experience at leading companies, including Shell, LyondellBasell and Clariant. Before taking those insights and experiences to launch a strategy & marketing consultancy, Progressio Global, and The Chemical Show podcast. Victoria brings a informed and engaging perspective, making this podcast not just about the chemical business, but about people, leadership, business challenges and opportunities, and so much more.
The Chemical Show brings you the latest insights into trillion-dollar chemical industry. You will hear from leading industry executives as they discuss their companies, business, markets, and leadership. You’ll learn how chemical, specialty chemical, petrochemical, material science and plastics companies are making an impact, responding to the changing business environment, and discussing best practices and approaches you can apply in your business.
This podcast is a must-listen for executives and business leader everywhere, leading B2B process businesses and industries, driving strategy, harnessing customers and suppliers, and driving business innovation.
Melina: Traditional economics and business
planning in general really assumes
logical people making rational choices
in everything that they do all the time.
And as we're all human we know that that
doesn't really work that way, right?
We have great intentions and then
don't follow through, um, or all sorts
of implications that can come up.
And a lot of the things that we don't
think should matter at a logical level,
the
brain is picking up on and it's
impacting behavior all the time.
voiceover: A key component of the
modern world economy, the chemical
industry delivers products and
innovations to enhance everyday life.
It is also an industry in transformation
where chemical executives and workers
are delivering growth and industry
changing advancements while responding
to pressures from investors, regulators,
and public opinion, discover how
leading companies are approaching these
challenges here on the chemical show.
Join Victoria Meyer, president
of Progressio Global and
host of the chemical show.
As she speaks with executives across the
industry and learns how they are leading
their companies to grow, transform, and
push industry boundaries on all frontiers.
Here's your host, Victoria Meyer.
Victoria: Hi, this is Victoria Meyer.
Welcome back to The Chemical Show
Where Chemicals Means Business.
Today, I am speaking with Melina Palmer,
who is an applied behavioral economist
and the CEO of The Brainy Business.
So Melina has a passion for helping
everyone from around the world to
understand what behavioral economics is.
And by the way, we're
going to get into that.
So stay tuned.
And how it can be applied to
communicate more effectively, run your
business more effectively, et cetera.
Melina is the host of The
Brainy Business Podcast.
Check it out.
And has written three books.
What Your Employees Want and Can't Tell
You, What Your Customers Want and Can't
Tell You, and The Truth About Pricing.
We're going to be talking about
The Truth About Pricing, but we may
touch on those other things today.
More importantly, Melina is
one of our featured speakers at
The Chemical Summit this year.
So that's being held on October 8th
and 9th, 2024 in Spring, Texas, um,
the theme of one of the foundations
of The Chemical Summit is thought
leadership, creating connections and
getting insights that you can apply.
And Melina in combination with
the conversations we'll have
at the Summit brings all three.
This is going to be a sellout event.
Get your tickets today, TheChemicalSummit.
com and Melina is going to give you some
insights today, but you're really going to
want to hear her in person at the summit.
So Melina, thanks for joining us.
Melina: Oh, absolutely.
I'm delighted to be here now and, uh,
in person, uh, coming up in October.
Victoria: Yeah.
Me too.
Can't wait.
So let's just start
with your origin story.
How did you get interested in the
world of behavioral economics?
Melina: Well, I look back to a particular
point when I was doing my undergrad.
So I was studying business administration
and marketing, and there was this one
section of one class, like little piece
of one book that was talking about
buying psychology and why people do
the things they do and I thought it was
just the most fascinating thing that I
have ever seen and got really excited
about it and said, Oh my goodness,
I need to go get a master's in this.
I I'm delighted.
And I spent the better part of 10
years calling universities that
said, uh, that's not a thing.
It's not a program.
It doesn't exist.
We got nothing for you.
So it kind of lived on a
shelf somewhere, right?
Put a pin in it of this
thing I might study someday.
Uh, and I was running a marketing
department for a financial institution,
and got involved with a group that was,
uh, this like innovation fellowship.
They brought in a team from the
Center for Advanced Hindsight at Duke
university, which is their behavioral
economics wing And And as they were
talking about the work they were doing
and their research, I realized, Oh my
goodness, this is exactly what I have
been looking for all of this time.
And I found myself a master's program
and jumped in and I knew I was early
because of that path that I had been
on trying to find schools and things.
But especially on the applied
side, I didn't know how early I was
and things that were so clear to
me about how understanding human
behavior is key to brand strategy and
internal communication and pricing
Victoria: Yeah.
Melina: and all these things in business,
just nobody was really talking about it.
And so I started to do that and was just
at the beginning of this like snowball of
people discovering behavioral economics.
So then people found The Brainy
Business and that led to books
and courses and, and trainings and
all the things that we do today.
Victoria: Yeah.
That's cool.
So first of all, the fact that
Duke has a department about
hindsight is an interesting thing.
Advanced hindsight at that.
It's like irony of all names, right?
So that's, that's cool.
And so I did wonder about that.
Are there degree programs today?
So you had to really work to
seek it out, but is it becoming
a more common opportunity?
Melina: One of the big.
Issues was that I didn't know the
name that the field had given itself,
right?
So behavioral economics doesn't
seem like a lot of what it is that
we're, we're doing on the surface,
especially coming in as a marketer.
Right.
Um, and so I didn't know what to ask
for and it's not always and often
not housed in the business school.
So that's part of a problem.
Two, right, as we're
Victoria: Does it go with psychology?
Melina: can, right?
So my degree I got from
a school of psychology.
Um, and so yeah, psychology or econ, but
sometimes it's in part of a philosophy
department or, uh, there can be all sorts.
So, yes, delighted that there are
more and more programs that are coming
up, um, including, uh, so I work
with Texas A&M we have a certificate
in applied behavioral economics.
That's virtual and available for
people all over the world so that
they don't have to struggle through
the same type of thing that I went
through of trying to find a program.
Victoria: That's cool.
So alright.
Let's tackle this.
What is behavioral economics
and why should leaders care?
Melina: Yeah.
For you to know why you want to go
into all these programs that exist.
Victoria: Why do I want
to use it in my business?
Melina: Yeah.
So I like to say that if traditional
economics and psychology had just
the most adorable baby, we would
have behavioral economics, um, and
essentially the reason that the field
came about why it matters is because
traditional economics and business
planning in general really assumes
logical people making rational choices
in everything that they do all the time.
And as we're all human we know that that
doesn't really work that way, right?
We have great intentions and then
don't follow through, um, or all sorts
of implications that can come up.
And a lot of the things that we don't
think should matter at a logical
level, the brain is picking up on and
it's impacting behavior all the time.
So what behavioral economics does is
helps us to understand those rules that
the brain is using to make decisions.
And in applied behavioral economics,
um, I help companies to understand how
they can get, use that so that more
customers buy and employees buy in.
Victoria: So can you give us an example?
Like just when do we see this in use?
Like would I recognize it
if it jumped up in bit me?
Melina: well, it's, it's
Victoria: to speak.
Melina: a funny thing because, for
the most part we don't notice it.
And it's because all these things are
happening on a subconscious level So one
of the stats that I love to share with
people, because it helps us, we learn
about our brains, is that research shows
we humans make 35, 000 decisions a day.
Each of us, 35, 000 decisions.
How many decisions do you
remember making yesterday?
Victoria: Probably like five or ten or who
Melina: right?
Victoria: Not that
Melina: yeah, if I
was
Victoria: went out to dinner.
Hey, there was a few decisions in
Melina: right.
If I was,
to really stretch myself, I could
come up with a hundred, right?
At the most, but not
thousands, let alone 35,000
Victoria: yeah,
Melina: of them.
Right.
And so we know that really in this
way, our lives are just a series of
micro moments and micro decisions.
And what behavioral economics is
doing is understanding how your brain
is making those little decisions.
I like to think about it like
bumpers and bowling, right?
As we're helping to guide someone down
a path, something along those lines.
And so understanding the rules, you
can either be working with them.
To make it easier to get through,
or you can be working against them
in a way that can derail things.
So the example that actually comes
up funny enough is not from either of
the two books that we've talked about
talking about today, but it's, it's
in my brain, so I'm going to bring it
up, uh, which is, uh, thinking about.
change and communicating change
within an organization or sending
even something as simple as an email.
So there's this concept of framing
and that how we say something
matters more than what we say.
And so in this case, I have
this example from, uh, a boss.
Years ago, and I got an
email from her at 10 a.
m.
On a Thursday, I got an email that says,
we need to talk be in my office at two.
So that is one of the scariest
emails I've ever gotten.
Victoria: Yeah.
It's going to trigger you in all kinds of
Melina: Right.
And I had been at this company
for, you know, less than 90 days.
And so, you know, I spent those
four hours looking at every
project I had been working on.
Every person I had been talking to.
I'm like binge eating all the
snacks and texting everybody.
I'm so stressed.
Right.
All the way through, uh, these
Victoria: four hours.
Right.
Melina: Yeah.
I get into her office.
She has me sit down and says, I'm going to
be out of the office tomorrow and wanted
to let you know that yours is the email
I'm putting on my out of office responder.
And that was it, right?
That was the point of this meeting.
And so,
Victoria: Which could have been an
Melina: yeah, that could have
Victoria: first place.
Melina: the email if we had
thought about the framing.
So the thing, and what's really
amazing about this is when I was
writing about this for my book.
Ten years later, I felt the stress, right?
My blood pressure increasing as
I'm thinking about this experience.
And this was just a moment for her.
I guarantee
Victoria: Yeah.
Melina: she not remember it.
There wasn't any ill intent.
I came to learn over the years, you know,
there was a very specific meeting on
Thursday mornings where I would get these
sort of short emails, right, mid sort of
thought stream, like boop, boop, boop.
But, If she had been more
thoughtful about that email, I
lost hours of productive time.
And even over the years, you know, and
I get these types of emails, I would
look at that and you say, it's probably
nothing, but, what if it is right?
It's always in back of
Victoria: Yeah.
Melina: your mind.
You're living in this state of
extra cognitive stress and strain,
which makes it to where I'm less
likely to be open to change.
Like, can you imagine if she was going
to be telling me about a change or
something that she needed me to do in
that meeting, uh, even if it's objectively
good, I'm not really ready to hear it.
And so a simple reframe on that
email to say, I'm going to be
out of the office tomorrow.
Do you have some time
to talk about it too?
yes, I do.
Victoria: Sure.
Yeah, absolutely.
And you would be in a positive
state of mind as opposed to a
negative state of mind for that
Melina: right.
And in this case, it's like the first
time that she was entrusting for
me to be the person on the email.
It would have been this delightful thing,
and I'm sure she thought it was great,
but it was so stressful for me because
of this simple way that this is framed.
And so research shows that we spend 17
hours per person per week clarifying
something that was previously said.
Victoria: Wow.
That's a lot of time.
Melina: Too much time, right?
So if we can be a little bit more
thoughtful in the way we send those
emails in the points of communication
and what we say to people and, um, how
we say it and it frees up, we'll say five
hours per person per week, like that.
Amazing when you think about
that across an organization.
So where I say you don't necessarily
notice it, like you said, you don't
see it, but now that you can start
to be looking for it, I, I like to
talk about with communication to
think about it like popcorn, right?
Popcorn's this great scent that
like draws you in when you're
going to the movies and we love it.
It can be exciting,
enticing, all these things.
And we've all been in the office
when someone burnt a bag of popcorn.
Victoria: No doubt.
Melina: And it's all anyone can
talk about for the rest of the day.
And it lingers, right?
It's like weeks later and you go,
Oh, did Melina burn popcorn again?
Right.
It's, it's out there.
Right.
So you can look at your communication and
say, is this going to be burnt popcorn?
Like, how could I reframe
it so that it's not right.
That's just like simple question that
you can ask to think about a reframe that
can save tons of time across the team.
And really, you know, that's
money for the company.
Victoria: Absolutely.
And I, I've learned that along the way.
Um, but number two, well, my, uh,
so my second daughter just finished
her freshman year at Texas A& M.
So the Texas A& M connection, and I
kid you not, it's like finals week
and she said they got evacuated.
There's a fire alarm at like 2 a.
m.
or 3 a.
m.
because somebody had burnt popcorn
and set off the fire alarm.
It was so bad and smoky and whatever.
She's like, are you kidding me?
We've been in the dorms for nine
months and you still haven't
figured out how to make popcorn.
Right.
Not to mention the fact that at some
point during your Prior 19 years, you
hadn't learned how to make popcorn.
So, um, it's, that's interesting that
the other piece, so that communications
piece I've learned, um, and part of this
is kind of the one to one learning and
the one to many learning, but there's,
um, with my marketing assistant, I've
learned that when I send her ideas,
she's ready to implement and I'm like,
Oh no, no, no, that was just an idea.
So I, I know to frame it as
put this in your future folder.
Not for today, but for future that
we might want to look at this.
Um, and then we eliminate
the back and forth up front.
She knows what I want to do with it.
I can still get it off my desk, uh, and
know that, okay, it's someplace where
we can talk about it in the future.
So it's, um, that, but
it is, it's an extra.
Um, probably a second at this
point of thinking before I do
something to make it more impactful.
Melina: right.
And having that little bit of space
up front to be able to plan and
say, Hey, what do we actually want?
Out of this, like, what
do I want someone to do?
And if we're thinking in these
micro moments instead of big moments
Victoria: Yeah.
Melina: of change, right.
And it's exactly the same when we're
thinking about communicating with
customers and getting people to buy.
Right.
And so
Victoria: Yeah
Melina: if we don't think
about like, okay, well.
I want to have like manifested this
product and then eventually people buy it
like that's what's going to happen, right?
Well, no, right?
There are lots of little moments along
the way, some that are more important
than others, some that are more
nudgeable than others, and you can find.
where you can be using numbers in
a thoughtful way, where you can be
incorporating a question, where you can
be doing all these things that are helping
to move them to that next micro moment,
that next decision, and we know the way
where we want them to go down the path,
whether that's internal or external.
And right now, if we just get one
thing from this, what's the most
important next thing to ensure that
we're staying on track and on the path.
And if we break things down in that
way, then we're just that much more
thoughtful and things really tie
in together and you can start to
say, what can be asynchronous here?
Like what can we turn into a process?
Because we thought about it one time.
That's going to streamline
everything down the way.
Victoria: Cool.
So how does this all tie into pricing?
So I actually have your book here.
So people that are watching the
video, um, your most recent book
is around The Truth About Pricing.
So I guess the question
is, what is the truth?
Melina: Yes and don't worry I'm not like
giving away the whole book in this case,
because I actually share, I think it's
on page three that I say what the truth
about pricing is in the book, which
is that pricing is generally not about
the price and everything that happens
before the price matters more than the
number on the tag or however, or, you
know, in the bid sheet or whatever it
Victoria: Yeah.
Melina: is that we have there.
Right.
And so all that stuff.
That happens before the
price is the psychology.
It's the thoughtfulness of these things
we're talking about and how you're framing
that message, how you're incorporating
all these different aspects, uh, into
really helping people down the path
of by the time they're ready to buy.
Doesn't even really
matter what the price is.
It's secondary.
Victoria: Yeah.
It's, it's kind of like the
Birkin bag or the it bag.
I was reading an article today
in the Wall Street Journal, they
were talking about what's the next
it bag, um, in terms of handbags.
And, um, by the way, I have none of
those bags because I'm not willing to
spend thousands of dollars, but there's
a certain mystique around it that has
nothing to do with its functionality.
Um, and I think sometimes in the,
It's certainly in our industry and the
B2B industry and in chemicals, people
often think about functionality as
the only source of value and pricing.
But what you're saying is
it's the rest of the story.
Melina: Yes.
Well, and actually I have, uh, the Birkin
is a case study that I have, uh, I give
some examples at the end of the book and,
um, yeah, the Birkin bag is one of them
because as you're saying, it's such a, a
fascinating and interesting example where,
you know, when we think about utility,
uh, you know, plastic bag from the, um,
Grocery store that I'm reusing would do
the same thing as that Birkin does, right?
It holds things and has handles Done
it right, but of course not that
is not how this works works right?
It's not about those things
It's about my identity and
knowing we're a herding species.
So this piece of social proof is
driven by scarcity Um, there's aspects
of loss aversion and what it means,
you know for me to be able to have
this, this item, what it says about
you and all these different aspects.
And so what I really love about the
Birkin too, is it's not just about
being able to afford it, right?
So that's another thing, because there are
a lot of really expensive bags and things
that someone could spend their money on.
But in the case of, of.
Hermes in the Birkin, they have actually
set it up that the only way that you can
get a Birkin bag is you have to spend now
enough money with Hermes outside of this
to develop a relationship with a sales
associate that they would then recommend
you as someone who could get a bag and
you don't get to customize the color
or the size or anything for your bag.
It's saying, Hey, this is now available.
You're on the list and you're now eligible
to spend thousands of dollars and pay us
all this money for a bag in a color you
hate that's too small to hold your stuff.
Do you want it?
And people say, heck yes, I do.
And I am going change,
Yeah.
This is now my new favorite color and I'm
updating my wardrobe to match the bag.
Like, but you have to be essentially
like nice enough to have the
relationship that that sales
associate wants to pass you along.
Which.
I love because so often we feel like we
have to cater to people that maybe aren't
so nice because they happen to have
the, the money or, or whatever it is.
And.
If you think about, well, what
if we don't do it that way?
We could build the model however
we want and have it to where people
are knocking down our door to
be able to spend money with us.
Like, it's really cool.
I, I love the Birkin.
I'm glad you brought it up.
Victoria: And, and, and being in a
position where people are asking to do
business with you and buy your products
is a bit of a Holy grail, right?
As opposed to having to sell,
just being in the position that in
some ways you're the gatekeeper.
Melina: Yeah.
Victoria: So how do we
translate this to B2B markets?
When we, uh, you know, chemical
industry often thinks about,
um, products being products.
And in fact, I talk about this a
lot to folks that nobody actually
cares about the specification because
there's just an assumption that that
product is going to do what it does.
Um, it's all the other things.
Quality relationship where they
perceived value, et cetera.
But when you think about this and
kind of just the, the lessons that
from behavioral economics, how
do they apply into B2B markets?
Melina: Yeah.
So at the end of the day.
It is still a human person that is making
the decision whether they're going to buy
from you or not in the case of B2B, what
you have is some more complexity that you
have multiple someone's multiple human
persons that are various gatekeepers
with differing levels of authority.
And if you can understand
what their motivations are.
And can cater to those.
It helps to streamline a process.
So and knowing they don't all
want to need the same things.
So there are kind of different levers
you want to pull at different points.
So, you know, your CFO is going
to be looking at something that's
different than that power user or
someone that's having to be running
Something that could impact you, right?
Where it's saying, well, we
already have all these things input
into a system that we're using.
I'd have to change a bunch of these
codes to switch to a new vendor.
Uh, I'm not willing to do it.
So like got to fire me
or, and like, good luck.
That person
Victoria: Yeah,
Melina: could derail everything
if, and if you don't know, they
exist up front to where you can
be understanding what they need.
It's like down the path, but if you
can think about them in advance and
what's going to help them to love this
idea, uh, you know, getting them in
the room is really key that they could
derail your whole giant sale because
they said, no, and you don't even know
that they exist if you're not taking
the time to be thoughtful about them.
So, uh, you still need to understand
what's going to be appealing to
the CEO, the CFO, all these other
people along the way and how you're
going to communicate to them.
, but understanding what behavioral levers
to pull with each of them is really key.
And so when you are in that B2B
space, knowing that you have multiple
humans that can interact in different
ways, and you're just applying the
same concepts, uh, to each of them,
Victoria: I think that's right.
Um, I just recorded an interview.
So in fact today, so prior to our
interview, um, and that actually
gets published a couple of weeks
before this, um, episode goes live
with, um, Gaurab from Solugen.
And one of the things they
talked about was in terms of,
and they're a startup company.
So for your benefit, Melina there, and
actually for other people's benefit who
didn't listen to episode, go listen to it.
Um, and aren't familiar with Solugen.
They're a startup in chemicals and it's
there, they found an enzymatic way to
create chemicals and, uh, more carbon.
Um, let's just call it carbon
beneficial and more sustainable product.
But, you know, we talked about how did
they figure out how to go to market
their customers, they went to the people
that were actually using it, right?
So often I think the conversations
happen between sales and procurement,
but actually getting down to where
the actual users of the product are
and what their pain points are, why
they use it, what they like about it.
They found to be really valuable, right?
So the operator who's using the product
has a very different need than the
procurement manager, then the business
manager, then the CFO, then the CEO.
, and understanding all those various
touch points becomes pretty critical.
Melina: right, right.
Well, and that's, so here where, what
you said is a piece that's like down
the line, other people that like it.
And we're able to share and say,
people like you like this thing and
are seeing value from it, right?
That's our testimonials.
That's social proof.
That's the same thing I was talking
about with the Birkin bag, right?
So it's the same concept
Victoria: Yeah.
Melina: but we're thinking about
it in a people like you have done.
And trust this, it's the star ratings
and reviews we see on Amazon and how
many followers people have wherever else
we humans are really motivated by that.
And it helps us to feel
safe in making a decision.
And so accreditations and
certifications certifications those
are a form of social proof as well
to show that you can trust us.
Other people did some due diligence
and vetted us were trustworthy.
Even being able to say, you know,
amongst our clients like you this
is the most popular choice, right?
That's, that's
Victoria: Hmm.
Melina: the social proof piece.
And so it feels like sometimes
we shouldn't have to say that
it shouldn't be about that.
Yeah, it is.
Victoria: Right.
Melina: It's about that.
And if you omit those
things, it just makes it so
much harder to
sell.
And so if you can line up, so in The Truth
About Pricing, I give these steps of how
you're going to be shaping out pricing,
how to think about it, all the things
that happen before the price, right?
And.
We can say, if you've built out what that
best offer is, what, you know, is the best
thing for most people to buy from you.
And then you want to put all
your eggs in making it obvious
that this is the best choice.
And it's the, you know,
maybe it's the best value.
Perhaps it's something that's most
popular, but we're making it very
clear that this is a good choice.
Testimonials line up with it.
It's also profitable for you
and it's something that's really
great for the customer, right?
So we're layering all those things in.
And then you want to create this.
What I call the wingman product or service
that is in addition to this and that
wingman is typically something that is
also going to be a high anchor, right?
So it is more expensive and
likely has more stuff in it than
what most people would need.
And you
Victoria: would
Yeah.
Melina: talk about that thing first
so that we say, okay, we've got
this thing and I'm going to use
much lower, easier numbers here as
we're saying, but it's like, this is
Victoria: the
Yeah.
Melina: 10,000 dollar option, and it's
got the extra deals and stuff in it.
We also have this
Victoria: 7,500
Melina: dollar one
Victoria: Yeah.
Melina: and it's easy for most, right.
Then like most people pick this one
and that's a great option for you.
If you started low and say, well, we
can get in as low as 2, 500 and there's
the 7, 500 thing I think you should get.
Or we have something that's 10, 000
like, like those are way too expensive
and they might've been the same
thing, but when we start
high, it makes a difference.
Victoria: Yeah.
Yeah.
So that whole anchor, uh, anchor high,
uh, as, as you do in negotiations, right.
Or, or anchor low, depending on
which direction you want to go.
Um, so, you know, I think in the industry,
there's often this belief that pricing
is kind of almost solely based on supply
demand or solely based on cost of goods
sold, or maybe not solely, but it's 80%.
Let's just say 80 percent of the price
is supply demand or feedstock related.
How do you respond?
Respond to that.
When you think about that
as a pricing mechanism.
Melina: Yeah.
Um, I disagree clearly, right.
In that I wrote a book
saying something else.
Um, and.
In the way, but if, if it's all
you think about, you can very
easily make it about that, right?
If you don't think about all
the psychology, it comes down to
price because people don't have
anything else to be thinking about.
If you're just looking at what your
competitors are pricing at and you, or
going, like you said, off cost of goods
sold or whatnot, and you do a percentage
above and you're talking to someone about
this like nitty gritty numbers stuff.
Sure.
They're going to focus on that
because you made it about that.
But if you don't, it doesn't have to be.
And that's where all these
psychological principles from
behavioral science come in.
Victoria: Yeah.
So that's when you start focusing
in on how are you using it?
What's the, what's the value?
What do you, what do you value, and
how are using that in our product
or in this product, et cetera.
Is that how you would go into it?
Melina: Yeah.
And I mean, just even my favorite
example to show how this, how you
can break yourself free of this.
So there's a chapter in The Truth About
Pricing, that's called you, right.
And saying that you, the collective,
you are really the biggest hurdle
to pricing, working, you And being
able to sell things at a higher price
point, if that's what works for you,
it's not all about raising prices.
I have examples of, you know, for value
businesses where you're, how can we
bring this down as much as we can, right?
What are, what are our
options there?
If you're wanting to sell, you
know, lower margins, but higher
quantities and things like that.
Um, so it doesn't.
Have to be about that.
But if we're thinking about
raising prices and getting, and
we're so fixed on the cost, right?
I want you to imagine that you're going
to be selling grilled cheese sandwiches.
So when we think about a grilled cheese
sandwich, uh, you as a customer, you
know, how much would you pay for one?
You really want a grilled cheese,
Victoria: Five bucks.
I don't know.
It depends on where I go.
If I'm going to my kitchen,
it's slave labor free, right?
Melina: You're right.
We know that the cost of items to make a
grilled cheese is maybe a dollar, right?
And even a terrible cook could probably.
Put one together.
You could, uh, you know, make your
way through this sort of thing.
Uh, and like you said,
maybe you pay 5 for one.
I've had people say 10, 15.
Uh, I think even like
20 or 25 is the highest.
Uh, I've heard someone say if
it's like, uh, but I'm expecting a
pretty fancy grilled cheese, right?
And I really wanted one.
Uh, there is a restaurant
in New York City.
It's called Serendipity Three.
They have a 214 dollar grilled
cheese sandwich that they sell.
Wow.
And yes,
Victoria: What makes it special?
Melina: but so aren't you intrigued now?
Don't you feel like you kind of want to
Victoria: I am intrigued.
Melina: to know what
the hype's about, right?
I want to get in on this thing.
Yeah.
So there's a, you know, flex of gold
in the crust and it's made with Dom
Perignon champagne and this very
special cheese from these cows that
only lactate for a certain period of
time and they graze on licorice and
strawberries and all this stuff, right?
It's like a whole thing,
but this is the framing.
We're priming you
Victoria: And there's a
whole story around it.
Melina: scarcity and we want to
be a part of the thing, right?
Like it's really, it's, I
kind of would want to try.
And if I'm in New York with a family,
do we do, we want to share about
it on social media and be posting
about it, right?
Our social proof coming back in.
They also have 200 French fries
that had a wait list of eight to 10
weeks when they launched, they have
a thousand dollar vanilla Sunday.
They have more normally priced things
too, but imagine you're going there.
Maybe you're not going to
get the 200 sandwich because.
You know, but you might get a 35
sandwich to say you were there
and you were part of the vibe.
Victoria: Right?
Melina: And you want to talk about it.
Right?
So that's that high anchor of
something that even with these extreme
Victoria: Oh, interesting.
Melina: examples, right, even with the
most expensive ingredients, it's not like.
They're only making 14 on the
sandwich when they're spending
200 on ingredients, right?
That's not what's happening here, but
they've turned it into this vibe about the
brand that we want to invest to be a part
Victoria: Mmm.
Melina: of it because it's
Serendipity Three, right?
It's what, what it is.
And, and I'm, I'm part of their clients.
I'm cool.
I'm, I'm in the in crowd.
You just wish you were cool like me.
And I got, they let me buy a
sandwich for them for 30 bucks.
Victoria: Yeah, actually, that's a
really good example of anchoring, right?
The hot anchoring high, because,
um, I mean, apparently somebody
buys a 200 grilled cheese.
And if I think about if I take this
back to the chemical industry, and
it'd be to be example that there there
are often products that are special.
Maybe they're special because,
um, of the way that they're made.
Their sustainability profile
today is obviously a big thing.
Maybe their performance criteria.
Uh, but am I okay?
Well, I can't necessarily make
that work in formulation, but I
can make the next best thing work.
Um, and then the next best
thing in your case, a 35 grilled
cheese seems like a bargain,
even though.
I would never normally spend
$35 for a grilled cheese.
Maybe I wouldn't normally spend a dollar
a pound on a particular product, but by
comparison, if I'm comparing it to the
product I really want, that's $10 a pound.
A dollar seems really affordable.
Melina: Mm-Hmm.
right.
And even for that's why I talk
about it as the wingman, right?
Instead of sometimes throughout
behavioral science, you'll see this
referred to as decoy pricing, right?
And I
Victoria: Okay.
Melina: don't love that term
because decoy makes it sound like
the other thing is bad, right?
So it shouldn't be bad,
Victoria: Yeah.
Melina: but it's like
it's whole job though.
You should be delighted if
someone buys the wingman, right?
Like, Hooray, how cool.
Right.
And the wingman's job is to make
the best offer look good, right?
That's what it's there to
Victoria: Hmm.
Melina: do.
In this case, if you have that
sustainable option or whatnot, what
I have found over the years too,
sometimes it's bundling, right?
So you can bundle two things
that you offered together.
And that becomes this high anchor price.
People didn't even know they could
get this other thing, but like, cool.
Like that's nice to know you
don't have to discount it.
Anything else.
It can just be something
that's already there.
You talk about first say, or you
could just start with one of them.
And this is how much
that thing would cost.
Right.
And people are amazed time and time again,
as you create that, that wingman, you
know, you have the high anchor, whether
it's a bundle or something people go, Oh
my, I didn't even know I could get this.
Like, yes, I want this thing.
Like, and then you realize,
Victoria: Got it.
Melina: actually the thing I
thought was the high anchor is
what we should really be selling.
And now we can create a new wingman.
Like,
and it's an easy way to raise your
prices as you get some, some wins.
Victoria: Yeah.
And as you talk about the bundling, it
makes me think about, we used to, uh, and
this is a practice that, um, I learned
when I was at Shell and I know other
companies probably followed around, um,
MISO, multiple equivalent simultaneous
offers, but part of the deal is that.
Yeah.
You know, it's not just product, it's
pricing terms, it's delivery, maybe level
of R and D and being able to actually pull
those multiple pieces together that you
may or may not have valued individually.
Um, that you may or may not have
considered as part of your offer, but
having it be part of your offer bundle,
and then being able to compare bundle
A with bundle B, what do you really.
What's really important to you, that
as a seller, I'm happy to offer and
as the buyer, you're happy to receive.
And it makes it all feel more valuable.
Melina: Absolutely.
Victoria: And you could theoretically
get a better price for it no
matter how you define better.
Melina: Yes, for sure.
Victoria: So, you know, I've got
a lot of questions for you on this,
but we're going to run out of time.
Um, so let me just,
let me start with this.
There seems to be a strong
element of linguistics, right?
When I think about part of your early
example about how you write an email,
and the response that that creates,
what I might happen to say about a
product or service or, um, how, I
identify you as the hero in the story
about getting this product or service.
There seems to be a strong
element of linguistics in this.
Is it true?
Is this about language as much as it is
about value and pricing and negotiations?
Hmm.
Melina: And, um, you know, we've
potentially opened the Pandora's
box of one of my like passion spots.
So we'll like, I'm going to
rein myself in at least a
little bit but it definitely is.
And showing the power of the
right word can change so much.
So our brains work in associations
when we're talking about things
and the right word can either keep
us moving forward and the wrong
word can kind of throw things off.
So even something as simple
as if you want someone to know
that it's expensive, right?
For whatever you're talking
about, but you don't want to
be like, Hey, it's expensive.
So don't talk to me unless
you have money, right?
Because that's, It doesn't really
feel great, even just saying
the word investment, right?
So this would be an investment in,
in your, you and whatnot, right?
That one word can make a real difference.
And there's an entire kind of adjacent
field that is emerging that is known
as cognitive semiotics, which is
essentially how the mind makes meaning
and understanding the power of metaphors.
And the choices that we use in words
and images and how that is impacting
decisions people are going to make.
And so the, um, research shows
that every, the 20, every 25th
word that we use is a metaphor.
Every 25th word we say
is actually a metaphor.
And so
Victoria: All right.
Give me an example of this cause
give me an example of that.
Yeah.
Cause I'm having a hard time believing it.
Melina: Inflation is rising.
Yeah.
Okay.
It's not, but it is right.
That's how we can understand it.
Right.
And so we're making these
associations to these sort of
physical properties all the time.
We talk about funds as being liquids.
Right.
So we have liquid assets, funds are
frozen, we're drowning in debt, right?
We, we use these terms all the time.
We're not actually doing those things,
but they are the way that we think
about them and how we talk about things.
And so when you can align your
metaphors in a proper way, it reduces
the cognitive load for someone.
And so there was some research done
talking about like, so if you talk about,
um, Make medication for depression.
And you can say it's either.
So if you talk about someone
being coming into the light, or
they're going to be more uplifting
Victoria: Yeah.
Yeah.
Melina: right.
And when you align the metaphor,
it's more impactful than if you say
like, you know, depression brings you
down and this medication can help.
Bring you into the light, like,
ok what, like that feels weird
Victoria: Yeah.
Right.
Melina: right?
But when you can line the two things up
and say, you know, the problem is like
this, we do this and they match, right?
So depression is bringing you down.
This medication will
help you feel uplifted.
You're going to be on the rise.
You're, you're coming
out of this thing, right?
People just naturally go,
yeah, yeah, that makes sense.
I get it.
if we don't even realize
Victoria: Got it.
Melina: that we're using a
metaphor, every 25th word,
Victoria: Yeah.
Melina: guaranteed you're mixing
them up a lot and it's not lining up.
Right.
So if you just even think, what do
we want to be and say, like here for
The Brainy Businesses that we help
you unlock what's possible, right.
And making sure we have
keys and locks and things.
Open being unlocked.
Uh, you know, or it's in the vault,
it's not available right now, that
sort of metaphor we want to go
all in on because it helps with
that consistency in the brain.
And so again, it comes back to
thoughtfulness, knowing what you're
going to be about, what that means
and how you can line all that up.
So yes, linguistics is a part of it.
Imagery is a part of it.
And it all comes down
to thoughtful alignment.
Victoria: Yeah.
So I know you work with a lot
of companies, um, helping them
understand all of these elements.
And it strikes me that, you know,
obviously this is introducing a
new approach, um, some of which
may already be happening is in, in
some cases it's instinctive, right?
I think for some people,
some of this is instinctive.
In terms of how they frame things,
position things, et cetera,
for others, it's not right.
And I think, uh, you know, I think
about The Truth About Pricing.
When I think about what your
customers want, it's aligning
your business, you know, whether
it be the salespeople, business
managers, product plant, et cetera.
And it's not necessarily easy to wrap
your head around this and align it.
So are there a couple of like easy
suggestions in terms of how you
find, um, the steps to get companies
in their organizations aligned to
being, to be thinking of this way.
Um, and to be framing their
conversations in this way.
Melina: Yeah.
And so so much.
Of course.
Thank you for asking that.
And, you know, for us, The Brainy
Business, we're at, we're teaching
and mentoring organization.
And so what we specialize in is helping
align those trainings for organizations
so they can be having, like, these
are the concepts that you and your
team should know around leadership.
These are the concepts you should
know if you're looking at pricing, or
if you're looking at experience and
brand design, and to be able to say,
these are a few things that you should
know, this is what's really going on,
here's how you can start to use it.
That is the core of what we do
here at The Brainy Business.
So people can, you don't have to go
get the PhD in this and, you know, way
down the road, maybe someone's going
to be able to apply this for you.
And so, What I recommend for people
as you're getting started, right.
And trying to figure out a couple things.
Victoria: Yeah.
Melina: you know, we talked about
the email as a point that we
can, we can start with, right.
And if you think you like
this idea of framing, right.
And you, that resonated with you.
You say, you know what?
I'm going to be thoughtful about
one more email this week, right?
We micro moments too, right?
It's not that we're going to go
try and do everything all at once.
If I'm going to do one thing, one email,
every email this week, I'm going to try
to be really thoughtful about the subject
line and what I'm wanting somebody to
do, or, you know, going into my sales.
Calls for the next month.
I'm going to think about anchoring
and how I can create, what's my wing
man going to be, and I'm going to
try that out for a month and I'm
going to see what happens, right?
Test one thing.
And, and go in on it, know why
you're doing it and just see, right?
What you can get, but you want
to know what the end result is,
what you're trying to accomplish.
You're going to do that little
test and you'll start to see some
lift in a really exciting way.
Victoria: Yeah.
That's cool.
All right.
Um, my final question, and I could
ask you some more, but we're going
to maybe make this the final one.
Um, Maybe I'm going to have to
actually, um, what do you see?
So you obviously work with a lot
of different business leaders.
What are the characteristics that stand
out, um, in business leaders that are
most effective in maybe leading their
business, their companies or businesses
or in helping them, um, Um, turn the tide
towards more behavioral centricity and
how they're running their businesses.
Melina: I love this question.
I don't, I don't think I've ever
been asked this specific question
and it's one of my favorite ones.
So thank you.
I would say that it is this,
um, openness to learning.
Right.
Being, uh, and this like coachability
feedback sort of space and knowing
that, you know, this, uh, it
starts with you opportunity, right?
So the ripples of change start
with that one thing, right?
And it's nice to say, Oh, wouldn't it be
great if someday we did that, but until
they do this, there's nothing to be done.
Those who take an action, like I'm
talking about that one email, that
one change you're going to make.
Go do it and then you can talk about it
and being able to look at yourself and
saying, you know What might I be doing?
That's not helping me on this journey
and how might I change that and I want
to learn more about that and I want
to Tell other people about the value.
I'm seeing you get inspired excited It's
making people want to be a part of that.
They want to try that little change
because you are successful too,
right so that openness to learning to
knowing that You The way that you've
done it isn't necessarily perfect and
the only way or whatever that is, but
opportunities for change and testing
some new things out, they are, and
just a general interest in humans.
people and their behavior and knowing
that when you work with people,
things just can work better and
trying to be generous with others.
I, those sorts of mindsets, um, are
the ones that are most receptive to
behavioral economics and, uh, see lots
of successes they start to implement.
Victoria: Yeah.
Love it.
And experimentation.
That's what comes to mind when
you say that is being willing to
experiment, um, and keep learning.
Great.
Well, Melina, this was really cool.
Um, thank you for sharing, uh,
your insights and I, you know, we
touched on a lot of topics around
behavioral economics and other things.
I think there's a lot of food for
thought here and I know you're going
to be imparting some different wisdom,
um, especially as we think about
customers, uh, when you come to The
Chemical Summit later this year.
So thank you.
Melina: course.
Thanks for having me.
Victoria: Yeah.
And thank you everyone
for joining us today.
Keep listening, keep following,
keep sharing, and we will
talk with you again soon.
voiceover: We've come to
the end of today's podcast.
We hope you enjoyed your time
with us and want to learn more.
Simply visit TheChemicalShow.
com for additional information
and helpful resources.
Join us again next time here on The
Chemical Show with Victoria Meyer.