Mike Michalowicz - Different Is Better

Alright, our last speaker for the day, and last but not least, Mike Michalowicz. Globally recognized entrepreneurial advocate, author of multiple business books including Profit First, The Pumpkin Plan, and what Businessweek declared an instant business cult classic, The Toilet Paper Entrepreneur. Can be heard regularly on his popular podcast for business owners, was a columnist for The Wall Street Journal, and the Open Forum for American Express. He's the small business expert that MSNBC turns to to host their small business makeover segments on Your Business, and he's the entrepreneur behind 3 multimillion-dollar companies. Today Mike's here to help you make your business more successful. His presentation is called Behavioral Marketing: Inspiring an Entrepreneurial Spirit in Your Employees. Please give a level 10 welcome. To Mike Michalowicz.

It's Mike Heiner, welcome! Thank you. Thanks, Dan. Thanks so much.

Wow! Wow!

And thank you, what a warm welcome that is from everyone. And please join me in thanking Dan for putting on such a phenomenal, I mean phenomenal event. And Kevin O'Leary this morning, Mr. Wonderful, I called my wife, I said, his presentation was mind-blowing. I said, you know, I wish I was Mr. Wonderful. What do you think about that nickname? To my wife, and she goes, well, you're more of a Mr. Meh. Better is not better, different is better. If there's one thing I want you to learn before we wrap up today, it's this ultimate lesson. That better is in fact not better, different is better. Remember third grade science class? My teacher was Mrs. Morrison, and Mrs. Morrison sat us down and she gave us the ultimate lesson in the importance of being different. It was science class and we were talking about biology, and remember the discussion around the hunters and the gatherers? The hunters were the men and the gatherers were the women. And the hunters would go out into the woods and they would look for the prey that they were hunting, you know, antelope or saber-toothed tigers, whatever the fare was for the day. And they'd be hunting through the woods and under their feet would be the crunching leaves as they slowly hunted for the animal. But the crunching leaves very quickly became familiar and got ignored. It wasn't important. It was just crunching leaves or sticks under their feet. What they were paying attention for was something different, a noise that they didn't expect. And you see, the faster they walked or moved quicker, it maybe made louder, better noise under their feet, but they didn't hear it. The caveman mind was designed to ignore that. It was designed to pay attention to something different. So when they heard hoofprints in the distance or a screech or a cracking branch over there, they froze and they paid absolute attention to it. Because the caveman mind knew that something different meant that there was an opportunity or a threat. Well, go to the gatherers. Mrs. Morris in third grade explained that the women were the gatherers, and they would go and collect berries and fruits and vegetation in the area to feed the tribe. Well, when they were looking, sometimes they would find something new, something they'd never seen before, and they would look at that potentially delicious red berry, but it could be poisonous. It could actually kill the tribe, or it could be vegetation that will feed the entire tribe. So they paid absolute attention to that different berry. That lesson in science class taught us one of the most important lessons of how humanity operates. Yes, societies move very quickly, technology has grown explosively, but our minds haven't changed much. We are still wired to notice different instantly and to pay absolute attention to it until we identify that's an opportunity or a threat, but we're also designed to ignore better. Louder stamping, crunching leaves, we simply ignore. What I want to share with you are some specific actions you can take in your business. The wonderful thing about these techniques, they cost nothing, but they all play into the behavioral psychology, the hardwiring of your customers' minds. I'll start off with a story of how I did this. I was working with a security company. There's security, I don't know if you noticed in this building, but security guards are commonly in all different spaces and buildings. I'm from the New York area, so it's very popular there. And this small security company called me in 2008 as we were experiencing the steepest part of the recession. And they said, we have a big problem. We are a small security firm. We have about 50 employees, where the big competitors down the street have thousands of employees, if not hundreds. And as a result, as buildings are having less occupancy, the building managers are coming to the security firms and saying, you better charge less for your service. And the big companies can compete on price, but us, the little small firm, we can't. What do we do? Well, if you practice like I do in studying behavioral psychology and the limitations of it, how how you first do an analysis of any situations you do was called a control. You simply observe what is going on. And so I went to this little security company and went to one of the buildings that they were protecting, just watched how the security guards operated. And just like this building, they were wearing their little, I shouldn't say little uniforms, their blue uniforms, and they would just sit near the elevator, and as people would walk by the elevator, they would just nod their head sometimes or say nothing. They were ignored. And I remember people coming in. This one guy, clearly from New Jersey, 'cause that's where I'm from, was walking in and he would have his phone and he'd be like, oh my God, last night was awesome. We were partying so hard, it was great. And he'd just walk into the elevator. Every single day for the full week I observed, every night was a great party and he'd be walking in. There was this elderly woman somewhere between the age of like 80 and dead, somewhere in there. And she would come in with her walker, walking, you know, 1 mile per day, slowly walking in, and she would work her way into the elevator, ignoring the security guard who was standing there. Now remember the lesson: better is not better, different is better. And as I'm observing this, we I decide, and my team decides, to make a change. We decide to change the uniforms. So instead of the uniform being the undescript blue uniform that you see everywhere, or brown, we put them in Armani suits. Armini suits, they were Chinese knockoffs. So we put them— yeah, I laugh at my own jokes a lot. So we put them in Armini suits, we give them a leatherette briefcase, sunglasses and that little ear doohickey thing. And I tell Frank, who's the one guard we're observing, I say, "Frank, next time people come in, all I want you to do is, you know, touch your collar, touch your— just touch yourself somewhere and kind of talk into it when people walk in, you know, something like that." I sit behind— similar to this, the elevator's over here. I'm sitting behind the this huge vase thing observing what's going on, which is very creepy, I totally get it. But I'm watching, people are walking in, that guy from New Jersey comes in and he's like, oh my God, we had such a party last night, it was so, huh? I gotta go, no, I gotta go. He hung up the phone and he ran to the elevator when he saw our new security guard, same guy in the new uniform sitting there. Next person comes in, Oh, this was horrible. So Frank, just between me and you, me and 1,000 of us, thanks for laughing, Mom. So this elderly woman comes in and I'm sitting behind here and Frank has never done acting before. He's never done the touch your ear thing. And I'm sitting there and he keeps on forgetting to do it. Well, I'm getting a little bit frustrated. So as I'm sitting behind this thing, I'm telling Frank, "Hey, Frank, you gotta touch yourself. For God's sake, touch yourself!" I yell, which really added to the creep factor. But this woman comes in, shockingly, maybe she couldn't hear me, she just kept on marching forward. And when she saw Frank in his new uniform, all of a sudden that walker became like the perfect pummel horse. Like she could apply for the Olympics. Like she leaps over it, starts running into the elevator. I don't know, she skates in, I guess I'm doing here. She runs into the elevator and goes up. And all of us know what was happening upstairs at the water cooler. The conversations. I think the FBI is moving into this building. Obama is gonna set up office here. When Trump takes over. That was kind of funny. So, you know, like, the conversations upstairs took off, but the real miracle happened about a month later. We kept doing this process, and the building management called. Now, back in 2008, some of the buildings in New York had 50% occupancy. Half the space was empty. And what that meant is if you owned a building in New York, you were likely losing money. This building had become the talk of the town because of the new security guards. We get a call from building management and they say, hey, we want to tell you something. We know the gimmick you're doing with that uniform, but this has resulted in a lot of phone calls. People are inquiring about our building at a rate we've never experienced before, even before the recession. People are moving into our space because of that. We got to tell you, you no longer are our security firm. You are our best marketing engine ever. What do we have to pay to keep you doing this? The lesson is this. Better is not better. We could provide better security, better people, better certified folks. In fact, we had that. The one thing that no one else considered in this industry was to do different. And when you do different, you get noticed and you break out of the price competition game. I want to give you some very practical strategies now that you know that story that you can start using in your business today. The first one is by leveraging two of the most magnetic words in the English language. In fact, it's the two most magnetic words probably in any language. These words are so powerful that they suck in people's attention. In fact, you got— you were motivated to take action today by these words. And if these words were put on tables, you'd probably move over and look at them. If they're in today's newspaper, I I guarantee you're buying a copy of it. Does anyone have an idea what these words are? Just shout something out. Free, free, free money, that's a funny one. What else? Free, so? Per day, yep. I heard someone say sex, yep. All right, yeah, so free sex. Very motivating, I get it. Yes, yeah. They said you guys are kind of wacky, So yeah. So yes, free sex is one of the options, but it's not the one I was thinking of. In fact, the most motivating magnetic words in the English language are our own names, our first name and our last name. Dale Carnegie wrote a whole book about this, "How to Win Friends and Influence People." These names are, these words are so powerful, as I said, if they were in today's newspaper, you would buy the paper. I'm in it. Show all your friends, look what they wrote about me. It's my birthday. You would buy every single copy of the newspaper that the whole town has if you're indicted of a crime. You'd want no one to see the paper. Our words are magnetic. The tags you have on you, you were compelled to pick up your own tags. Of course, they motivated us. Words are powerful, but the names, when we use our customers' names, it's the most influential, the most magnetic. I got a call from the Chimney Cleaning Association of America. You think pharmacy and being a pharmacist, you think pharmacies is hard? Try being a chimney cleaner. Like, that's a hard business. I get a call from them and they say, we're having a difficulty selling our services. No one buys from us. And I'm like, I'm not surprised. They said, here's our problem, Mike. When we dispatch someone to clean a chimney, if you have a chimney at your house, I'm sure you you do for your furnace or a fireplace, like you don't stick your head up inside the chimney to see how dirty is it today. No one knows they have a problem. And they said when we render our services, we have to go up on the roof and they don't see us actually doing anything. They can't see a before and after. And they said, and our mascot isn't so popular, Mary Poppins. She takes your children and runs away. They said we got a real issue. In fact, the president of the association who called me to help and our team to help address this systemic problem for all the chimney cleaners chimney cleaners, said our website where we list all of our members is indicative of the problem we have. We have about 1 visitor a day, which was the association president just going on the website to see if it was still up and running. So here's what we did. We used the power of names. You can do the same or a variant of this. We reached out to every past client that these chimney cleaners had and we started collecting stories. We reached out and said, we want to hear stories about your experiences in front of the fireplace. Now remember this, your customers never buy the product or service you provide, they buy the benefit it derives. No one buys a clean chimney, we buy a safe chimney for a roaring fire. So we reached out to customers, we collected their questions, I mean, we collected their comments about stories in front of the fireplace. And stuff came in from the Northeast of these these crazy winter storms that would come through and how people warmed up their bones in front of the fire. Stories of celebrations, sweet 16 birthday parties and 50-year anniversaries all in front of people's favorite fireplace. And one story that was a tearjerker was a 12-year-old young girl who shared that her father passed away in front of the fireplace and that that was his favorite spot in the house and the whole family had gathered there. And in her story, she recounted that as her father took his final breath, she couldn't bear to look at him, which I totally get, and she looked away at the fireplace, and at that moment, the fire sparked. And she said, "That's the day I believed that God existed." And so these stories came in, and we collected them. Now remember the power of names. We went to the Chimney Cleaning Association site, and we started listing all these stories, the celebrations and so forth, and we gave attribution to the people that contributed the stories. Well, guess what? With the 50 stories we had, how many visitors came to the website do you think the next day? 50. And the day after, about 500. Why? Because those people, just like a newspaper story, were telling their friends to check it out, and then their friends wanted to contribute stories and get attribution to their own name. Names are magnetic. And people started contributing, and business went up. My background, I've had the good fortune of owning and selling a couple businesses. One of my businesses was in computer crime investigation, and we would solicit large clientele. We'd work with some of the largest corporations in the US, and my key contact there was usually directors of security, the CIO, CTO. So what I would do is write an open letter, say John Smith of of Ford Motor Company was my target and I wanted to work with them, I would write an open letter on my own website saying, John Smith, I so admire what you've achieved, what you've done for Ford. It's truly a remarkable CV that you've accumulated. It would be such a privilege one day to meet you and learn from you and perhaps even be a vendor of yours. Well, guess who is searching for his own name on Google? John Smith. And sure enough, he would be Googling and I'd get inbound calls from people that discovered my open letters and said, wow, this is amazing, how do we do business together? What names do you Google? I sure suspect you've Googled your own name a couple times. Your customers are magnetized by their own name and they cherish those words. When they come into your pharmacy, You should be memorizing their names. In fact, there's techniques to do it, and I wish we had time for me to share with you how to memorize names. There's a technique called mnemonics. I'll give you the basic formula. If you want to remember my name is Mike, what's a popular rhyme with Mike? Mike, Mike motorbike. You can picture a motorbike racing over my head. Now you got a good visual that you'll never lose. And next time you see me, you can say, 'Oh, hey Mike,' and you have me magnetized, you have my absolute attention because you're speaking the most important word to me. Have yourself and your employees memorize the first name at least of your patrons and they will come more often than ever because no one cares about their names, but they do and now you do. Second strategy, it's called reciprocity. Does anyone ever, just by show of hands, anyone ever heard the term reciprocity? Okay, 1, 2 people, great. Let's just try that. By a show of hands, who has hands? Okay, half the audience. Okay, we're getting— okay, I apologize for everyone else. So reciprocity, reciprocity works like this. It's a core hardwired concept. It's the fabric of society depends on this. And how it works is that when someone does something towards you, that we reciprocate in kind. If I go up to you right now and I put my hand to shake your hand, you will feel a compulsion to shake my hand back. Why? Because it's reciprocity. It's what's expected of each other. What is given is received back. Here's an example of it. I speak quickly, as you noticed, because I'm from New Jersey. And where I live in New Jersey is right outside New York City. We have more traffic flowing through this part of New Jersey, I would argue, than anywhere else in the world. And as I was coming to this event to get to the airport, I'm pulling my car out and it's bumper-to-bumper traffic. I mean bumper-to-bumper. I look down at my watch, I'm like, I am running a little bit late. As I'm looking down, the guy in front of me, I guess, started to flag me in, but I didn't notice. So what does he do? He starts doing this. And I'm still, I'm like looking down. I finally look up, by this time he's doing one of these moves. So what do I do? I acknowledge it by giving him this. Thank you, let me in. Reciprocity. He does this, I do this. The guy behind him, obviously got a little too close to his bumper, does this. So I do this. How often do you laugh when someone's doing this at you? I mean, yeah. Reciprocity, reciprocity. What is done to you, we reciprocate in kind. There is a deli in Boonton, New Jersey. That's a little town next to me that I live in. I go there regularly. Old Town Deli serves literally, between me and you, the driest roast beef sandwich on the planet. But they know the law of reciprocity. When you go to Old Town Deli, sometimes John, the owner, will look at you and say, hey, Mike, I haven't seen you in a while. Hey, why don't you enjoy a sandwich on me? And all of a sudden, that dry roast beef sandwich becomes the most delectable sandwich on the planet. Other times, I've seen new customers that he's never seen before walk in, and he says, hey, I wanna welcome you to our store. This sandwich is on me. And what do you think people do? They start talking about Old Town Deli. That place has people lined up every single afternoon for lunch because of reciprocity. People are hardwired to respond in kind. Now we have the same opportunity. Give your customers small gifts. Could you imagine walking into a pharmacy, I pick up my prescription and along with it comes a warm baked cookie And they say, "Hey, we know the medicine will help, but a warm cookie never hurts." Whoa, my gosh, is that amazing? Reciprocity. Customers will be blown away and want to do more business with you. It's only small gifts that are required. And don't think you're not wired to reciprocate for reciprocity. Just think about the holiday season. Christmas came around, we're celebrating Christmas at our house, Hanukkah, all these holidays. You can tell how close you are to Christmas Day by the pile of cards that have come in. And at the very end, usually a couple days before, our last few trickle in. I got one last year from my Aunt Jeanette who actually I thought passed away 'cause we hadn't heard from her in 5 years. We're not really that closely associated with. A card comes in from Aunt Jeanette. She was alive, it was a Christmas miracle. But then what did my wife and I do? We raced to the Hallmark store to FedEx a card back to her, and you would do the same. It's the fundamental fabric of society, reciprocity. Give away small tokens of appreciation to your customers, like the warm baked cookie, and they will appreciate you to no end. Another strategy. Any fans of circuses here? Okay, so like the same 3 people. Okay, so you're the whack jobs, right? Oh sure, we have hands, we're fans of circuses, we know reciprocity. Okay, I bet everyone knows Ringling Brothers and Barnum Bailey Circus, right? You know, Ringling Brothers and Barnum Bailey Circus is the biggest circus in the world, it's called the incumbent, that's the most established brand. Now in the New York City area, There's Ringling Brothers and Barnum Bailey Circus. They perform globally. But also, if you're from the New York area, there's another circus. It's the number 2 runner-up. Does anyone happen to know the name? Big Apple, yes. The Big Apple Circus. And if you're not from the New York area, chances are you've never heard of that circus. And the Big Apple Circus has a real problem. If you come to visit our city, and you come into town, and you're with your family, and you decide, we should go to the circus, You will see advertisements for both. Statistically, you will go to Ringling Brothers and Barnum Bailey Circus. Why? Because you recognize the name. It's a safe bet. It's the familiar in this case, and it's safe. Familiar means safe, and Ringling Brothers, as a result, can charge a premium. For Madison Square Garden, the main venue where Ringling Brothers performs, they get $125 for the premium seat. $100 a ticket. Big Apple Circus, the number 2 competitor, for the exact same seats, the exact same venue, and the almost identical performance, can at the most get $50 a ticket. And that's the problem of not being the incumbent. You experience what's called downward price pressure. The incumbent sets the standard, and everyone else to compete— because you're not recognized, you have to compete on price. And in the circus industry, you You can go all the way down the circus kind of level of downward price pressure. So you have Big Apple Circus, I mean, I'm sorry, Ringling, Big Apple Circus, local circus, and then you have like those carnies that come to your town that you pay like $5 not to touch your children. Yeah. That's the worst in downward price pressure, by the way. Please do not touch my child. But there's one circus, there's one circus who broke out of the paradigm, who charges 3 to 4 times what Ringling Brothers can get. Cirque du Soleil. Cirque du Soleil. I don't know why I get all upset with that. I mean, it's just congratulations Cirque du Soleil. Cirque du Soleil, do you know they use one behavioral trick of being different that gave them exposure? Cirque du Soleil, they broke the generic label. Understand this, when you hear, when you heard me say the word circus, in your mind, I know instantly, pop, popped triggers of a circus. Maybe a tent, maybe a clown, which are kind of freaky, maybe a giraffe walking by. But when I say the word circus, pictures pop in our mind. Cirque du Soleil knew that if they called themselves, which is the— it's a French phrase, Cirque du Soleil, which means the sun circus or circus of the sun. They knew that if they called themselves the sun circus, that they would fall victim to the familiar label. "Ugh, it's just another circus. I'm gonna go to Ringling Brothers." So instead, they changed the label. And what happened? The first time you heard Cirque du Soleil, I suspect you said this, "Huh." What's that? And if you can get your customers even momentarily saying, what's that? That means you've broken out of the box of generic labels. You know, to us, to your customers, a pharmacy is a pharmacy is a pharmacy. A circus is a circus is a circus. And I don't care how much better you are, the customer is familiar with what a pharmacy is and will not pay attention to what differentiates you. So we have an obligation to break the label. Let me tell you how a law firm did it. I was working with this law firm and I already know what popped in your mind. You heard law firm, I'm sure in your mind pops a guy with a briefcase suing somebody and a big, big bill after the fact. A lawyer is a