“Look after the pennies and the pounds will look after themselves”
Small Change by Dan Ariely looks at money mishaps and how to avoid them by looking into what goes off in our brains to sabotage us from using money wisely.
The book is useful on two counts, Firstly and why the book was written is to show people all the mistakes they make with money and when they think about what to do with our money.
The second useful thing you get out of the book and is of most use to you and your business is that it shows you all the mistakes people make with money and when people think about what to do with our money.
If you can pick this up it can help your marketing be more effective as you can tap into those thought processes people have.
Whether you think the author is correct or not he does highlight the different ways people act when money is brought in to the equation and these issues are going to be around for many years to come if not ever so if your adverts and when you are doing your sales pitch can push those buttons you can have a better chance of your customers parting with their money.
The book looks at things like:-
How we value things – The book says people struggle at measuring how valuable a thing is going to be to them and attach cost to it even if money was not the question as they find it an easy thing to compare.
It is harder to sell a service – People cannot easily work out the value it will give them compared to another product and go for the cheaper one even if they get an inferior service.
People struggle planning for the future – People are more likely to take what they are given now even if the thing they are being offered in the future is better, the book uses the example of if you offered someone a chocolate bar now or a box of chocolates in a months time they are more likely to take the chocolate bar now. – This is why ‘If you join today!’ sales approaches work.
We Compartmentalize – The key to most people’s budget planning it to put money into different pots, eg bills, kids school fees, food shopping or leisure time. Partly a good thing because it makes sure you cover the bills coming up in those sections but the book highlights how people then forget about all the other sections so if they go food shopping and see a joint of meat at £100 they will compare this to their food budget and say it is expensive whereas if they looked at all their money it may not seem that much. – Understand which pot you are trying to get your customer to spend out of or try to offer something that will help many ‘pots’
Summary:- As I said at the start, the book makes you think twice, once as yourself and asking yourself “do I do any of those things?” and secondly, if I do that do my customers do the same and how can I use that knowledge in my marketing.