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The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

Apr 3, 2020

I am very excited to introduce you to Dr. Sudy Majd, a behavioral scientist applying concepts from behavioral economics in business. Sudy has always been interested in how people behave. Right out of college, she worked for a consulting firm that enabled her to travel all over the world to study consumer behavior. She then got a PhD in Psychology at Columbia where she focused on consumer decision making. She is now a consultant and on the advisory board of startup Candid™.

In today’s episode, we talk about a couple of specific projects she did on behalf of Candid™, a company that helps people straighten their teeth with clear aligners without ever having to go into an office. Sudy has been bringing behavioral science out of the lab and academia, and testing things within a real business. She shares how applying behavioral economics principles in a real business setting had unexpected results, and she discovered that the business questions were more complex than she realized.

This is that concept of “finding the right answer to the wrong question” you hear me talk about on the show often, and the value of “questionstorming” – which I teach to many of my clients and with the group of members in the BE Thoughtful Revolution


Show Notes:

  • [02:23] Dr. Sudy Majd has been interested in how people behave for most of her career. Right out of college, She worked for a consulting firm that enabled her to travel all over the world and observe how people behave to make recommendations to increase sales.
  • [03:03] She then got a PhD in Psychology at Columbia where she focused on consumer decision making.
  • [03:16] This gave her insight into why people make decisions and how to influence those decisions.
  • [03:27] She then started working at tech startup Candid™. She also works with other clients to help incorporate behavioral science into their businesses.
  • [04:08] Sudy shares a story of how consumer behavior ended up being different than she expected it to be.
  • [05:02] Many Candid™ customers didn't return their kits with impressions and photos, so that wouldn't result in a sale.
  • [05:43] They added cards that incorporated behavioral science into the copy, and the return rate became worse (hindsight helps, I offer up a reason it may not have been successful).
  • [07:45] Humans have a lot of conflicting things going on in their lives, one card wasn't enough to push them over the edge.
  • [09:21] They decided to identify psychological traits of customers who were and weren't returning their kits.
  • [10:52] They implemented feedback loops with penalties or rewards. This was a different way of framing the message with loss aversion and incentives. This also included nudging, time discounting, and herding (links to past episodes below). 
  • [12:05] The penalty framing worked the best. These customers converted worse but were cheaper to acquire.
  • [14:19] Marketing is to get people interested enough to take the next step.
  • [16:30] They always incorporated customer feedback to figure out why something was happening.
  • [18:17] Have the user see themselves in your brand and use their language to describe the product.
  • [21:18] Sudy thinks the future of behavioral science is testing it in actual businesses. She loves discovering how the physical design of retail spaces influence how people behave.
  • [22:41] She would also like to incorporate behavioral science theories into big data applications.
  • [26:25] Having something that doesn't work teaches you as much as something that does work.
  • [29:17] Testing is key to the growth and success of any business. Keep trying and improving.

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