Simon Sinek’s book, Start With Why, explores business and consumer psychology with questions like…
- Why do we buys things?
- How do companies nudge consumers to use their products and service?
- How do companies use price as a tool to manipulate consumer behaviour?
- How do we use fear as a motivator?
Some say Sinek’s claim to fame is his TED talk, which happens to be the third most popular talk ever. See for yourself:
Let’s go through a few key points from his book and Start with Why:
Beware of the price game
"Companies can play the ‘price game’ as they know it is effective toward consumers."
What he means is that companies can (and sometimes will) try to manipulate prices to get you to buy their products. As he notes, "Price is a highly effective manipulation ... Drop your prices enough, and people will buy from you."
Think about retail when things are priced to move. You see this all the time:
- "Buy one get one"
- "Buy $10 worth of brand X, get a free squeegee"
- "This week only, 50% off Y"
How many times have you found yourself buying something because it’s "SUCH an amazing deal"? I know I’ve been guilty of this one.
But, here’s how you can use this to your advantage:
Think about consumables
I remember Mark Cuban relating that you should buy two years’ worth of toothpaste (or other consumable products) if you can get a good deal. So, when toilet paper, towels, toothpaste or long-life items like canned goods go on sale, buy them.
Make sure it’s not just about the appearance of a deal
I used to work for a retailer that had signs all throughout the store on every product that said, "Was $35, now $19.99." What a good deal, right?
In fact, while the prices were sometimes reasonable (based on quality), it wasn’t necessarily an amazing deal. Yet, when consumers would see the signs, consumer psychology would kick in and they would instantly say, "that’s a deal."
As a shopper, you have to be disciplined enough to separate emotion from facts and know what the benchmark price is on those products (which is why it pays to do research ahead of time).
Use corporate "crack cocaine" against them
As Sinek relates in his book, trying to get away from the strategy of offering a discount to consumers is like "crack cocaine" to companies.
He discusses how the car industry has and continues to put on promotions like outrageous cash-back deals or other incentives that are all in the name of "buy today." In 2007, he relates, “GM was losing $729 per car,” largely because of cash-back incentives.
As the consumer, discipline rather than emotion is once again key, as you really need to have your game face on when you go to buy something where there is wiggle room, whether on a car or on other consumer goods.
Plus a travel bonus worth another $150.
Quantities are limited.
Take advantage of rebates
Sinek says "breakage" is the percentage of consumers that fail to take advantage of a promotion and end up paying full price.
This ordinarily happens when buyers don’t follow through on a particular action required to receive the promotion, including rebates. He categorizes this type of activity as a manipulation.
While that sounds ominous, it doesn’t mean that all retailers are bad, but I think he would suggest that you take care of yourself as a consumer.
This process, Sinek notes, has been purposefully kept difficult or onerous to prevent consumers from successfully completing the action to get a rebate on a product. While we’ve all been there ("Oh, I definitely need to use that!"), it doesn’t always happen unless you’re really committed.
This is not true of every company (I recently bought some new Michelin X-Ice 3 tires and was able to get a nice rebate of $70 easily), but I have definitely been in the shoes of the consumer that has not fulfilled what is required.
Given that some transactions for rebates are now moving online (like my Michelin example), it feels like the barriers may be lowering slightly.
So, how do you solve this? What can you do as a consumer to maximize the money in your pocket?
- Ask about rebates (or research them beforehand). When making any major purchase, be sure to ask about rebates. My $70 rebate for 10 minutes of work was a nice return on time and investment – I would do that every day, if I could.
- Ask about other incentives. Sometimes, paying cash to a retailer (especially local retailers) on a purchase will give you an immediate discount as you’re saving them several percent on credit card fees. If you can save a retailer $200 on a $10,000 purchase and have the cash to do it, ask the retailer if they will give you an extra discount on top of what you’ve already negotiated.
For more tips on how to negotiate on items and services, check out these blog posts:
- How To Negotiate Better Deals On Kijiji And Craigslist
- 5 Ways to Hack Your Cell Phone Bill
- Calling Retentions Can Really Slash Your Bills
- How To Save Money On Internet Service
- How To Get A Credit Card Annual Fee Refund
Beware of fear as a motivator
"What could happen if you miss out on ____________? What if I don’t do ____________?"
We’ve all uttered that phraseology at some point or another. Yet, it can be motivating, especially to us as consumers. For some of our younger readers, they’ll recognize this as FOMO, or Fear Of Missing Out.
We see this type of thing all the time, Sinek notes. We’ve all seen political ads that say a vote for someone else will result in a negative consequence or a news ad that says your health or security is at risk unless you tune in at 11 p.m.
Businesses routinely use fear as a motivator to sell products:
- "Do you have radon in your home?"
- "Buy life insurance before it’s too late!"
- "Does your car have 99 airbags to protect your family?"
Yes, some of those are tongue-in-cheek, but others are quite real.
When thinking of other examples that you’ve been exposed to in the past, ask yourself: did that motivate me to buy or influence the timing of the deal or the price I paid in the end?
In those situations, I would suggest we use logic to help us combat fear. Ask yourself, "Is that really true?" If claims are truly real, think of a logical plan to help you buy that radon detector or newer, safer vehicle in a non-emotional way.
Beware of aspirational products
An aspirational product is a product that promises to bring about positive implications to the consumer as they use it. Products like that fresh Hot 150 Yoga or 29 Second Abs DVDs which promise to help you lose weight.
In fact, these aspirational products are so effective that the weight loss industry is expected to reach a value of $206.4 billion by 2019.
What does that mean for us as consumers?
The "get rich quick," “19 steps to happiness,” and all other types of products are fine to consume (if that’s truly for you). Yet, these types of messages “tempt us,” Sinek notes, and is almost an extension on the fear tactic used above. It fills us with the thought of, “despite my shortcomings, this one product or service will help me finally achieve my goal.”
As consumers, we have to do our best to control our level of temptation since avoiding it really isn’t possible. We again have to ask, "what is realistic?" Am I already doing everything practical within my power to achieve the goals I have?”
Instead of buying a product or service to help you "fix yourself," I’d suggest checking out Stephen Duneier’s fascinating talk on how you can TRULY achieve your most ambitious goals.
What does this all mean?
While this is just the tip of the iceberg for consumer psychology, Simon shares some great points. The biggest takeaway is, as a consumer, we need to think through our needs and understand motivation: both ours and that of the business attempting to sell you goods or services.
When you see a sale on that new leather jacket, ask yourself if you really need it or if you want it. Why do you want it? Why now? What is the store’s motivation for giving you such a "great deal"? Will patience potentially bring you a better price later?
As you work through these types of questions to understand your needs and motivations on both sides, you’ll start to make better decisions when it comes to making purchases. You’ll no longer feel guilty about a purchase or try to hide that purchase, because you’ve really thought it through.
What are your thoughts?
What do you find works for you in these types of situations? Have you been tempted, coerced or somehow manipulated into buying a product outside of your desired timeline or at a price that was not to your liking? Have you been able to stay disciplined in those same types of situations?
I’d love to hear about your experiences in the comments below.