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 of the day was. 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. Morrison, 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 customer's brain. Minds. I'll start off with a story of how I did this. I was working with a security company. Um, there's security— I don't know if you notice 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, 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. Armani suits, they were Chinese knockoffs. So we put— yeah, I laugh at my own jokes a lot. So we put them in our mini 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 touch your collar, 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 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, ah. 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 pommel 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 wanna 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 money. Free, free, free money, that's a funny one. What else? Free, so? Per day. 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 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 one 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'm easy. 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? 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 good. Okay, I apologize for everyone else. 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 notice, 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 I'm 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 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 see 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, a 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 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 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 endowment price pressure, by the way. Please do not touch my child. Yeah, 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, it In your mind, I know instantly 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, Sun Circus, that they would fall victim to the familiar label. "Ah, 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 bill after the fact. A lawyer is a lawyer is a lawyer after all, right? And if you need legal services, yeah, you want a good lawyer, but they better be price competitive. So this law firm approached us and said, how do we break out of this paradigm or belief that people have lawyers are all the same? And we changed their name. No longer did we call them lawyers, we called them integrated counsel. And I suspect you've heard the term integrated counsel and you're like, what does that mean? Exactly, exactly. We used a term that no one heard before and what happens is when something different presents itself, the customer gives it immediate attention to evaluate is that an opportunity or a threat. They will listen to you. And what that law firm did, they said, well integrated counsel means we do legal work 'Just like any other lawyer can. That's the easy part. We also come on site, we integrate our team into your culture, we get a sense of how your business runs, and when we prepare your legal documents, which is easy, we can now speak the language of how your business runs. We can speak to the culture of your business.' And customers started to pay a premium. You see how simple it was? They said, 'Yeah, of course lawyers are lawyers are lawyers. That's the easy part.' but we're integrated counsel, we're different. If you call yourself a pharmacist, you run a pharmacy, you are falling victim to a generic label. Come up with a new professional term. Now, I'm not familiar with terms in the pharmacy arena, but maybe a master pharmacist, maybe a meditologist or something. But that's horrible, do not use that one. But could you— we'll just play with that one. Say meditologist or meditologist. Medicinologist. That's even worse. So we'll say you're a medicinologist. You can go up to your customers and say, yes, we have an on-staff medicinologist who is going to sit down with you and give you some details. And they'll say, what is that? And I'll say, you never heard of that before? Oh, we are in fact the only one in the state that has a medicinologist. Let me make an introduction. Now be careful of the law. Of course you don't want to break the law, but come up with a label that distinguishes you. Because in the customer's mind, the second they hear familiar terms, I don't care, you can speak until you're blue in the face, they will ignore you. Just like if I went on and on how great my circus is, you already know what a circus is. Come up with a unique term. That's better than Messinologist. But come up with a unique distinguishing term to distinguish your store or the people in your staff, and you will stand out and you'll get the attention of your customer. Now here's the key, don't do some cheesy marketing term, it has to be a professional sounding term. Fourth strategy, I'm just tearing through some stuff here, is a technique called UPoD. It stands for under-promise over-deliver. Maybe it's a term you're familiar with, but I wonder if you're using it because I know one company that used it to grow to a billion dollars in revenue. $1 billion in revenue. Anyone ever buy anything from Zappos here? Just by a show of hands. Okay, good. So, okay, a lot of Zappos consumers. I don't know if you know the backstory of Zappos. When Zappos started their internet presence selling shoes, they had a major competitor coming into the industry that you probably all know called Foot Locker. Foot Locker had a presence in every mall in the country, was backed by venture capital, and had millions backing it. Zappos was a little startup out of a garage and had the same idea. Foot Locker said there's a huge opportunity on the internet, we're moving in. And Zappos said there's an opportunity on the internet, we're gonna give it a shot. Millions, actually hundreds of millions backing this one, nothing backing this one, but Zappos won. How? Because they use a technique called UPoD, under-promise over-deliver. Just because you're sitting right here, I'm gonna pick on you. When you bought your shoes, you bought shoes from Zappos? Okay, how long ago? So a couple weeks ago you bought shoes. This is not a magic trick. Have we ever met before? Is there anything up my sleeve? Okay. When you bought your shoes, have you had this experience? When you bought your shoes, did they promise it would take about a week to get the shoes? But did you get it overnight? Oh my God, you got them overnight. Unbelievable. Now we've never met before, we never talked before, and I'm about to ruin your day. They do that with everyone. I know, I know, it's okay. You can go cry now. No, and they said you're a VIP and all this stuff. Zappos, and everyone in the audience that bought from Zappos, they've done it with you. It's a special technique. They made a promise, it'll take 5 days, and then they FedEx it overnight. And when it arrives overnight, it's like your birthday. This is amazing, the shoes are here. Now here's how Foot Locker moved into the market. Foot Locker said, we're gonna take shoe orders and we're gonna promise overnight delivery. And so Foot Locker would order the shoes, the exact same shoes, Foot Locker would say you'll have them the next day and they'd arrive the next day. But that's what they promised. Eh, as my wife would say, eh. But sometimes UPS or FedEx would get stuck in a storm, they would miss a package and it would take 2 days. Foot Locker promises they'll get to you overnight. It in fact takes 2 days. You're sitting here waiting for your shoes like, where are they? It takes 2 days. Well, guess what? Foot Locker sucks. They can't deliver on their promises. Zappos, on the other hand, said it'll take 5 days to get to you. It comes overnight and you're blown away. But sometimes they'd have the same problem. Sometimes it would take FedEx an extra day to get the package there. Instead of coming in 5 days, now it comes in 2, and it's still like your birthday. Under-promise, over-deliver. The biggest way to improve a business is not by getting better on your deliverables, it's actually by improving your promises. Setting promises that are on the outer side of reason and then beating those promises. Most people over-promise. We want to promise the world to our customers. Of course we'll get your, your Your product's ready, they'll be ready in 5 minutes, and then when they show up it's not ready, you set your client up for huge disappointment. Promise an outer side of reason. Now you are gonna experience the tinge, and what I call the tinge is when you tell a customer, you know, it'll take us 5 hours to prepare this or 10 hours to prepare this, and your competitors are saying we'll get it done in 2 hours, your customer will say, well, hold on, everyone else says 2 hours, you say 10, that's horrible. You have to have a reasonable explanation for it, saying, well, we want to make sure we do it properly. We want to have our metanologist review it. That's a horrible name. We want someone to review your order, but if it's an inconvenience, please tell us and we'll expedite it immediately for you. That's how you address the tinge. Then here's the magic. You prepare the order just as you did as quickly as possible, but now an hour later you call the customer and say, hey, we have wonderful news. We say we get it done in 10 hours, we're able to expedite, it's been reviewed, it's perfect, it's ready to go, we're ready early for you. And your customers will be blown away. Your competitors are overpromising and underdelivering and losing customer loyalty. Don't do your work better, simply adjust your promise and you'll be perceived to be radically better. Zappos grew to a billion dollars and has loyal customers. Foot Locker collapsed and doesn't have an online business anymore. I mean, who bought from Foot Locker's online recently? That's what I thought, nobody. Under-promise, over-deliver. There's another technique you can use, it's called exclusivity and scarcity. I wanna tell you how these works, it's a huge motivator for people to buy from you. And airlines are masterful at doing this. Last year, I fly— anyone else fly United? I fly United. Yeah. So me too. I got you. I fly United, but this time I got bumped to a different airline because the United flight was canceled. Surprise, surprise. I show up to this other airline and I found there is two ways to move humanity in mass. Literally, we can get everyone to leave this room very quickly if someone announces that there's a fire going on. Oh, we'll move. But I found there's a second way to move people very quickly, and it's simply this: make an announcement you're gonna board an airplane in 5 minutes, and people will jump up and run to the gate. So this airline says— the flight attendant comes on and says, we'd like to announce that we'll be boarding the airline in— the airplane in 5 minutes. Please locate your luggage. People jump up, they run to the gate. There's this wall of humanity blocking the entrance. There's no way on this plane now unless you can pierce this veil of human flesh. Until they make the next announcement. Flight attendant comes on and says, "We'd like to welcome on anyone that needs extra time boarding or has children under the age of 3." And this small crevasse, I guess would be the word, opens up and you know, that woman that was at the elevator, she comes walking, I'm like, what the hell is she doing here? She comes, yeah, and I'm like, she can pummel that thing, I'm yelling. They're like, who is that guy? This other woman walks in with a child who has a full-grown mustache and I'm like, kudos to you, well played, madam. Well played. And then the wall of humanity closes again, and the only way through this is when they make the next announcement. We'd like to welcome on anyone traveling with a platinum card, right? And all the platinum members come in and, oh, you know, they show their card to everybody. Yeah, I'm a platinum member. Yes, look at me. Look at that. Yes, yes. And then the closes down, and then they're like, We'd like to welcome on any gold members. The gold members don't hold their cards as high. It's kind of like half-shelf. It's like, yeah, like alligator claws. Yeah, I'm a gold member, right? Then we'd like to welcome on any bronze, semi-precious metal, plastic material. And then at the very end of this particular boarding, there was one guy left, this yucko, and the flight attendant had to make a scene out of it. The room was about as big as this. There's no one there. It's late at night. It's just me, and they're like, "We'd like to welcome on our general boarding." And that's when I'm like, "Yeah, thank you," and I walk on board. Airlines are using a behavioral technique that's hardwired into all of us. It's the power of exclusivity. When something is limited in its availability, it becomes more desirous. People go to extraordinary measures to keep that platinum card. Literally, at the end of this year, the last week of December, it's always fun to go to the airport and just ask people, where are you traveling to? A lot of people travel— like, they leave their airport and they circumnavigate the world to land back in their airport to keep their points up. We go to extraordinary measures to belong to a group. We And the pharmacy industry has the exact same opportunity. You can start a buyer's club. Tell your customers, please keep your receipts. You know, once you do a certain purchasing volume, $500, $1,000, we have a special gift we award to our premium clientele. And watch how people will go an extra mile for you to get that award. It is shocking. Start a buyer's club. Now, there's also a technique called scarcity. I like to call it the shrimp bowl effect. And what this is is that when something is less available, becomes more desirous. You can do it tonight or next time you're at a cocktail party or something like this. Next time you're at a cocktail party, watch for this. You're drinking like your wine, you got like, you know, Merlot going on, you're talking with someone like, "How are the kids?" Yuckity, yuckity, yuck. Don't say those words like yucky, yucky, yuck. That's a very awkward conversation. But then the hostess will bring— or host will bring out the shrimp bowl. Watch people's eyes when this happens. All of a sudden it's like, oh, the kids, they said— oh yeah, it's good seeing you. And then the next move is called the shrimp shuffle. Everyone starts talking with their wine. Yeah, yeah, great, that's one. The kids sound amazing. But not as good as those shrimp over there. Then people go to the shrimp. This is the most amazing part. The first person takes out the shrimp, lathers it up with cocktail sauce, makes a big scene. Oh, this is so delicious. I can't believe how good this is. Next person's like, oh my God, it's started. They grab one. A woman comes, she grabs two at a time. Now this guy, he's like, he's tucking in his knee pits like the perfect shrimp. Shrimp storage point. The consumption explodes. As there's less shrimp, we eat more and faster. Now, no one eats the last little shrimp because if you do, you're a pig. The lesson is this: the less available something is, the more desired it becomes. It's hardwired into us all the way back to the caveman days. The less meat that was out there, the sooner you had to get it. The less berries, the faster you had to move. If you wanna start moving product in your store, if you have a storefront, make it scarce. Say limited, small collection, we have 10 remaining, limited run, and stuff like that. Watch how customers move more quickly to consume. Everyone ever hear of buyer's remorse? You know the term buyer's remorse? Okay, the same 3 people, 'cause it's a fantastic group here. The buyer's remorse, do you know buyer's remorse became irrelevant 25 years ago? We've been elevated to a new level called buyer's defense. Buyer's remorse, so we're all on the same page, was where a customer would make a purchase from you and then regret their decision. Ooh, I could have bought this elsewhere at a better price, that was a mistake, and then they will try to unwind the purchase. They'll try to return the product or the item. They won't do business with you again. That was buyer's remorse. We've now been elevated to buyer's defense. Buyer's defense is where a customer makes a purchase from you and then they are attacked by the people that surround them, their family and their friends, their acquaintances. You bought what? At what pharmacy? You could have just gone on YouTube. You could have made the medicine yourself. "My uncle does stuff like that." You don't need that, I know someone else. Everyone has a better solution that's cheaper because the internet says so. Your customers, my customers are guaranteed to be attacked. There's always a better solution out there and someone else knows it and they attack the consumer. We need to defend them. And I'll share a great story of how a company called Zappos actually did this. I bought a pair of shoes from Zappos called the Vibram FiveFingers shoe. Has anyone ever heard of this shoe? Yeah, okay, oh wow, okay, there's a lot of whack jobs in this section here, great. So I'm one of you. If you don't know what the Vibram FiveFingers shoe is, a normal shoe, like the front of a shoe like here, follows like our hand, The front of a shoe is like this. The Vibram FiveFingers shoe is like this. It's like an African tree frog. Like, you put these things on your feet, you can literally scale walls and stuff. And I think you're getting to know me enough, you're like, this guy's kind of wacky, he's probably into those shoes, which I was when I discovered them. 5 or 6 years ago, I discovered them. Zappos is carrying these shoes, so I order them. But I'm also smart enough to know that if my wife found out about this purchase, she wouldn't be so happy. So I came up with the ultimate plan. I ordered from Zappos on a— I remember it was a Monday morning. I order it and they say, thank you for your purchase, the shoes will arrive by the end of the week on Friday. I'm like, this is perfect. So I schedule my plan for Friday. My plan is this: I'm gonna tell my wife I'm leaving for work in the morning, I'll pull out of the driveway, start driving down the road, I'll tell my neighbor that expect me Friday morning to pull pull into his garage and park my car. And don't tell my wife about this. And then what I was gonna do is I was gonna hide behind a bush and when the FedEx guy comes, I'm gonna run across, I don't know why I keep skating. I'm gonna run across the yard, grab the package, thank him, and then run back to my neighbors and open this amazing package with these amazing shoes. I ordered it from Zappos. Before I knew about this whole under-promise, over-deliver stuff. And the shoes came early. Actually, they came on a Tuesday. And I'll never forget this. I come back from work on Tuesday. I drive in, park the car, open the door, you know, a little foyer. I call it a foyer. It's so small. It's like a box. I walk into the foyer and to my left side, your right side, is our dining room table, and on there is the package opened. And there's this heat coming out of the kitchen, and no one's cooking. And all of a sudden, around the corner, out of the kitchen, comes Godzilla. "Grrr! What did you do, Michael?" That's my wife, by the way, if you didn't catch on. And for everyone that's married in this room, I am about to divulge a technique that every husband has been trained on. So any of the guys in here, I'm sorry, it's time we come out of this. We've been told a technique. When you get attacked by your wife, there's one defense that you should use. It's called the III defense. And what you just do is you go, "Aye, aye, aye, aye." And I tried it, guys. I tried it. And again, it didn't work. So she's like, "These shoes are ridiculous." And I'm like, "Aye, aye, aye." And she goes, "If you wear those clown shoes in public, we'll get kicked out of this town." And it's like you can't make a scene out of The Matrix. As she's yelling, I'm getting blown back like this. And she's She's just like, "Ahh!" Well, this position is the ultimate reading position I found. As she's yelling, I can see the box behind me and there's a letter right there from Zappos. It had a buyer's defense. Here's what it said. It said, "Dear Mr. Michalowicz." Now I know none of you care about that, but that's my name, caught my attention. Remember the power of names, at least they'll get to get the person's attention. Dear Mr. McCallowitz, we would like to welcome you to the Free Footers Club of America. The Free Footers Club of America. I don't know who these whack jobs are, but if I'm getting divorced over this, I am hanging out with those guys. It's the power of exclusivity, belonging to a small group. That's actually another behavioral technique. Then it went through the buyer's defense. First line said, by wearing these shoes, you can experience barefoot walking in any environment. So as Godzilla here is yelling at me, I'm like, I can experience barefoot walking in any environment. And she's like, that's ridiculous. The next line, that wasn't laughter, that was fear. I still remember that moment. The next line says, your posture will improve. And I hunch all the time. I'm like, my posture will improve. She's like, who cares about that? Just stand straight, you idiot. Next line, next line saved my life and my marriage. Next line said this, by wearing the Five Finger Shoe, you will never experience plantar fasciitis. Now I don't even know what it is. Is it like a venereal disease or something? I have no idea what this is. I'll never experience plantar fasciitis. And she stopped yelling at me. She goes, you'll never experience what? And I'm like, plantar fasciitis. And she goes, it fixes that? I'm like, apparently so. She goes, I have plantar fasciitis, which in short is a foot cramping problem. It's worse than that, but it's a foot problem. It's a hereditary foot problem. She now owns the shoes! And that is the power of buyer's defense. When your customers buy from you, the sale has only started. They will get attacked, it's guaranteed people have a better solution— their friends or family have a better solution. Every time they buy from you, they should be receiving a letter along with it that is bullet-pointed and easy for them to defend themselves by buying at our pharmacy. I don't know if you're aware of this guarantee, this promise, this benefit, blah-blah-blah-blah. Bah bah bah. Then when they're attacked, they can refer to this letter and they can start defending themselves from the attack and perhaps even conveying or converting customers over to you. Buyer's defense. I'll give you another quick one. Does anyone know that Black Friday, the day after Thanksgiving, the biggest shopping day in the US, do you know that's manufactured? Like that day is a manufactured event. It didn't just happen. Do you know that happened about 23, 24 years ago now with the first Black Friday? Before that, there's always had been sales and discounts going on, but consumers weren't coming to the stores. So the major retailers at the time, Nordstrom's, Kmart, some others, Sears, got together and said, this is— we have the biggest opportunity and we're missing it. Now, you understand the significance of Thanksgiving. Thanksgiving and the day after Thanksgiving, Friday, you have people that are off from work. Basically, no one works on the day after, except for you guys. Okay, so that kind of hurt, I apologize. The rest of us don't work on that day. Don't worry, you'll benefit from this. So most consumers are sitting home, and then these stores say, and you know, not only are they sitting home on a Friday, they have no religious obligations. It's one of the major holidays that there's no religious association. And they go, and there's something even better. On Thursday, the day before Friday, they've been home with their family the entire day. By Friday, they want to get the hell out of there. This is great. What do we do? They used a technique called social proof, and this is what they did. On Friday, 23 years ago, they hired actors. We'll say it was at the local Kmart, but all the stores did this. Kmart hired 500 actors and said, please come to our store at 5 o'clock in the morning holding signs up, we wanna get in, pushing the doors, chanting about the discounts and pushing that you wanna get in. Actors. Then what did they do? They called the camera crews and said, we've got 500 people here trying to get in our store. It must be our discounts. You gotta check this out. News crew. The news came, turned it on, televisions went on in our homes. You're sitting there, you know, with your tryptophan situation and your, your pumpkin bread or whatever, and you're like, oh my god, what's going on at the local Kmart? Why is it all these people? I gotta get down there! I'm with my family, I better go right now! And we went running down there. It is hardwired into humanity to replicate the behavior of others. We are constantly observing how others are behaving and before we do the same. And when someone else does it, we copy it. Did you ever give a standing ovation? Sure you have. I suspect you weren't the first person to start it. Someone else did. Why? Because if you've ever gone to like a play or show where there's a standing ovation, you know, one person will stand up and start applauding. The people next to them say, oh, I guess I should be standing too. It's inappropriate. I should stand up. And they stand up. More people stand up. And then all of a sudden everyone's standing up. Breaks out like a wave. Chances are you didn't start it, but you joined the wave. Now, do you know those people that give the standing ovation are called salts? They are actually hired actors. We talk about the bottom of the acting pit. We're gonna put you in the audience to give a standing ovation. Here's $5. Like, that's their job. But seriously, that's their job. They're told to laugh the loudest at the funny jokes. They're told to stand up and give a standing ovation because they know that the people around them will replicate the behavior. You can use social proof in your business too, and you don't need to hire 500 actors. You can get by with 499. You can do it through a really simple method, particularly if you have a website, through testimonials. But let me tell you, most people use testimonials in the wrong way. They put it on their one page on their website. And they have a list of testimonials, but that's not where customers are going. You need to put the social proof next to the points of danger. Now think about the caveman. When the caveman, they threw the spears and weapons and they killed that saber-toothed tiger, they didn't all run up and say, "Okay, let's start eating this thing." They wanted to make sure it was dead. So they said, "Hey, anyone willing to poke the beast?" And one guy's like, "Oh, I guess I'll do it." Right, and he kind of walks over. He got a weird walk anyway. Pokes the tiger, and if it wasn't dead and it killed him, they're like, "He was a jerk anyway." But if he pokes the beast and it's dead, then they all come running and they gather the meat. They watched his behavior and the response first for safety. What's the point of danger on your website? It's not the page, it's the phone number you have listed. Call us 24 hours a day, here's the phone number. Right there should be the testimonial of a customer who said, 'Never worked this pharmacy before. I call this number, the best service, the most caring people, and that medicineologist is amazing.' Right? If you have a contact form, right next to that contact form and in your store, when you have a customer, give them a card and saying, 'Thank you for your business. If you have a friend that would like to come here, we want to give you this card to get a discount for you and them when you do an introduction.' That's the ultimate in social proof, when an existing customer goes to one of their friends and says, "Hey, this pharmacy's amazing, and by the way, we both get 10% off, uh-huh." You'll spread like wildfire. One final technique. You know, people ask me, "Mike, what's the most viral method in the world?" You know, there's always talk about virility, like, not virility, that's totally the wrong word, but there is a lot of talk about that with this free sex going on here. About viralnesses, I guess it's called. There's a lot of talk about that on the web. How do you make things go viral? Well, you can make anything go viral, and it's real simple. You use a secret. There's nothing more viral than secrets because everyone wants to talk about it. Played out on the national stage maybe 7, 8 years ago. There was two major celebrities right around Thanksgiving, right around Thanksgiving, there was two major celebrities 2 men that had marital affairs, and one of them exploded onto the news and the other one fizzled out. Does anyone know who one of the people was, by chance? What? Tiger Woods, yeah, Tiger, everyone knows Tiger Woods. Exactly, Tiger Woods, Tiger Woods. Does anyone know who the other person was that got busted? Yeah, you know, I've shared this little story thousands of people, no one can think of the other person. I'll give you some hints. This other celebrity is more famous than Tiger Woods, has been on far more television, is globally recognized. David Letterman. Everyone remember David Letterman? Remember that affair he had? Now the question is, why do some people remember Tiger Woods and no one remembers David Letterman? Because of the power of secrecy. When— remember the Tiger Woods situation? News breaks, Thanksgiving's approaching, it comes on, it's like, Tiger Woods, truck bashed into tree, golf club through window. We're like, oh my God, what's going on? He comes on the news, he's like, me and my wife, we were throwing golf clubs at each other. Everyone does that. And we're like, ooh, there's a secret. And then he's like, oh, okay, okay, okay. We're having a little bit of a fight because, you know, I was dating around. With a prostitute, or 15, somewhere in that range. Tiger Woods attempted to keep it a secret, and that makes things go viral. It invokes curiosity, and I won't even go into the scientific reasoning behind it, but explodes in curiosity. David Letterman, totally different story. David Letterman gets busted for having an affair. He goes on television, The same night and on his own television show says, "I had an affair and here's all the dirty details of exactly what happened." And us as an audience, we're like, "Oh God, like if I, whoa, oh." And we turned off the show. He put everything out there. Everything just destroys the viral-ness and secrets make things go viral. Employ secrets in your business. I'll give one last final story about how I did this with a jewelry store. Now, a jewelry store engaged our firm. They wanted to get some additional exposure. I am legally contracted not to share their name. In the contract, literally says I can only share one letter, the first letter from this company. Let me just say, every kiss begins with this letter. That's legal. I can say that. That's legal. So this company calls and says, we're experiencing a decline, as the recession was kicking in, We're experiencing a decline in consumption. The average wedding or engagement ring was a full carat. It's now dropped to a 3/4 carat. We need to get back up to a carat to get our margins again. And here's what we did. We went to one beta store, one test store, and when usually a man was buying the ring, after he bought a ring, he would have to get it appraised at a third party to get the insurance for it. We would upgrade that typical 3/4 carat ring to a full carat. He would go get it appraised. He would come back the next day and say, "Um, I guess it's a good news, bad news situation. I got the ring, thank you. My appraiser told me it's a full carat. I think there was a mistake." And then what we do is this. The store owner would come out, or the manager, would come out and say, "That was not a mistake. We are so excited about your celebration that we wanted to celebrate with you. That's a gift from us. We just have one favor because we do this occasionally for some of our customers. We ask that you tell no one about this. And guess what store instantly became the most popular store in the tri-state area where we were doing this? This store, because the word spread like wildfire. Now you don't have to do that as your secret. You don't have to give things away. FedEx does it. You ever see the FedEx logos? Anyone know the secret thing in the FedEx logo? Okay, so the people that know, the people that don't know right now are really curious about it. You can tell them later. They employ— yeah, everyone's like, "What is it?" That's the power of secrecy. Employ small, even insignificant secrets like that in your business and the word will get out. People will talk about it. Go to your best customers, that exclusive group you started that are buying the most from you and saying, "Hey, thanks for coming to our pharmacy and being so 'cause you're so loyal, we wanted to tell you about something. There's one little secret going on. It's a fun little thing. We just wanna tell you 'cause you're such a loyal customer. Just, you know, let's keep it between you and I. And they will tell everyone about it. Your business will be the talk of the town. The concept of being better. You know, I talk to so many businesses and everyone says, I wanna be better than the competition, I'm aspiring to be better. Better's nice. It gets you in the ballpark, but that's about it. If you want to hit home runs in business, It's about being different. Thanks, guys, and have a good night. Enjoy your dinner. Thank you very much. Thank you. Thank you. Thank you. Thank you. That's very kind. Thank you.