December 4, 2020

The largest single lottery pool in United States history was a Powerball jackpot of $1.586 billion in January 2016. Three winners, in California, Tennessee, and Florida, each had the option of receiving a $533 million pretax annuity or a lump-sum payment of $327.8 million.

The odds of picking the correct six numbers in such a lottery are 1 in 300 million. Expressed another way, the chances of success in this game are 0.00000033%. Essentially zero.

Any logical analysis of this purchase would deem these lottery ticket to be essentially worthless. So why would anyone spend $2 to receive a worthless piece of paper? Moreover, why would they stand in long lines, like thousands did in the days leading up to the drawing, to buy a ticket which essentially has no monetary value? What drives the purchases of these tickets?

Hopes and dreams, for one. The dream might be to pay off the mortgage, or student loans, or both. Maybe they want to buy a house for Mom, or something more extravagant like a vacation home in Spain. Maybe it’s an around-the-world cruise. Whatever the motivation, visualizing the realization of that dream is something lottery ticket buyers receive.

Buyers are also motivated by identification: ‘Everyone else is buying, so I ought to give it a shot.’

Another motivation is the fear of missing out. It’s the ‘I can’t win if I don’t play’ thinking.

Here in the State of Georgia, lottery proceeds fund scholarships to in-state colleges. Some buyers, while accepting the extremely long odds, justify their purchase as a contribution to education.

What’s the common thread in these different motivations?

They are all intangible.

Clients buy for intangible reasons which have nothing to do with the features and benefits of the product or service, or what you think might be logical. This principle is true for all customers and everything they buy.

Yes, everything.

If you’re a professional services provider, you might think it’s different for you. You’d be wrong.

I had a client who picked a CPA because in the initial interview he used the word “ain’t.” My client’s reasoning was that “any man who says ‘ain’t’ is a man I know I can talk to.” (You can read the full story here.)

This reasoning (which made sense to me, by the way) had nothing to do with the quality of the services provided, the size of the firm, or the designations, education, or certifications of the professionals involved. My client’s decision didn’t take into account all the features and benefits this firm proudly displays on their website as reasons someone would want to do business with them. I doubt that he ever looked at the website.

Your clients aren’t any different. They are motivated by their own mix of intangibles, many of which have nothing to do with your features and benefits. They will buy from you based on reasons you think might be crazy, meaningless, silly, or irrational. They will also turn down your pitch or even fire you based on reasoning you think is illogical.

They will buy worthless pieces of paper for two bucks, and find value there when they do.

The extent to which you understand and internalize this fundamental aspect of human behavior will drive your ability to market, effectively price your services, and serve your clients.

 

Image Credit:  JumpStory

©Ray Business Advisors, LLC and John Ray

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About me:  I’m enthusiastic about how changes in pricing strategy can significantly change profitability for a business and enhance life choices for business owners. I live this passion through Ray Business Advisors, my outside CFO and business advisory practice, in which my pricing is exclusively value-based, not hourly. I work with business owners on how they can change their pricing not just to increase their profits, but better serve the wants of their customers. Click here to learn more or call me at 404-287-2627.