Brand and Butter

Emotional Traps and Smart Shifts in Business Strategy

• Tara Ladd • Episode 47

Share episode

Have you ever found yourself clinging to a failing project just because you've invested so much time and effort into it? This episode explores the psychological trap known as the sunk cost fallacy and discusses the importance of recognising when to pivot toward more strategic decisions. We'll also look at how external factors over the past few years have reshaped consumer behaviour and investment strategies, making decision-making in business more complex than ever before.

Download our FREE Brand Action Plan here
Get on The Laboratory Waitlist here 

Send us a text

Visit https://youroneandonly.com.au/
Follow YO&O on IG https://www.instagram.com/youroneandonly_au/
Follow Tara on IG https://www.instagram.com/iamtaraladd/
Connect with Tara on https://www.linkedin.com/in/tarajoyladd/
Sign up for the Design Mind Theory Email – See how other Brands use psychology to nail their strategies.

Speaker 1:

you're listening to Brandon butter a straight-talking occasionally in your face. No BS branding podcast for modern marketers and business owners. Here for those who want to understand the influence and power of branding and how pairing associations, consumer behavior and design thinking can impact what people say, think and feel. I'm your host, tara Ladd, the sometimes funny, sometimes vulnerable and often unapologetically blunt founder and creative director of brand and design agency. You're One and Only.

Speaker 1:

Have you ever heard of the bias, the sunk cost fallacy? Now, I ask you this because it plays a big role in how we make decisions, especially when there is emotion involved. But it's also about time spent on something and us giving more to it due to that time spent on it. To give you an example, if you are working on a project and you've spent a lot of time on it, but it's going nowhere, you will continue to invest time and energy to complete that project because you've already spent a lot of time on it. Another great example is if you're reading a book that you don't really like or you're not really sure where it's going, and you get halfway through the book and it's still not that great, but you have already invested time reading half the book and so you continue to read the rest. That's the sunk cost fallacy at play, and a lot of business owners and people in leadership fall victim to this. So an example would be a business owner that has invested a lot of time and a lot of money into a specific project or a product or something that they would hope to deliver, something that hasn't yet, and they will continue to pursue that because they've already invested time into it when the logical decision should be that. When the logical decision should be that maybe you just cut it loose and try something else.

Speaker 1:

What I see and I have fallen victim to this myself. In fact, when I was studying behavioral insights at the beginning of the year, which is all on behavioral economics and the way we make decisions, I did my final essay and I had to include three core decision making theories and values. That has implemented my decision making process, and I did the sunk cost or I chose the sunk cost fallacy as one of those decisions, and so what I used it for in my instance was when I was holding on to my physical studio the design studio because when I first started your one and only back in 2017, pre-everything one of my core goals was to have a physical space. To me that was some kind of achievement. It was a box ticker. It was, if we look into the I guess, the ego part of it. It was to showcase that I was worth something. It was like an internal validator. Except last year, when I really looked at where the business was and how it was going, the cost was not outweighing the benefit, and when I was looking at where I could invest that money, the studio was. Well, in most cases it was just a waste of money because it wasn't actually generating anything. It was more of an ego thing, something that made me feel good about it.

Speaker 1:

And the world has changed so much in the five years that I'd had it that I actually had to take a hard look at why I was holding onto that and so I let it go. And I've been working from home for six months now and absolutely nothing has changed. So it was a decision that I should have made a lot earlier, but I didn't because there was an emotional attachment to it. And so I see, with business, especially those that are in roles that are in charge of decisions and strategies and where things are going owners, ceos, managers, all of those places. Sometimes they can invest time and energy into things that should change, and so what I'm seeing at the moment is a lot of business owners specifically especially when it's tied to emotion are sticking to things that they've already done because they've already invested so much time and energy, when the outcome to this is almost something quite simple to change.

Speaker 1:

But the decision is harder to make because there is an emotional attachment to it, and so, just like any decision that we make, regardless of what people think, there is always an emotion involved. Sometimes that requires minimal emotional output and sometimes it's a lot, and when there's emotion involved, obviously there are feelings, and so the decision isn't easy to make. What we've seen over the past five years has been a lot of external things happen that have impacted how we plan, how we strategize, how we work and collaborate, and also the externals have impacted people's alignments, their values and where they choose to invest. So it's shaken up consumer behavior a lot, and so what comes hand in hand with that is how we then choose to invest our money to future-proof our brand and where we feel that money is most deserving, and it can be really hard to see that when you're sitting in the literal seat that has been overshadowed by a lot of emotion. And now these emotions can differ for different people. For instance, if you're someone that doesn't own the business but you're in a leadership position that makes decisions, then those decisions would impact your reputation and your ego, and a lot of that is, is, or sometimes it could even make you feel as though, well, it validates you, and that happens across the board. That can happen for business owners as well. However, sometimes you find that it may be easier for you to make decisions in some areas because the money of the business may not necessarily be tied to you, so you can make those financial decisions a lot easier.

Speaker 1:

As business owners, it can be hard to make financial decisions when you know that that can cut into you know your own output of the business in terms of financials, and so we can be very cautious on where we spend money. And so then brings in the conversation of risk and uncertainty. A lot of people are willing to take a risk if they are aware of the outcome. However, if there is uncertainty, people won't take that risk, and they're two very different things, although they're obviously wrapped up as the same thing in most cases, but it's not. Uncertainty is confusion. There's no clarity, there's lack of direction, whereas risk you're taking a punt on something Now. That doesn't necessarily mean that you don't know what the outcome would be. There's still uncertainty involved in that. However, you may have more of a valued perspective on that decision at hand. So if someone has educated you on something and you're now aware of that circumstance, you may be willing to take a risk on something because you know what the benefits and negatives are of that decision.

Speaker 1:

However, if you know nothing, it's really hard to make an informed decision because you don't have the right things in front of you to make a calculated choice, and so what comes with that is overwhelm and anxiety and pressure and all of these things that are involved in making us feel impostery or not validated or sometimes worthless. And those words may not even mean anything to you. That may not be it at all, but they're a lot of the things that I'm seeing at the moment, and I know because 18 months ago now, I was sitting in my business looking at how amazing I had built this unit and all of a sudden, it took a major turn because of a few decisions or lack of decisions, I should say, and it was in a completely different spot. Now that doesn't invalidate my experience as what I know in my career, but it went hand in hand because all of a sudden you saw X equals Y when there are so many nuanced things involved in that, many nuanced things involved in that. And so what I'm trying to educate people on at the moment in terms of brand is the awareness of what brand now is, and it's been evolving for a really long time now, where it used to just be marketing, and then you'll have people go well, if you can sell your product like, brand will come secondary. It's actually. It's kind of like where does it sit on the scale of one to 10? No one's going to buy from your brand, regardless of what the product is, if it feels wrong. So you may see something pop up on your Facebook account and it could be a product that looks interesting. But then you start to dig a little bit deeper into that brand and you're like, oh, the reviews aren't great or oh, they don't really have a reputation or their website looks a bit funny. And then that's when brand comes in, because you may actually be attracted to that product pre-knowing the brand.

Speaker 1:

But if you then do, and in most cases, when people are letting their money go, it's not very often that people will just invest in something that they know nothing about. They usually will go to the effort to do the research, to find out a little bit more, and then their opinions will change. And so then comes setting the perception. What perception do you have? Setting the perception? What perception do you have? What are you? What narratives are you leading? What are people saying about you? What are the biases at play? What are the unconscious biases at play?

Speaker 1:

So, for instance, you may think you're doing a great job, but you've branded your business in a way where the messaging or the visuals are misaligned, or what you're saying and what you're doing aren't connecting. And this is the biggest problem. It's not that people have failed brands, it's that there are areas of it that need improvement, and there could be one thing that's stopping the other five amazing things from going to that next level, and it's the lack of understanding of knowing how to get there. So one thing that I'm really adamant on doing at the moment is diving into that aspect of behavioral science in the mind of why people choose and why we decide to do things because it's so deeply aligned to emotion and you'll see this if you dive into brand it is always it's like you're selling a feeling and we don't buy. You know, we buy a holiday not because we're going on a holiday, it's because you spend time with your family or you get to have a break, like you're. You're selling that time, you're selling luxury, you're selling freedom, and whatever that person is buying a holiday for that's what you sell Is the person stressed out, take time away so you can recharge, like that is a message that is common at the moment, because a lot of people are stressed or spend time with your family. You know, make memories. Like it's.

Speaker 1:

It's understanding what those key drivers are in the audience and then using those key drivers as the messaging to service the product that you're selling. And so many people miss this. We're biased in what we sell. We're biased in what we know, and a lot of the times sometimes being biased also is a disadvantage, because we may know how amazing the product is that we offer, but sometimes that lives in our head and we haven't actually articulated it in a way where other people understand how amazing that product or service is, and so it's up to us as business owners, leaders, marketers, anyone that's in charge of pushing and driving the sale and the marketing and the reputation of what you do, to make a bottom line to the people and in a way that they understand and want to buy it. And so then you need to understand the complexities of psychographics, because if you don't know why someone is buying said product, then all you're doing is selling the features of it instead of the benefits, and it's important to highlight both the benefits and the features. However, it's the benefit of this product that will either save them time, make them money or save them energy.

Speaker 1:

That's the pains. There's obviously the benefits, being like ego and happiness, and they're two very different strategies. If you're speaking to a pain, you need to speak deeply about the pain and how your product or your service alleviates that pain. And if you're speaking to a pleasure, which is how does this enhance their life, the whole terminology changes and the way you would deliver that changes, because you're now speaking to someone that maybe doesn't need it, but this can add value, whereas the other one you're in terms of pain, you're looking at how does this move me away from where I am now? And when we're talking to pain points you're looking at, how can one pain outweigh another pain? And that's the only way that someone will move from where they are. Is that when where they're sitting is so uncomfortable that they need to do something to change? And so what we're seeing with business owners at the moment is they're not getting to where they need to be, and it's usually because there may be one or two reasons why.

Speaker 1:

And what I've assessed is the deeper understanding of where we're at in the market, what the consumer spend is at the moment, how the economy is, how people are feeling within that environment and what external factors are driving the behaviors of consumer spend. And it's so important to actually be really aware of the market when you're a business owner or someone in leadership managing the role of delivering a product and being just cautious of the conversations that are going on, the feelings that are happening and, if you look at it, I guess in terms of what changed during the COVID messaging. So when all of a sudden, something really doomy and gloomy came about, all of the messaging that went out wasn't really about sales. It was all about we're in this together, we are a unit, we can get through this. It was about conquering something that was fearful and it wasn't about hey, let's go on a holiday. It would have been tone deaf to do something like that.

Speaker 1:

So when we're looking in the market at the moment, there is a reason why people need to empathy gap. What is the empathy gap? So if you're not experiencing the situation that is happening, it's hard for you to empathize with those that you're selling the product to, that the product may be targeting, to that the product may be targeting. So you need to speak to people and you need to research and you need to understand their point of view so that you can actually align how the product or the service will elevate said pain. The same thing is for the pleasure. What is it that they're really looking for? Because when people talk to you about this stuff, they will highlight words, they will highlight feelings that will be specific to them and sometimes, if you're not in that, you can't understand that. This is why diversity and inclusion is important, because you get different perspectives, which highlights different problems and different solutions, and I guess when you're aware of what the problems are, you can then solve the problem like solve that problem.

Speaker 1:

You have a list of ways to do that it's crossing the bridge. I call it crossing the bridge. You're on one side of the bridge. You need to know how to get to the other side of the bridge, but you don't know how. So each question, each learning and each thing that you implement is one extra step to getting across that bridge. That people are looking for a way just to fly over the top of it. Instead, look at it as though if I just do these one, two, three things, what's changed since that? And it's like test and assess, try, test measures. What I say is put something out, see how it goes. What's the feedback? Did it work? Why Does that piece of content then become nonchalant? No, absolutely not, or useless? I should say it doesn't.

Speaker 1:

It may be that the hook was wrong. It may be that the message was wrong, which is the same thing, but it may be that the visuals were wrong or that you have got the framing wrong. For instance, is it 10% fat or 90% fat free? It's the same claim, just reframed. This is something that we dive into a lot with the brand lab and actually the brain lab. We've just gone through talks about this a lot, but we will be talking about how to set perception and alignments when we bring that out in mid-September.

Speaker 1:

But for now, what I actually have available is a free checklist, essentially called the brand action plan, which highlights all of the elements that are involved in brand strategy, and you may have nine out of 10 of these done. It's actually like a 26 page document so you can go and have a look, but it just kind of may bring to attention something that you're missing. And when you plug that in, it's like you know, oh, that one fairy light at Christmas time and one bulbs out. You just put that, plug that in. It's like you know, oh, that one fairy light at Christmas time and one bulb's out. You just put that in and boom, it all starts working. It's kind of how it works, and so I'll put those links in the show notes for you to have a look at, because I think that this is something that a lot of business owners need right now and a lot of people in leadership, to understand the connection of brand psychology and how connecting with consumers is so much deeper than a product or a service. And yeah, I'm actually really proud of it.

Speaker 1:

But for now, I think that that's a nice little in-depth touch on behavior, especially in the way that we can make decisions or be blinded by certain things that we're not doing because of emotion, and obviously this is something I'm so passionate about. So I dive into this ongoing. The website, our blog, has a lot of these conversations. You can go and read as well, but for now, you know where to find me slip into our dms and have a chat, and I will chat to you next week. Did you like that episode? I hope so, because if you did, why don't you head over to whatever platform you listen on and rate and review? It's much appreciated and helps others know what we're about. If you want to follow us, you can find us at your one and only underscore au on Instagram.

People on this episode

Head Shot

Tara Ladd

Host