Episode BAM013: “Perception vs Reality”

By Posted in - Podcasts on January 9th, 2017 0 Comments

Brick and Motor Podcast, Episode BAM013




Show Notes

Perception vs reality. The way we think and don’t think.

What’s interesting about reality is that it’s how we perceive it to be.

If I believe an investment is a good one, then for that moment in time that I make the investment, to me, it’s a good one.

Our minds fool us on a regular basis. Daniel kanaman developed an idea that our brains think in two different ways. Fast and slow. Or system 1 and system 2.

When we talk about value in anything, we are talking about the way we perceive that value. If I believe a cup of coffee is worth 50 cents or $5.  That’s my perception of value.

I like the headline to an article that was published in the U.K.  Where they interviewed a Scottish guy about his feelings on global warming and the rising level of the ocean. He said ” in Scotland we have mixed feelings about global warming, because, we will get to sit on the mountains and watch the English drown. ” if you’re not aware , Scotts and brits don’t like each other much.

The same goes in regard to saving to a capitalist.  He views saving as unnecessarily delayed consumerism. You and I see it as building for the future.

Take for instance what a college did to try and get their students to stop wasting printer paper and ink in the printing lab. They noticed they had a major problem with students discarding massive amounts of papers that were errors in printing. So they decided to nudge the students with a perspective based request.  They posted a sign that said ” the cost to operate this printer each month is equivalent to : -4000 Taco Bell Tacos. Or 1,084 gallons of gas , or 42 tickets to Disney world. Please think before you ink. “

So that was a good idea right? It helped people put into perspective that their one or two sheets they wasted contributed to a bigger problem and they don’t want to be part of the problem right? The staff probably thought this was a great nudge to get the students to help the college manage costs. The problem was it was told from the wrong perspective. They were painting a picture from their own perspective. Not the students. One of the students decided to inform the staff of this by printing their own perspective nudge for the staff. His sign read ” a student wants you to know: with my tuition I could pay for 41,460 taco bell tacos, 10,365 gallons of gas , or 465 tickets to Disney world   

With this , times 5200 students, I should be able to print whatever the hell I want.”

Sometimes things intended to bring awareness and solve a problem, end up functioning differently in the practical application of the the thing.

So I think about our payment systems. Automatic withdraw and debiting was a good solution to buy here pay here. But what if we employed some things we didn’t have to do like sending a bill for their car note. Text reminders that the car note is due. Placing a smiley face on their receipt to give them a sense of accomplishment when it’s paid instead of treating them like a criminal that has saved themselves from the firery wrath of the warden by making their payment. I think if we are a little creative, we’ll come up with things that matter to the perspective of our clients.

We want higher rates of participation so, do things that separate you from the rest of the lenders or sellers of your product.

Include a minimal warranty with your product. The perceptual bang for the buck is tremendous. You might say , “well why would I do that? My customers aren’t asking me for them. I sell plenty without it.  I don’t need it. Besides, if my customer wanted it, they’d ask for it. ” this is what I’d say to that. You may be right. Maybe you don’t need it to keep doing the volume you’re currently doing. Maybe everyone will be just fine without it. And I’m not making a case for warranties. What I’m saying applies to unicorn keychains.  If that’s what perceptually helps your customer experience your product better and retain good clients for you than give them unicorn keychains. So you say you don’t need it. But consider this. Malcom gladwell in his book “blink”  references a man by the name of Howard moskawidz. Howard is an interesting guy. He’s the one I mention in the coke vs Pepsi episode. He’s actually most famous for reinventing spegetti sauce. And cambels soup came to him and cambels makes prego . And cambels said they wanted to improve prego next to ragu. Ragu at the time was the dominate spegetti sauce of the 70’s and 80’s. in the industry there were only one type of spegetti sauce and prego was better. It adhered to the pasta better, the tomato paste was better , all the way around a better sauce. So despite their superior nature, prego was struggling. So they came to Howard and said Howard we want to make the perfect spaghetti sauce. And of course Howard says there is not perfect spegetti sauce,only spegetti sauces. Howard didn’t believe based on his research that people were able to measure perfectly their experience of anything so perceptually they preferred one over the other based on their arbitrary perception.  So he got together with the cambels soup kitchen and he made 45 varieties of spaghetti sauce ranging from thin and watery to thick rich and hardy. Tartness, sweetness, garlic content and every way in between. Then he took all the sauces and went on a trip. He went to New York, Chicago , Jacksonville and Los Angeles   And he brought in truckloads of people into big halls and sat them down for two hours and gave them ten bowls of pasta with a different sauce on each one. After they ate it they had to rate on a scale of 0 to 100 how good the sauce was. Now after doing this for months he had mounds of data and he took it and he analised it. He didn’t look for the winner of the group.  He didn’t believe there was ever just one winner. He wanted to find clusters of opinion. He wanted to see which ones were the winners. After he broke down al the data he realized all Americans fall into one of three groups. Plain, spicy and extra chunky. Of those three groups the third one was the most significant. Because at the time of the research, if you tried to find extra chunky spegetti sauce , it wasn’t available. Now this is significant because while the two companies were fighting for market share 1/3 of their customers were left alone and not being served. 1/3 of their customers were unhappy with both of them. They weren’t being served. Cambels  of course was taken back by this, they looked at howard and said “are you telling us that 1/3 of Americans crave extra chunky sauce and no one is providing it??!” He said “yes.” So cambels began to produce extra chunky sauce and over the next 10 years they made over $600 million dollars off their extra chunky line of spegetti sauce.

What’s even more impressive about this is that it marked the change of the entire industry. That’s why you have 7 different kinds of vinager and 6 different mustards and 37 different salad dressings. He fundamentally changed the way the product producers looked at the consumers. For years the producers thought the way to find out what the people want was to ask them. And for 20-30 years of focus groups being asked what they wanted in a spaghetti sauce, no one ever said extra chunky. Even though 1/3 of them in their hearts secretly did. People don’t know what they want! A critical point to all this is we can’t always explain what we want or what will make us happy. Happy people. happy buyers. Happy payers. Consistent payers.

Now that’s revolutionary and impressive that someone can have that much insight into such a narrow field but I’d argue that maybe we do too. If we will listen to our customers. Pay attention to their personal needs and not write them off as just another sale on the balance sheet this month, then  maybe you will revolutionize your business and improve it for us all.

You have to understand that most people can’t do what you do and sell cars. They aren’t emotionally equipped to do it. They are the 80% that follow. We are the 20% that lead. Don’t approach them or your business with a minimalist mindset. Meaning, the least I can do to get the most out of them. That takes no imagination and it doesn’t inspire anyone to help you grow your business. Imagine if Martin Luther king hadn’t given an  ” I have a dream” speech but instead had given an  ” I have a plan.” Speech. The point is that corporate america and every other dealer in our business does the least. And they all have a plan. And the way I know that you aren’t one of them is the fact that you’re listening to this. You have a high level of desire to grow and develop your self and your business. If your listening and you don’t currently have a business, be encouraged.  Because you’re growing. And one day the guy that appears to have it all together won’t know how to relate to the customers and serve them and that will be your opportunity. He’ll have left the door cracked open for you to enter the business as an owner. All you have to do is find the need and fulfill it. The reason that so many older dealers are struggling in this business with millenials and the ever changing and evolving market is they quit learning. They got comfortable and quit growing. They believe the answer to why they aren’t selling the blue Chevy truck is that they don’t have a red Chevy truck so they go buy it. The inventory isn’t always the answer. The problem isn’t external. It’s internal.

Dealers aren’t completely at fault here. Our environment teaches us to collect to ourselves. We bid against each other at auctions trying to win. And for every winner their has to be a loser. We just try to win more than we lose. We have to fight with repair people to get our costs low so we can still have a profit margin when the cars ready to sell. We have to manage employees and make sure they aren’t stealing from us while we aren’t looking. We have to fight fight fight fight all the time. So it doesn’t leave much room for giving. It doesn’t leave much room or time for viewing something through the other persons eyes.

older dealers get that you have to give to receive. They understand that you’re not going to win every time. They are like prize fighters. They get their jaw jacked and they just spit out a tooth and smile at the guy that just cleaned their clock. They appreciate when they get beat because they know that was a battle. Not the war. they are the ones that last. They are the ones that are successful because they understand , it’s not all about them.

So as you go about your day or your week , as hard as it is, think about the perspective of your customer and think about how you can serve them better.

Because at the end of the day the people are the key to it all.


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