In this episode of the ROI Online Podcast, host Steve Brown interviews Will Leach, author of Marketing to Mindstates, founder of Triggerpoint, and CEO of the Mindstate Group. Will’s background is diverse; he performed poorly as a student and was a military man before transitioning to a career in economics, focusing on future prediction. From there, he went to Azusa Business School and studied market research. While working in marketing, he began to draw connections between market research and behavioral psychology. Ultimately, Will found that rational economics, the standard tool in market research, missed a crucial component of effective marketing strategy. It held that no change in the environment should mean no change in a population’s consumer patterns; however, it failed to reckon with the emotional aspect of the consumers. In reality, consumers are shaped by emotional reactions, which is why appealing to such things as the scarcity effect and goal theory makes marketing more effective. Given these realities, those marketing goods and services to consumers need to understand the customer’s higher-order goal. Discerning this goal can take time, is often discovered by intuition, and can be determined through a process called laddering. Appealing to a higher-order goal helps a marketer to build trust, empathy, and relationships. In Will’s own work, he markets to mindstates rather than people, allowing himself to honor the complexities of real people. His science-backed methods have proved enormously fruitful for him, and he is especially passionate about helping small businesses develop a consistent marketing strategy, and about helping entrepreneurs see that they can implement the marketing techniques he’s shared without a significant financial commitment. Learn more about Will Leach on LinkedIn and Twitter, and at marketingtomindstates.com.Read his book, Marketing to Mindstates.Visit mindstategroup.com to learn more about Mindstate Group Read Steve Brown’s book, The Golden Toilet.Thinking of starting your own podcast? Buzzsprout’s secure and reliable posting allows you to publish podcasts online. It also includes full iTunes support, HTML5 players, show statistics, and WordPress plugins. Get started using this link to receive a $20 Amazon gift card and to help support our show!Support the show (https://cash.app/$stevemfbrown)
station. So here I am. I'm thinking as these business owners that are listening right now, maybe they don't sell chips or soda, but they have a portfolio of products or services. And so what some little things that they can start to like grind on a little bit. Give us some examples of how maybe if I'm a plumbing company, talk to me, maybe some good examples you have. I don't know what they are, but yeah, there's a couple of things that I think marketing has lost their way because a lot of agencies are trying to be cute and they're trying to be innovative with their words and trying and trying to stand out. But in that, in that ability to be so creative with their words, their taglines that we forget that people just want to solve the problem in their lives or they have a job to be done right. People just want to solve problems. Yeah. And I often say that, you know, I tell my team here, I said, you know guys at the end of the day people we work with, they want to get home at 5:00 to watch their kids play T ball just like we do, that is a problem we can help them with even though it has nothing to do with marketing, research and agency and meet providing consulting services. I can do small things like write up an email for them so that they can send it to their boss explaining what I do just to get them home right early. So there's all sorts of things you provide outside of plumbing. In your example, there's all sorts of things you can provide, you don't think in that way. So the first thing I tell people is if you don't understand the goal of your customer and that may be way outside of what you provide, then you truly don't understand how to market because people only buy products and solutions that help them reach their goals and there are goals that are very functional. Like, hey, I'm coming, I want to be regarded as a very quality driven plumber, right? And I also want to solve my client's needs. I want to be on time. I want to have profit in my business, right? So there's a simple, basic functional goals. But ultimately people, especially business owners out there, we have an emotional goal. We called higher order goals and certainly I want to have those things for my company too. But what really drives me emotionally rationally, those things that if you ask me, what do I need for my company, I need to be profitable. I need to grow it onto this size. I have all sorts of things. I need to create processes emotionally. Why do I want that emotionally? For me, my higher order goal is at least in my world, is to create a meaningful difference, especially the kind of the middle class. That's something I grew up middle class and I want to see people succeed and I believe my way of doing that is understanding how people make decisions and teaching others to make their marketing better. Cool. So the first thing is if you don't understand the functional goals and most people get that you've got a ladder up to what's the true emotional goal. And then if you can help somebody meet that emotional goal, in this case I want to provide, I want to make the world a little bit better place by using all the psychology, the stuff that can actually help people reach their goals. That is an important thing that differentiates me from other companies. So for me, if you don't stand goal, you are already missing the mark on any marketing you're doing. If you don't truly understand, get lucky, you may get lucky and you may get a couple of sales, but you won't maximize your sales until you understand the goal and start messaging to that higher order goal.
so you through that process, you came up with the Pcs or some prototype in your mind. Right? And so then you you go to to testing it. So probably some ups and downs back and forth. Let's hear about that. What happens is as you read these sciences, you'll get caught up into reading just 11 science. And for me it was behavioral economics concept that Danny really writes about in that book. So I read about behavioral economics and let me give an example. One of the things in behavioral economics, there's a heuristic or there's a rule of thumb that many times we will use to make a decision quicker and faster. Right? So for instance, they study these rules of thumbs and they study these triggers. They get people to not think, but just to act. That's what behavioral economics does. So I'm sitting there and one of the ideas is called scarcity effect. And this idea that we place value on things that we believe are scarce in nature. so great. So we're really talking about that. There's other authors and other academics that talk about this. So I'm sitting there in the world of real, the real world, in the real world where I am helping to sell chips and I've competitors. And what happens if we both use coupons that say limit to, right? That's scarcity. So in my head, Babel economics doesn't account for the fact that well what differentiates one scarcity versus another. I was like, well there's another science and it has to be goal theory. Like what drives me to choose one brand over another if we both have the exact same juristic, right? So I since I'm in the real world, the real business world, I didn't have to study one behavioral science for two decades. Like most academics do, they study one science for two decades and become experts met. I didn't have that limitation. I got to find four different social sciences and find the bridges and I realized these guys aren't talking to the guys who are talking about motivational science, are not talking to the behavioral economists in the behavioral economists, not talking to people who are studying goal theory. I'm looking at this step because oh my gosh, they all touch on a very important part of understanding our decision making and our behaviors. So here's the story of when I thought, man, I've got something big here. So remember when you know the fact of the matter is I did a study that by all accounts should have gotten me fired, which was the Tostitos right? Like because I couldn't tell what was reality. I had a lot of, you know, people who supported me at Pepsi and they said, you just got to go figure it out. Here's what I figured this thing out when I kind of merged these sciences together and what it was was it was it was actually a study that I also write about in the book. And I want to I want an award for this project very a very prestigious award in terms of behavioral science marketing, which catapulted me into starting my own company. So this time I'm still at Pepsico, I'm still marketing research is struggling with this whole social science and all this stuff. And I read a study from Yale from a guy by name Robbie dar, that talks about this concept that when we bundle products. So let's say for instance if you're going to go into a grocery store and they say if you buy this one product you can buy another product and together if you buy both at the same time you can get a discount, right? So it's classic Bundling, we all do it all the time. So Pepsico would sell chips and sodas under a bundle. Hebei both of these together for a lower price. Kellogg's does the same thing, you know, pop tarts and cereal like so people bundle products all the time for a discount. Here's what ravi did. He looked at a totally different industry and he said what if rather than placing both items together for one low price, what if instead of that you said you know what, I'm going to not discount the bundle. I'm going to discount the item within the bundle that you feel guilty about and that's a totally different way of thinking about the same discount. But what if you felt guilt about maybe it's a nice chunk of chocolate that you know you shouldn't be eating. But if you discount the chocolate in the bundle, what if I did that? I can now get the discount but also you can make me feel less bad about myself. You can discount sin, right? They call this concept Hedonic Bundling. I read it about cars and I thought, oh my gosh, I could do Hedonic Bundling because I know that there are people who feel guilty about eating chips and drinking sodas or things like that. So I did a basic study to understand which items within the Pepsico portfolio had a high hedonic charge, meaning there was a lot of emotional arousal to it, but people feel a little bit guilty for eating right, snacks are great about that. There are great indulgences. So I did a basic study, I took two concepts, One concept I was you buy soda and chips and put em both together for one low price. The second concept I ran as I said, buy sodas and chips. Save 70 cents on the soda rather than saying save both and and and get both together for a dollar 99 or whatever it was. I said, I took the exact discount place down the soda and I saw 20% lift in sales almost immediately. I didn't do anything but refrained. I just use communications differently. And in my world of economics that shouldn't matter like we should, we should know the discount. But I'm getting back together. I save 70 cents either way. But in this case I was able to tap into an emotion and solve for that emotion and that. I actually worked with a great scientist to do that work once we saw the results, we couldn't believe it. And we actually put up for an award and we won an award. And when I got off stage for that award, think of it as it's kind of like an Academy award for Marketing Research, right? It's called explore Ward. It was almost like winning Best Picture. And I came off stage and I had three companies as I'm coming offstage saying if you're not happy I'd like to talk to because I want I want you to come work for me. And I thought to myself, there's something here because this room is full of marketing research companies, best marketing companies in the world. And they were like, we want you because what you just did, we never heard of. And I thought there's something here that is powerful, is really, really powerful. And so I took it to start my own company.
just so you spoke about when all of a sudden you started to put those together, I'm guessing or assuming that's what we would call the inciting incident or the call to action. So draw that picture for us. Yeah. I talked about this in my book. Here's what happened. I'm over at Frito Lay. I'm running shopper insights at frito Lay here in Dallas texas, a lot of responsibility and they invested heavily in a laboratory. We called it the smart lab, the shopper marketing and retail testing laboratory. So imagine this space where it was about the size of a Walgreens and I had a theater about the size of a Walgreens to run experiments. Now I still wasn't really in this world of behavioral psychology yet and understanding emotional factors, decision making, all this stuff that we just talked about. I was more like I'm going to ask people to come into my laboratory maybe 75 people. I'm going to then keep my old packaging of Tostitos And I have 75 people shop my aisles. And then I will look to see the number of people who bought Tostitos. And then the next day I'm gonna, I'm gonna recruit another 75 people to shop that same ill. But this time put a new bag. So it's very much a very standard classic piece of marketing research. I change one variable and see what happens. So here's the story. I did a study where I was asking people, 75 people to come into the laboratory to shop the store and then overnight I'm supposed to put on the new packaging of Tostitos to see, hey, does the new packaging create greater lift that night? The shipment of packaging didn't arrive to the laboratory, but I had already had another 75 people the next morning going to show up to shop this environment. So what do I do? Well, I can't just call 75 people and tell them to come back another time. It's too late. I said, you know what? I'm going to create the exact same study again. I'll get a bigger base size 150 people. Right? And then a couple of weeks later, a couple of days later, I'll bring in the new example. Well, I brought in the 75 people. We got the data back. And I had an analyst, he said, well, I got to talk to you. There's an issue with the data. What's the issue? And she said, well, the results from day one are not matching back the results of Day two. But yet the packaging was the same, the same exact environment, the same lighting, the same plan to grant the same prices. They are totally different cells. And I said, kim don't ever tell anybody about this. Don't say a word. Because in my world that's not supposed to happen. Rational economics, right? Traditional economics say that nothing should have changed. I had the same variables. What should have changed? Like people should have still been making the cost benefit analysis of this Tostitos bag and it wasn't the same. That blew me away. Unfortunately for me, I had a senior vice president marketing who found that out. So I couldn't keep I couldn't keep the secret trying to figure this out, right? And he said, Hey, will your yearly budget is $5 million. And if you can't tell me what's reality, whether it's day one or day two, then we have an issue with the lab. And he basically, in not so many words, told me, you have about a year to figure this out. And that's when I started thinking, well, what can I control for emotion? I couldn't control for the emotions that people were feeling or the environment that they were coming into my laboratory for. And that was my first introduction to reading about this whole science around behavioral sciences. And I read the classic daniel release book that everyone in my genre reads and they got this world of rational decision making is wrong. And that was that was kind of the beginning of this whole journey for the next three years, where I just had to understand behavioral psychology in shopper marketing. Yeah.
So what's the difference between behavioral sciences and decision science? I think you can almost blend the terms together. I will say that there is a slight distinction and that decision sciences is trying to understand the processes of making decisions and those can be oftentimes conscious many times an unconscious as well, but conscious decision making. We have processes to help us understand the world and make decisions that are in our best interests. Behavioral sciences go beyond that. Say we sometimes just react to the environment like you said, we don't think as much as we think, we think that is in the world of behavioural sciences where we are oftentimes influenced by our environments. The way you're talking to me, the way I'm feeling, whether I'm hungry or whatever those things are beyond decision sciences, so they can kind of be intermixed because there's certainly a lot of overlap, but there's that slight distinction between rational thinking versus environmental influences, so