Agency Growth Through Behavioral Science with Nancy Harhut

Danyel McLellan [00:00:01]:

Running an agency can be a lonely proposition, but it doesn’t have to be. We can learn how to be better, faster if we learn together. Welcome to Agency Management Institute’s Build a Better Agency podcast presented by White Label IQ. Tune in every week for insights on how small to midsize agencies are surviving and thriving in today’s market. With 25+ years of experience as both an agency owner and agency consultant, please Welcome your host, Drew McLellan.

Drew McLellan [00:00:01]:

Hey everybody, Drew McLellan here from Agency Management Institute, back again with another episode of Build a Better Agency. And today we’re gonna talk psychology, which I think we’re gonna love. What’s interesting about our guest, I’ll tell you a little bit more about her in a minute, but what’s interesting about our guest is she comes from an agency. She’s an agency owner. And so she has a very unique view on the world that we all share because she looks at the world from the same lens we do.

That’s actually one of the things that I love about our presenting sponsor, our friends at White Label IQ. They actually, as I’ve told you before, are also born out of an agency. So they have literally sat in your chair. They know what it’s like to have a client breathing down your neck, and they’ve built their business because they lived the exact same pain you did. Couldn’t find a solution. And that’s how White Label was born, actually, was to solve a problem that their sort of mother agency, if you will, couldn’t solve in another way. And so today they only work with agencies. And the reason they do that is because you are who they understand, because you are them. And so whether you need help with design, dev, or paid media, they are your go-to. So whether you need an extra hand or you need a whole department of people, White Label IQ understands what it’s like for you to do business with a partner. How you still need to make money. I need to make clients happy. So when you talk to them, you don’t really have to explain agency life because they get it. They live it every day, just like you do. And that can make a huge difference in the partnership. So if you’re curious about the work they do, head over to whitelabeliq.com/AMI and you can find out about a special deal they have for you. And also, if you will do me a favor, pop them a quick email and just say, Thanks so much for sponsoring the podcast.

All right. Okay. So also, uh, born of an agency is our guest today, Nancy Harhut. So Nancy was fascinated by behavioral science, why we as human beings make the decisions we do, what’s underneath the decisions we make, and what interestingly kind of shortcuts those decisions. So if you think about it, uh, we make millions of decisions every day, and most of them are made very unconsciously. And so Nancy decided to really do a deep dive into studying what is it— what is the, the behavioral psychology behind how we as human beings make decisions, whether it’s a buying decision or a behavioral decision. And she ended up writing a book about it, which we’re going to talk about, but really critical when you think about the work that we do and that we’re trying to persuade people to believe something, to do something, to ask a question, to stop doing something. In some cases, the more we can understand about the psychology of our audience, the better. And so that’s why Nancy is here with us today. So without further ado, let’s welcome her to the show. Nancy, welcome to the podcast. Thanks for joining us.

Nancy Harhut [00:03:40]:

Gu— thanks so much for having me. I’m looking forward to this.

Drew McLellan [00:03:42]:

Me too. Tell everybody a little bit about your background and how you came to have this knowledge that we’re gonna spend the next hour digging into.

Nancy Harhut [00:03:50]:

Sure, sure. So, you know, I grew up in the agency world. I started out as a copywriter, kind of worked my way up and, um, eventually founded my own agency, uh, or co-founded it, I should say, HPT Marketing. And, um, you know, I’ve always been interested in why people do what they do and, and, you know, how to get them to do what, what my clients want them to do. And right. One day a mentor gave me Robert Cialdini’s book, Influence: The Psychology of Persuasion. And I read the book and it sent me down this whole rabbit hole about behavioral science. I was reading the book and I was— underlining things and making margin notes and thinking about the challenges that my clients were facing and how some of this information might help. And I began to test it and I began to see that it was working. And that was the point of no return. And that’s what led to my, you know, my firm belief that marketers need to use behavioral science in order to increase the likelihood that our customers and our prospects do what we want them to do.

Drew McLellan [00:04:41]:

So define behavioral science for us. So everyone makes sure— I just wanna make sure we’re all on the same sort of playing field.

Nancy Harhut [00:04:47]:

Yeah, no, that’s, that’s a great point because when people hear it, uh, you know, some people’s eyes just rolled to the back of their head like, oh, Science, please. You know, I’m a creative person. I don’t need science, you know, and, you know, and there are other people who define it differently. You know, is it all about data science or is it about, you know, uh, you know, uh, programmatic buying? It, it’s not those things at all. Very simply, behavioral science is simply the study of how people behave. And more specifically, it’s the study of why people do what they do and how we as marketers can get them to do more of what we want them to do. And what behavioral scientists have found is that Over the ages, humans have developed certain decision-making shortcuts. What happens is we— we cruise along through life on autopilot. We encounter a situation and we just default to these hardwired behaviors, these automatic, instinctive, reflexive behaviors. We developed them as a way to conserve mental energy because we couldn’t possibly weigh every bit of information before making a decision. And now we just default to them without even often consciously being aware of it. And the opportunity for us as, as marketers, as agency owners, is to kind of get out ahead of this and harness some of these automatic behaviors to, to trigger or prompt them. And when I say prompt, I don’t mean in an AI way, I just mean to, you know, kind of nudge them because if we know someone is gonna do X, if we present Y, let’s present Y so that they do X. So it really gives us an added advantage.

Drew McLellan [00:06:07]:

So you mentioned AI. I wanna get into what these specific sort of shortcuts are, but How do you think AI is or isn’t going to change this human reality?

Nancy Harhut [00:06:22]:

Ah, you know, that, that’s the million-dollar question, Drew, isn’t it? Right? I mean, things are changing so quickly. New use cases are coming up. Um, but I think at least right now, AI is help— helping us condense information quickly so that we can uncover patterns. We can, uh, find bits of information that help us craft our messages, that help us better target our, our audiences. So it’s, it’s making us more efficient. It’s speeding things up for us, which is great. There are some behavioral scientists that are experimenting with creating, I guess what you would call like digital or AI-driven focus groups. So you don’t really have people in front of you, but you can test some of your concepts against the AI. And in theory, it will tell you what your customers or prospects would’ve said if you could afford to, you know, have a, you know, a live focus group and have people in front of you. And, you know, I, I have yet to use that, so I can’t say for sure how good or, or lacking it is, but I think there are lots of things that are happening with AI and, and, you know, the— it’s anybody’s guess where we’re finally going to land. But what I’m not a big fan of is using it to generate copy. As you might imagine, I grew up on the copywriting side and, um, I think it’s— yeah. Okay. So, you know, you know, it’s like, uh, we can, we can do some research. That’s great. We can do some proofreading. That’s great. Some editing, maybe some, you know, reformatting, but, uh, I still believe in the, in the human touch and the human generation.

Drew McLellan [00:07:40]:

So let’s talk about these shortcuts. Walk us through a couple of them and sort of how they— what, what are they? How do we recognize them? And then how do we tap into them, obviously in an ethical way, to encourage people to make the decision our clients want them to make?

Nancy Harhut [00:07:59]:

Sure, sure. So, um, you know, a lot of times we think in, in marketing, again, we, we, I mean, we like lovingly, carefully craft our marketing messages and we, you know, you know, really kind of comb through and make sure that they’re perfect and they’re saying exactly what we want them to say. And we think that our audience is gonna spend the same amount of time carefully considering the message, weighing the pros and cons, and, and coming to the only logical conclusion, which is that they should respond to it. But unfortunately it doesn’t work that way. As, as I said earlier, often we’re on autopilot where you’re just kind of cruising along and we default to these hardwired behaviors. So, What we need to do as marketers is we need to kind of put some of these behavioral triggers into our concepts, into our offers, our strategies, particularly our copy, and, uh, and reap the benefits of that. So for example, behavioral scientists have found that humans crave autonomy. They talk about something, uh, behavioral scientists talk about something called autonomy bias, and it’s this deep-seated desire that people have to exert some kind of control over themselves and their environment. So essentially, We don’t like to feel like we’re being told what to do. We don’t like to feel like we’re being pushed into, you know, something or backed into a corner, right? We like to call the shots. And, uh, there’s some research that came out of Tulane University that found that if you give somebody two options as opposed to one, uh, you can nearly quadruple the likelihood that people will make a buying decision in the moment because, you know, we think we’ve, you know, we’re doing all the work and I, I’ve like, I’ve done all the work and Drew, this is the perfect plan for you or the perfect, you know, tier for you or the perfect product for you. But, but you are now thinking, well, I don’t know, do I or do I not want this? There’s no context, there’s nothing to compare it to. So we do the very human thing. We think, I’m going to do some research, I’m going to talk to my peers or my colleagues, my friends, and see what they think. And then, you know, we get busy, the moment disappears, we don’t have time to do the research and the sale doesn’t happen. Right? Right. But you put two things in front of someone and suddenly It’s a very easy decision to make. Which of these two do I prefer? Right? It’s not, do I, or do I not want this? It’s, oh, which of these two do I want? And as a result, people are much more likely to make that decision. Now, of course, Drew, as I say this, you might think, well, don’t put two in front of them, put 10 or 20 in front of them, right? Let’s really ramp it up. You know, and people would love all the choices, but then analysis paralysis sets in. So two is better than one. Three is often a kind of a magic number, but I wouldn’t go much beyond that. Yeah. I, I would cap it at 3, 4, 5 tops, but you wanna give people just enough choice so they feel they’re in control, but not so much that they feel overwhelmed. And, uh, an interesting adjunct to this idea of autonomy bias is something called the BYAF technique, but you are free. And what behavioral scientists have found is you can tell someone what you want them to do, you can ask them to do it, and then if you follow your request with a phrase like, but you are free to choose, or the choice is yours, or it’s up to you. It’s your call. You can on average double the likelihood people will do what you want them to do simply because you’re making it very top of mind that they’re coming to the decision on their own. You’re not forcing them into it. So autonomy bias is really a, you know, it’s a very useful driver for us in marketing, uh, in terms of tapping into human behavior.

Drew McLellan [00:11:07]:

Give me another shortcut.

Nancy Harhut [00:11:08]:

Another one. Okay. Uh, well, here’s one that some of your listeners might be familiar with, uh, the idea of social proof. Right? When people aren’t certain of what to do, we look around, we see what other people are doing. We follow their lead. Right. And that’s particularly true if those other people are like us. And we do it because we think, well, they must know something I don’t, or we do it because we think, gosh, I’m gonna, I’m gonna lose out if, if I don’t follow them. So social proof can be very, very valuable for us. It can be very powerful for us. And, you know, it manifests itself in terms of testimonials and star ratings and, you know, most popular product or fastest growing product or, You know, um, you

Drew McLellan [00:11:46]:

know, over 10,000 views, right?

Nancy Harhut [00:11:47]:

Exactly. Exactly. Yep. But the thing that we have to be careful about, cuz we think we know social proof so well, the thing we have to be careful about are social proof backfires. And that is where we inadvertently reinforce the bad behavior, the wrong behavior. So imagine, imagine I’m selling insurance and I wanna get people to buy life insurance, right? And so I say, you know, too many people wait until they’re older to buy life insurance. You know, here’s why you should buy yours now. Well, what people hear is, oh, a lot of people like me wait. A lot of people like me don’t buy it yet. Great. I’m gonna wait. You know, and that’s exactly not the message that the marketers wanna send. And yet that’s the message that’s received. So we have to be careful about these social proof backfires. Uh, the other mistake we make with social proof, you mentioned, you know, ratings and reviews and testimonials. We look for the perfect one. We look for the one that says, you know, “ACME Company is the best thing since sliced bread.” We’re like, “Oh my God, this is great. I didn’t put the words in someone’s mouth. That customer actually said it. They love me. This is what I wanna do.” And the, the problem with that is it’s not as believable. But if instead you have a review that says, you know, “I didn’t know if it was gonna be worth it to drive across town to get to ACME Company, but I happened to be in the neighborhood and I stopped in. Oh my gosh, they’re the best thing since sliced bread. I’ll never go anyplace else.” You know?

Drew McLellan [00:13:07]:

Right.

Nancy Harhut [00:13:08]:

As a marketer, we might want to take out that first part. You know, I didn’t know if it would be worth it to drive across town. Cause like, I don’t want to plant that idea in someone’s head. If they’re not thinking it, I’m not going to be the one who brings it up. But yet when people are reading these reviews and these testimonials, it’s because they haven’t yet made the buying decision. And so they’re looking and they’re like, oh my gosh, that’s exactly what I was wondering about. Is it worth the drive? This guy wondered the same thing, but he ended up making the drive and trying it. And now he likes it. I guess it will be good for me. So they can actually be more powerful and more convincing if we, if we have a little bit of that, that doubt, or, you know, quote unquote negativity, you know, we don’t have to have a 100%, oh my God, they’re great testimonial. It’s fine to introduce a little of that skepticism or hesitancy as long as it gets resolved, you know, in the end. So, um, so those are, those are a couple of comments I have on social proof. I know it’s a very common, uh, decision-making shortcut and one that a lot of advertising and marketing people are familiar with, but we have to be careful we don’t mishandle it. And we, you know, we should be careful about the reviews and the testimonials that we use because some of the ones we might kick out are actually gonna be the ones that are most powerful for us.

Drew McLellan [00:14:12]:

Well, when you think about it, the one that displays a little bit of doubt or concern and then resolves it probably is more akin to what I’m thinking right now. So I feel more, I feel more connection to that reviewer that stranger reviewer because they are, in air quotes, more like me, which of course is what social proof is all about, is these are people just like me who had a good experience or like the book or the movie or, you know, like the insurance agent or whatever it is. Therefore, I probably will too. So your point is, is a valid one that if we’re assuming that the buyer has some indecision or some concerns or whatever, Showing them that other people did as well, but it resolved positively would make perfect sense.

Nancy Harhut [00:15:03]:

Yeah. Yeah. There was actually— you’re so right about this. There was a study that came out of the Netherlands. There were 3 researchers and they did a deep dive into Yelp reviews and they found that the Yelp reviews that did exactly what you’re talking about, that, you know, expressed a little bit of that doubt, actually were judged to be more helpful by the users. They were judged to be more believable by the users. And as a result, they were more beneficial for the brands, for the companies. So. So that, that little bit of, you know, I don’t know, honesty, authenticity, humanness, you know, it’s what that person, that, you know, reader is looking for. It’s like, yes, that’s, that’s exactly what I was worr— wondering about or worried about. And, you know, this person who’s like me experienced the same thing. So you’re, you’re spot on with that. Yes.

Drew McLellan [00:15:45]:

Yeah. So these seem— you would think that these seem logical. I mean, we’re human beings creating marketing for other human beings, so you would almost You know, again, coming at it from the writer’s perspective, as you and I are, you would sort of think this is natural to write the copy this way or to— so why do we get it wrong?

Nancy Harhut [00:16:08]:

Well, you know, if we get it wrong for, for like in this particular instance, I think we get it wrong because we’re looking for the 100% perfect testimonial. We don’t want to introduce anything that, you know, that might suggest we’re not great, you know, or plant that idea in someone’s head. Or we, you know, uh, in the other instance, it was like, oh, too many people wait. That is a fact. And we’re trying to say, you know, look, too many people wait to buy insurance. You know, here’s why you shouldn’t. And what we don’t realize is it’s reinforcing the bad behavior. And, and I think, you know, this ladders up to the idea that, uh, people don’t make decisions the way we think they do. Uh, we like to think that people make well-thought-out, well-considered decisions. Right. We like to think that we do. And by extension, we think our customers and, and our prospects do. And So often they’re just responding, you know, instinctively, reflexively, automatically. And so as, as marketers and advertisers, we need to take that into account. We need to stop and think about that. And when we, when we fail to stop and think about it, uh, when we think it, you know, it’s just a matter of getting the right message to the right person at the right time, that’s when we make the mistake, you know, because you’re right. You know, when we actually talk about these, as we’re having this conversation, like, well, that makes perfect sense. That’s, you know, of course, why, why aren’t we thinking about that? But We’re so focused on getting the, the perfectly constructed message to the ideally curated target that we forget that we need to serve up our messages in a brain-friendly way. You know, we need to work with the brain and, and not against it. And the brain isn’t perfect, right? It has these mental shortcuts, it has these biases, and, uh, we need to kind of embrace that and work with it. And that’s what gives our messages the, the best chance of succeeding.

Drew McLellan [00:17:43]:

So it’s one thing to create marketing, that takes advantage of sort of these— this behavioral science. It’s another thing to help a client who’s very proud of their list of benefits and features and all of that to understand that this is actually the way to communicate with their prospective buyers. So how have you educated your clients to be more open to the idea that leaning into this behavioral science is a more effective way to communicate than perhaps the bullet-pointed list of features and benefits or some of the other things that clients often sort of push onto their agency as something that they for sure wanna have included in the fill-in-the-blank, the ad, the, you know, web copy, whatever it is.

Nancy Harhut [00:18:32]:

Sure. Uh, that’s a great question because it, it is our reality. We live it, don’t we?

Drew McLellan [00:18:36]:

Yeah. Right.

Nancy Harhut [00:18:37]:

But, you know, but the tru— here’s the thing, and I always say this to my clients, you, you guys, you know your product and service way better than I do. You’re living it. It’s yours. And, and you know your audience better than I do. No question about it. And I am not telling you that you should walk away from the, the features and the benefits because we know that features and benefits work. But what I’m suggesting is we test some behavioral science and it’s not my opinion or your opinion. You know, what I like to do is I like to point to the research, you know, here’s a study that came out of Harvard or that came out of Stanford or that came out of Yale, or here’s a case study from this company or that company or another company. So what we’re doing is we’re taking an educated guess here. And we’re gonna, we’re gonna build on what somebody else has already learned. Yeah. And we’re gonna test it. We’re gonna run a pilot program. We’re gonna do an A/B test and we’re gonna let our market tell us, because the truth is, you know, not every tactic is gonna work every time. And what worked for one person, one company may not work for another. Um, what didn’t work in the past may suddenly work now. What had been working really well may start to cool off. I mean, that’s just the reality of things. So what we wanna do is we wanna, you know, we wanna form a hypothesis about why this behavioral science tactic may work, and then we wanna test it and we, we’re gonna let the market play back to us. But it’s, it’s not about disregarding product features and product benefits. It’s not about one opinion over another. It’s taking some evidence-based research and looking for the right ways in the right places to apply it in order to build on what we’re putting in the marketplace. You know, when I talk to clients, I talk about blending marketing best practices, and which would include your features, your benefits, your good targeting, you know, all of that, right? You know, with the behavioral science to deliver the one-two punch. So it’s not one or the other, it’s that combination. And you know, you pilot it, you test it, you test and learn, and you get your answers.

Drew McLellan [00:20:27]:

Yeah. So when we’re working either on our own or with a client and we’re putting together a list of, again, that features and benefits, Why should the audience care about this product or service? Why should they buy it? What kind of questions should we ask ourselves to sort through all that data?

Nancy Harhut [00:20:47]:

Ah, yes. So I think we’re very good in the agency world at putting together the list of why someone should do something. We’ve got the features and we’ve got the benefits and, you know, all the reasons why this is perfect for you. But sometimes we stop there and when we stop there, we stop short. Because the other question, the very important question that we should also ask is, why might they not do what we want them to do? We’ve got this whole list of why they should do what we want them to do, and it’s a good list, right? It’s a legitimate list, but we also have to ask, why might they not? Because that’s gonna allow us to uncover some of those buying barriers. And when we know what the buying barriers are, or at least we, we’ve got a, you know, a, a good guess at what they are, we can craft messaging to overcome them. Because in sales, in one-to-one sales, if you and I are talking, you know, you can stop me and say, I don’t know about that, Nancy, that doesn’t make sense. Or I don’t think that applies to me. Or as I’m giving you my sales pitch, I can see maybe you frown a little, or I can see you kind of shaking your head and I can stop and say, oh, duh, wait a minute. You know, does that not make sense to you? Or does that not feel right to you? You know, like I can respond in the moment, but so often in marketing, we’ve got our emails out there and our websites and our direct mail and our ads and our posts. And we’re not there in front of the person. We’re not there when they’re reacting to it. And we can’t pick up those little clues and— or cues, and, and they can’t stop us and say, oh wait, Nancy, I wanna ask you so that, that doesn’t— I, I’m not following you. You know, we have to, so we have to anticipate it. We have to anticipate it. We have to build in those answers that we would give if we were face to face. We kind of need to build them in. And so by asking ourselves not only why should people do this, but also why might they not, that, that starts to pave the way forward for building in the, you know, the arguments to overcome those buying barriers. You know, you might have this great product, but you know, why might someone not buy it? Well, maybe they’ve never heard of us, or maybe they think it’s too expensive, or maybe they think they don’t need it because what their current solution is, is doing just fine, right? So despite the fact that we’ve got this long list of whys, We need to identify those why-nots, and when we have a pretty good idea of what they might be, then we can start to address them. If we think, uh, the why-not is they think their existing solution is just as good, we can hammer away at that. If they think that maybe our price point is too high, we can hammer away at that. If they think that, um, you know, if they’re like, I don’t know, I’ve never heard of those people, so why should I trust them? Well, you know, we can introduce, as we were talking about earlier, some social proof or some of the authority principle where, you know, when an authority says something, we, you know, we generally take the word for it. So we say, hey, it was endorsed by the ADA, or it was written up in, you know, the New York Times, or, uh, you know, the, the Better Business Bureau thinks we’re good, you know. But right when we know what might be holding someone back, it helps us craft the right messaging to move them forward. And that’s why, in addition to asking why should they do something, we also want to remember to ask why might they not want to do what I’m asking them to do.

Drew McLellan [00:23:44]:

Yeah, I’m— as, as you’re talking, I’m thinking that seems like a great place to leverage some AI as a thinking partner, right? In terms of like, you know, here’s, here’s all the information about a product or a service, here’s the copy as it is today, you know, a, what are the social behaviors that would trigger a purchase? Or more importantly, maybe because I think it’s hard for us to think about the— when we believe in a client or we believe in their product or service, it’s hard to think sometimes about why somebody wouldn’t— we, I mean, we already know more about it than the prospect does. So, you know, asking, uh, some tools ourselves and some tools, you know, what, what would be in the way of somebody purchasing this and what would be the compelling argument that would get around that barrier? That would be an interesting exercise if you Have you leveraged that at all in the work that you do?

Nancy Harhut [00:24:40]:

I think it’s a great idea. I have not done that, but I think if you were to, you know, kind of create, you know, feed the AI with, with the profile of your target market and then, you know, you talk about your product and then you say, you know, why, you know, how would people respond to this and why might they not, you know, what would their hesitancies be? You know, we might very well get some answers back that we hadn’t thought of on our own, right? Yeah, you know, sometimes we can find them by, you know, by sitting in a room with the team and brainstorming. Sometimes we can find them by doing some research, by doing some social listening, by talking to the sales staff or the customer service reps that are answering the phone because they know the questions that people ask or they hear the complaints or the confusion or the— I thought it would do this, but it’s not. Or, you know, so we can mine all of that. But, um, but yet another way is exactly what you’re saying. Another new way.— is through AI. Yeah. Because if we feed the right data in, it should be a good kind of sparring partner with us to say, okay, we didn’t think of this, or how about this? I, I think that’s a great idea.

Drew McLellan [00:25:39]:

Yeah. It’s an interesting idea. I, I wanna ask you some more about— I wanna talk a little more about behavioral science and how it impacts pricing and perception of pricing. Uh, but let’s take a quick break and then when we come back, we’ll talk a little bit about how, how those two kind of collide, uh, in our world. So we’ll be right back. Are you tired of juggling multiple tools to manage your agency? Meet Deltek Workbook, the all-in-one solution for marketing and communications agencies. Streamline your projects, resources, and finances all in one place. With real-time dashboards and reporting, you’ll have full project visibility. You can plan team capacity weeks ahead to avoid bottlenecks and keep your budgets on track to maximize profitability. It’s perfect for both agencies and in-house marketing teams looking to work more efficiently. PCI is a certified Dell Tech partner offering expert implementation and support to ensure your success. If you’re ready to transform your operations, visit pci.us/podcast for a free consultation today. Hey everybody, just wanna remind you before we get back to the show that we have a very engaged Facebook group. It’s a private group. Just for podcast listeners and agency owners that are in the AMI community. And to find it, if you’re not a member, head over to facebook.com/groups/BABA podcast. So again, facebook.com/groups/BABA podcast. All you have to do is answer a few questions to make sure that you are an actual agency owner or leader, and we will let you right in. And you can join over 1,700 other agency owners and leaders And I’m telling you, there’s probably 10 or 15 conversations that are started every day that are gonna be of value to you. So come join us. All right, we are back and we’re talking about behavioral science and how humans are wired, whether we consciously are aware of it or not, how humans are wired influences the way our clients, prospects interact with our marketing, interact with their products, with their services, with their employees. And right before the break, I was saying to Nancy, I’m curious how this all plays into pricing. So Nancy, when you sort of have looked at all of the research you have, and I know you’ve applied a lot of this in your own shop, how does, how does all this play out on the pricing platform?

Nancy Harhut [00:28:08]:

Yeah, you know, it’s interesting. There’s an author and a podcast host. Her name is Melina Palmer, and she wrote a book called The Truth About Pricing, and in it she says something like, um, it’s usually not about the price. Like, even though, you know, when we’re out there, our customers are prospecting, “Oh, the price, the price,” and we’re like, “Ah,” you know, that’s always a big barrier. And often it, it’s not. It’s, you know, what we do as marketers leading up to the price. And then also important— importantly, how we show the price can make a big difference. So there’s something behavioral scientists talk about called magnitude encoding effect. And it’s basically the idea that the way a price appears on the screen or on the page how much physical space it takes up colors our perception of how big or small, high or low that price is. So, um, really it’s very interesting. So imagine, let, let’s talk about $4,000. You can have dollar sign 4 comma 0 0 0 decimal point 0 0. That’s $4,000. Or, you know, you could say dollar sign 4 0 0 0. You skip the comma, you skip the decimal point and the, the two zeros. Or you could have a, a dollar sign that’s about half the size of the 4, as opposed to the full size of the 4. So smaller dollar sign, 4,000. So if you imagine those, the first one takes up the most space, the second one a little bit less, and the third one even less than that. So if you’re talking about your competitors’ prices, right, you wanna use the first one. You want it to take up more space because it seems like a bigger price. If you’re talking about your prices, you wanna use that third one cuz it takes up less space and people just read it as a, as a smaller number. The other thing you can do is you could say, you know, I know it’s $4,000, but I’m gonna take a $1 hit on this. I’m gonna charge $3,999. It’s only a dollar difference, but it reads as a much larger difference. It reads as a thousand dollar difference because people spend a disproportionate amount of time looking at the first digit. It’s called left-digit bias by behavioral scientists, left-digit bias. But in, in cultures where we read left to right, we focus more on that left digit. So if you saw, you know, the 4,000 with the comma and the decimal points, the 4,000, uh, without the decimal point, you know, the 4,000 without the comma, and then you see 3,999, what it looks like is, oh, the first 3 are in the $4,000 range and that last one’s only in the $3,000 range. It seems like this thousand dollar difference, you know. So leaning into, uh, left-digit bias is, you know, a, a great way of, um, of attracting more business, you know? And it’s, again, it’s these, these little mental shortcuts that, that people take. Getting back to the idea of magnitude encoding process, you know, how, how prices appear and the amount of space they take up. Uh, imagine we’re having a sale. So what we wanna do is we wanna have our original price on the left and then our sales price on the right. So you want people to anchor on what the, higher price is, and then they see the sales price and it seems like a, a good deal. And sometimes advertisers make a mistake. They lead with the higher price and then they say, used to be, or formerly, or was, but, but you miss the opportunity to, to get that pop from the anchoring when you see the original price. And then you say, oh, oh, the smaller price seems so much smaller. So you want the original price on the left, you want the sales price on the right. And then often what we do is we put it in a larger font size, because we don’t want people to miss it, right? Like, hey, we’re having a sale, you know? Right. And, um, it makes sense. There are lots of reasons to do it. We don’t want people to miss it. We wanna call attention to it. We want to stand out. But there was some research that came out of UConn and Clark University that found that when the point size of the sales price is smaller than the point size of the original price, people perceive it to be a better deal, a deeper discount. Huh. And it was really interesting research, Drew, when I was talking about it at a, at a conference. And, uh, one of my clients came up to me afterwards and said, we’re gonna test that. And I was thinking, oh God, of all the things I talked about, I think I covered 7 different points. That’s the one you wanna test. Like, I don’t know. I’m like nervous about this, you know? I mean, I know what the research says and all, but, but we tested it and it worked, you know? So it was like, I was like, psh, thank goodness, you know? Uh, cuz as I said, sometimes, you know, what works for some person, one company may or may not work for the other. That’s why you wanna test. But we tested it and it, and it worked. The other thing, if we’re gonna have a sales— our original price and our sales price, you, you could have, say it’s on a horizontal line, right? You have, um, you know, $400, dot, dot, dot, $350. You know, used to be $400, now it’s $350. Or you could say $400, dot, dot, dot, dot, dot, dot, $350. In other words, they’re further apart horizontally. The further apart the prices are physically, horizontally, the further apart they feel monetarily or financially.

Drew McLellan [00:32:48]:

Oh, fascinating.

Nancy Harhut [00:32:48]:

It is. It is so fascinating that just these little things that feed into how we perceive prices. And if you ask somebody, you know, does it make a difference how far apart, you know, these two— you’d be like, no, you know, it’s— the money is the money, you know, right? Yeah, test after test shows it, that, uh, it’s just a kind of a quirky way that we process pricing.

Drew McLellan [00:33:10]:

Well, and what’s interesting is, I mean, I think we’ve all seen the $399 versus $400 or the $397 versus $400 a million times, so you think we would be wise to it, right? Like you would think you’d see it and go, I know what they’re doing. They’re jacking around with my head. And that, you know, it’s still 400 out. Like we’d round it back up, but we— our brain doesn’t do that.

Nancy Harhut [00:33:33]:

It, you know, I mean, I’m, I’m not saying that it never does, you know, like if you are in this like very rational, I’ve got my thinking cap on and I am really in the moment and I am doing a price comparison. I’m like, you know, you might be like, it’s only a dollar difference. But the truth is, our attention is so fractured. We’re juggling so many things that very often, not always, but very often we’re cruising along on autopilot and we are just making these decisions. You know, I mean, I, I, I wrote a book using behavioral science and marketing. I work with my clients all the time with this. I’m very familiar with it. I’ll get home at night sometimes and I’ll be like, oh, I know why I did that. And in the moment, yep, I did it and I thought I was doing what I wanted to do or what made sense, you know? And then you get home and you’re like, Oh, for goodness sakes, you know,

Drew McLellan [00:34:15]:

I fell for— I fell for one of the things I wrote about.

Nancy Harhut [00:34:18]:

Exactly. You know, I mean, it really does work. Yeah. You know, and so, and so that brings us back to something that you mentioned earlier when we opened the podcast about using these tactics ethically, right? Because, you know, we’ve got this body of research. It, you know, it indicates that, uh, you know, if you do X, people will do Y. So what we want to do as advertising people, as marketing people, is we want to make sure that we use these responsibly and ethically. If you know, if we say there’s only 10 left, we know that’s likely to get people off the dime and they’re gonna make a purchase. But we only want to say that if we have 10 left. If we have a stockroom of 1,000, you know, what happens is eventually people figure it out. And what that does is that erodes trust. And once that trust is eroded, it’s, it’s virtually impossible to rebuild it. It’s really, really, really hard if, if you’re gonna do it at all. And you just don’t wanna do that. So We want to operate in a, in a very responsible, ethical way. We don’t wanna put marketing messages out there that we wouldn’t share with our friends or with our, our mom, you know, like we, we wanna say something, we wanna make it a win-win. We wanna make it easy for people to make the decisions we want them to make because both they and our company will benefit, right? They’re gonna make a purchase at a good time. They’re gonna make a smart purchase. They’re gonna get a good product. Uh, they’re gonna get a good deal. And, you know, and we’re gonna get business and, and that’s a win-win. But what we don’t wanna do is we don’t wanna start to manipulate. We wanna motivate, not manipulate. And, and I always like to mention that when I’m chatting about these tactics because, you know, like anything, things can be used for good or for ill and we wanna make sure we’re using them the right way.

Drew McLellan [00:35:50]:

Yeah, for sure. A lot of the examples you’ve been giving have been kind of retail examples. How does this play out in the B2B world?

Nancy Harhut [00:35:59]:

So Definitely there are differences in B2B and B2C. I’m sure your listeners know that, but there are also similarities. And certainly one of the similarities is at the, you know, at the other end of that marketing message, that email, that website, that podcast, that white paper, that social post, right? At the other end of it is a person, right? And people are people and we don’t magically transform into other entities when we leave the house and, and walk into the office, right? We’re, we’re still people. We’re still controlled by emotion. And that’s one of the big things that we often overlook in B2B marketing. We think, uh, in B2B marketing, people are making decisions for the good of the company. And it’s not that— that’s not true. I mean, they are, but it doesn’t stop there. They’re thinking, all right, is this good for the company? And also, how is it gonna affect me? How am I gonna look to the boss? How am I gonna look to the board? How am I gonna look to my colleagues? If I, you know, if I advocate for this solution and it backfires, Am I gonna look like an idiot or can I still save face? If I, you know, bring a, a solution in, am I gonna spend evenings and weekends, you know, onboarding people or does it mean I get to get home and have dinner with my family on time? Right? We think about these things. And I remember Drew, years ago, I found this study. It was in the tech world and they asked people if there was a technology that you could bring into your company that you believed would really be beneficial. But it was gonna be difficult for you to, to advocate for it, would you still do it? And the majority of people said no. They’re like, I’ll just move on to something else. Like it— what, even though they firmly believed it would be great for the company, when they saw like the, the gauntlet they would have to run through to get it, you know, to get it implemented, they were just like, it’s not worth it. You know, and it’s true. It’s like we can’t strip the emotion out of how we make decisions. Uh, there’s a, a researcher named Antonio Damasio and He studied people who had sustained injury to the part of their brain that controls emotion, and he found that these people were virtually incapable of making a decision. Even a decision as simple as, what do you want for your lunch today? They couldn’t decide. They go back and forth and back and forth, right? We need to tap into the emotional parts of our brain to make decisions. And that’s true in B2C, but it’s also true in B2B. And I’m not saying we, we walk away from features and benefits. I’m not saying we walk away from the messaging about why this is good for the the company. But we also have to understand that emotion plays a huge role. You know, how is this going to affect me? How am I going to look to the boss? You know, what’s it going to do to my work life? You know, is it going to make things better or worse, easier or harder? And, you know, if we’re asked, we might say, oh no, we’re not paying any attention to that. But we make decisions often on a subconscious level. And it’s been proven that emotion plays a role. In fact, the B2B Institute finds that when you add emotion, to marketing messages, 7 times the increase in sales revenue and profitability. And that’s from the B2B Institute. So, you know, we really want to remember to, you know, infuse some emotion into our B2B marketing messages.

Drew McLellan [00:38:52]:

And are there, are there sort of those shortcuts? Are there shortcuts that are different on the B2B side than there are on the B2C side, or are they just human nature?

Nancy Harhut [00:39:04]:

Well, you know, I, I think for the most part, it’s human nature. And then the question is, you know, which of these behavioral science tactics is going to be applicable? And the answer to that really is, is driven by what is the market situation, what is the challenge, what is the customer mindset? And it’s less about is this a B2B or a B2C implementation and more about what’s the context, you know, because there could be times You know, we talked about social proof. There could be times that works in B2C. It could also work in B2B, you know, autonomy bias, same thing. Now, granted, you know, in B2B, we’ve got more decision makers involved, a longer sales cycle, higher price tag. So, you know, saying that something is $9.99, you know, that 99 cents could work in consumer, probably not so much in B2B, right?

Drew McLellan [00:39:53]:

Um, right, right.

Nancy Harhut [00:39:54]:

But, you know, the idea of magnitude encoding effect and, you know, that 3,999 versus the 4,000, that could in fact be very powerful. So it’s, you know, it’s how you apply them, you know, in the context and, you know, and kind of like what the, what the environment is that, that leads us to which ones we should use. So some of them on, you know, in a particular instance might be better for B2C or better for B2B, but generally speaking, at the end of the day, people are people and, you know, we default to these decision-making shortcuts often without realizing it. So, as agency owners, as marketers, you know, that’s valuable information for us to have that we can use.

Drew McLellan [00:40:30]:

Are there some of these short— mental shortcuts that you think are most effective for agencies to use when selling their services to prospects?

Nancy Harhut [00:40:43]:

Yeah, that’s a great question. So, you know, people— I think when people are looking for an agency, they’re looking for, you know, a few reassurances. All right. They wanna make sure that they’re not making a mistake, right? Like, are these guys— I’m gonna trust them with my business, with my brand, with my budget, you know? Right. Uh, can I, uh, is it a good choice? So social proof is good there. If you have testimonials, if you can show the logos of the other companies you’ve worked for, you know, that can be beneficial. Sometimes what they’re looking for is something that’s gonna make them stand out. Like, I want someone who’s different. I, you know, I, I, I don’t wanna do what everyone else is doing because then you know, I’m never going to stand out, I’m never going to, you know, rise above the, you know, the noise out there. So they’re looking for an agency that’s got a distinctiveness or uniqueness to it. Behavioral scientists talk about something called the Von Restorff effect, which is the idea that things that stand out from their surroundings are the things that get noticed and remembered. So, you know, it’s why some agencies maybe have unusual names. They don’t sound like other agency names, because that helps them stand out and get remembered. When, you know, we talked a little bit about autonomy bias, right? And, and the BYAF technique, you know, the choice is yours. So maybe when we’re pitching a client, we’ve got a proposal in front of them, maybe we give them 2 or 3 different options. Here’s the entry level, here’s the mid-level, and here’s the deluxe, as opposed to just, you know, here’s what it’s gonna cost you. Uh, you know, it’s sometimes it’s risky to, you know, you put that, here’s the campaign and here’s the cost, pick us, pick us, you know?. But if someone else comes along and says, you know, here’s the campaign and here’s the cost, and we can do it one of three ways, that autonomy, that idea of being able to choose one of them, would give you, the agency owner, an advantage. So there are definitely ways that we can use these things with autonomy bias and, and, and social proof and the Von Restorff effect. And, uh, behavioral scientists also talk about the incredible persuasive power of providing a reason why. And they found that people are more likely to do what we ask them to do when we give them a reason why, and the reason why doesn’t even have to be this ironclad bulletproof reason. It, it’s more the presence of the reason than actually what the reason is. And sometimes, you know, we think, well, we’re out there, we’re doing advertising. We want you to choose us to do your advertising for you. Here are our credentials. Boom. You know, like, what more can I tell you? But just kind of circling around and saying, you know, choose us because we’re gonna do a great job for you. Choose us because, uh, a lot of people in your industry have had success with us. You know, choose us because we We’re really gonna work with you one-to-one to bring your vision to life. You know, what— what— just closing the loop can actually be very valuable. And in all of those examples, I use the word because, and I did that deliberately because there’s a researcher that came out of Harvard named Ellen Langer, and she identified the word because it’s an automatic compliance trigger. What she found is that when we see it or hear it, we just automatically start to agree. We start to nod yes before we’ve even processed what comes after the word because when we hear the word, because we’re just so used to a good legitimate reason following that we’re just already nodding yes. And she ran this experiment where people were lined up to use a photocopier, Xerox machine, right? And she sent someone to the head of the line and she instructed the person to say, excuse me, can I cut in front of you? And 60, 6-0, 60% of the time they’re allowed to cut, which I thought was high, but I guess that says more about me than anything. But, um, but 60% of the time, people are allowed to cut. She repeats the experiment a second time, but this time she sends someone to the head of the line and instructs them to say, “Excuse me, can I cut in front of you because I’m in a hurry and I have some copies to make?” Well, the 60% number shoots up to 94%. But, you know, Drew, as I tell you, they should say, “Well, Nancy, they said they were in a hurry. Of course, you know, you make this one exception.” But Langer repeats the experiment a third time. This time she instructs someone to go to the head of the line and say, “Excuse me, can I cut in front of you?” because I have some copies to make. 94% number drops to 93%. Statistically insignificant. Still that, that same high lift over the baseline. Right, right. Everybody standing in that line was standing in that line because they had copies to make, right? Right, right. That’s why you stand there. You don’t stand there to get a coffee. It’s, it’s the photocopier, you know? And she identified that word because as an automatic compliance trigger. People just— without even processing it. They, you know, they just— that’s crazy.

Drew McLellan [00:44:59]:

Go ahead. Like, it’s not even a good reason. It’s not like because I’m late for a meeting or because I’m gonna get fired, or it was just because I have to make copies. Well, exactly. Yeah, right.

Nancy Harhut [00:45:13]:

Yeah.

Drew McLellan [00:45:13]:

Fascinating. Human beings are, are fascinating.

Nancy Harhut [00:45:15]:

Oh, absolutely. Yeah. So I mean, you know, another tip for agency owners when you’re out there pitching your business, just close the loop with a reason why, a good because, and it doesn’t have to be, you know, because we’re the cheapest option. It doesn’t be because we’re gonna guarantee 100% results. Like no agency can say that or wants to say that, but it could just be some of the examples we talked about earlier, you know, because we’re gonna work hard with you, we’re gonna partner for you, you know, partner with you. We’re gonna bring your vision to life. And just having that reason can be very helpful.

Drew McLellan [00:45:44]:

Yeah. Fascinating. If folks want to learn more about your work, if they wanna find a copy of your book, where’s the best place for them to track all of that down?

Nancy Harhut [00:45:53]:

Sure, sure. So the book is called, uh, Using Behavioral Science and Marketing: Drive Customer Action and Loyalty by Prompting Instinctive Responses. So it’s available at coganpage.com. They’re the publisher. It’s available at Amazon, at, you know, Barnes Noble, but Using Behavioral Science and Marketing, bright yellow cover. You find it any place fine books are sold online, uh, and in some stores for that matter. And then I’m active on LinkedIn and Facebook and a little bit on Threads. And my agency is HPT Marketing, hptmktg.com, and we publish a certain amount of thought leadership and, you know, research and interviews at the agency site. And anybody is welcome to access it. And, and anyone is— any of your listeners are welcome to reach out to me. I’d love to connect with other agency owners and swap stories and share information. So those are the places you can find me. So why yellow on the COVID You know, that was a publisher’s decision. They sent me a few different options, but, uh, the yellow seemed to work for me. It popped. They had a red option, they had a yellow option. I think they had a white option. I liked the yellow, it jumped out. And I find now people are saying, oh yeah, that yellow book, that yellow cover color book, which is why now I’ve started to say it. Cause I’m like, all right, apparently people, they zero in on it. So, um, so there you have it, but it’s, it’s 282 pages, 17 chapters, and over 25 different proven, practical, easy-to-apply ways to increase engagement and response. They’re the go-to behavioral science principles that I’ve used year after year after year with my clients. I include many case studies, quick takeaways, practical ways to use these tactics. Um, and you know, you can read the book cover to cover, or you can just dive into a particular chapter that deals with a, a challenge that you have or, or a topic that you’re interested in and People say it’s a masterclass in why people do what they do and how to get them to do what you want.

Drew McLellan [00:47:40]:

So is there one of, of the 25, is there one that is sort of your go-to that you’re like, this is the— if I only can use one of these, this is the one I lean into more than any others?

Nancy Harhut [00:47:51]:

You know, that’s, it’s a tough question cuz it really, it’s context dependent, you know? Like, you know, I, I love social proof. I love loss aversion. The idea that people are more motivated by loss than by gain. You know, they’re all good, they’re all powerful, they all have their place. But to say that there’s one magic wand that works, you know, all the time, it really is dependent on the, the market, the, the challenge, the, the mindset. So it’s like asking me to choose my favorite child. I can’t. But there’s a good reason why I can’t, you know.

Drew McLellan [00:48:20]:

It’s like, you, you could, you’re just not gonna say it on recording, right? This has been really fascinating. Thank you for You know, I, we’re so focused on the technology that’s influencing our businesses today and all of the high-tech stuff and AI and all of that, that it’s sort of refreshing to talk about just the human beings that we’re trying to connect with and influence and, and open up their eyes to opportunities that maybe that they’re, they’re not seeing. So it’s, it’s good to get kind of back to the basics of you know, why I think most of us got into the business, which is the fascination of human behavior and human choice and how we can influence that. So thanks so much for being with us.

Nancy Harhut [00:49:05]:

Thank you so much for having me. I’ve totally enjoyed our conversation.

Drew McLellan [00:49:09]:

Me too. Me too. All right guys. So, uh, grab Nancy’s book, but here’s a little bit of homework for you. So Nancy mentioned probably 5 or 6 of the 25, so you could re— go read the book. Look at all 25, but pick one, even one from the podcast, and experiment with it. Experiment with it even verbally. Experiment with it at home. Experiment with it with a coworker and just watch, observe how people respond when you lean into these behavioral science realities, these shortcuts that we all have. And other homework, notice when you are the one that is being triggered. So it’s It’s easy. It’s interesting for us to all think about like what we’re doing and how we’re using it to get clients, prospects to do what we want. But it’s more interesting to think about it when we’re the prospects, right? And how, how are you being triggered by the size of type with a price or with the word because, or some of the other things that Nancy talked about. So just observe this week sort of where you are at in terms of your own sort of behavioral science and your own humaneness, and also how you might be able to leverage it for your clients and for the agency as well. So that’s homework. Before I let you go, two more things. Quick shout out and thank you to our friends at White Label IQ. You know, I’m super grateful to them. They’re the presenting sponsor of the podcast, as I told you at the top of the hour. And most important, actually, of all— so I hope you’re actually sticking around and hearing this— I am really grateful that you come back every week. You know, we’ve been doing this together for over a decade, and, uh, I get to have these fascinating conversations with people like Nancy because you keep coming back and you keep listening and you keep telling me that you’re learning and you’re growing and you’re applying some of these things, or you’re passing the podcast on to someone else who you think might learn from it. So I, I don’t ever wanna take for granted how busy you are and how many podcasts and other learning resources you have. And so I, I feel really privileged that I’m part of that set for you. And so thank you very much for, for hanging with me every week and spending time with me and, and allowing me to get smarter alongside you. So I’m super grateful for that. And guess what? I will be back next week with another guest, and I hope that you will join me as well. Okay. All right. See you then. That’s all for this episode of AMI’s Build a Better Agency podcast. Be sure to visit agencymanagementinstitute.com to learn more about our workshops, online courses, and other ways we serve small to midsize agencies. Don’t forget to subscribe today so you don’t miss an episode.