I recently read an article by Seth Godin about there being 2 kinds of marketing
“There’s the kind that no one can possibly like. The popups, popunders, high-pressure, track-your-private-data, scammy, spammy, interruptive, overpriced, overhyped, under-designed selfish nonsense that some people engage in.
And then there’s the kind that inspires us, delights us and brings us something we truly want.
We call them both marketing, but they couldn’t be more different.”
I completely agree with Godin’s assessment, marketers shouldn’t steal time away from or rudely interrupt people using pop ups or make them wait through adverts for the thing you promised them or for the thing they actually came for.
Give them their time back. Help people who want your help, who want what you’re selling. Be where they are looking.
If people land on your site, show your offering, have it close at hand but don’t try to beat them around the head with it. Let them know it’s there. If they are interested they’ll look, if your headline is tempting enough.
But don’t bait them with the promise of interesting content and then withhold it behind your bullshit offer. It’s wrong, your wrong and quite frankly you deserve nothing from them other than their scorn.
Don’t do it because everyone else is doing it either. Marketing has a bad name because marketers have a habit of abusing trust and taking things too far. There will be a backlash at some point, or at least some degree of bad feeling from prospective customers, towards you and your brand. You might enjoy some limited success, in the short term, but your reputation, in the long term, will be compromised and tinged with negativity. Don’t be that kind of marketer.
It’s easy to accuse high profile people of poor decision making, whether they are the government, local council, business leaders, or football managers. Hindsight is a great tool for scrutinising the choices of others, especially when results deviate from intentions.
But hindsight contains the full picture, where the initial decision is made on a best guess basis, relying on past experience as a pointer to future repeatability, and a great deal of hope that luck will work its magic on subsequent variables that could fall for or against a position.
Many critics comment from a position of ignorance, often unaware of the true complexity of a situation, which on the face of it seems obvious, until you dig into the detail sufficiently to actually affect change.
Most people are poor predictors of future outcomes, particularly with regards to their own circumstances. So what makes them experts in things they have less experience dealing with. People are quick to blame others, outside influences and unforeseen events for their own shortcomings when it comes to decision making, but are less willing to extend that courtesy to others.
Next time you feel the need criticise others for making a poor decision, take a pause, and think that maybe, just maybe there is more to it than meets the eye, and realise that maybe subsequent events didn’t fall favourably for the decision maker.
At least they made the decision in the first place, fear of change and uncertainty is often enough to paralyze decision making and subsequent action taking, it’s easier to play safe and do nothing. Give them some credit for trying, by doing so, you give yourself permission to take a chance and make a change through the decisions you make.
If your outcomes are not as predicted, use the power of hindsight to learn lessons about where it went wrong, so that you shorten the odds for unexpected results next time, that’s the best you can really hope for, and so it is for others.
I’m asked quite a lot about the requirements for achieving online success, so have done a walk-through of the considerations for achieving online success, so check it out below.
I haven’t elaborated on each of the points, rather I am just trying to highlight considerations, there are other posts on this site that deal with details.
This site isn’t specifically designed around providing information about running an online business, but I have a number of articles about the subject, based on my research and own experience, which are linked to at the end of this post.
This post is designed for people who want online success, to get results with their online business, but are getting, frustrated, puzzled (why is it not working?), feel like giving up, have run out of ideas.
Let’s assume your goal is to achieve online success.
What’s needed to get there, and what is your target? Make sure you have an end goal in mind, before you begin. You can, by all means, have a number of interim goals, that get increasingly bigger, but by having an end goal you will ensure you are fully in alignment, and not deviating on your journey.
i.e. Making an online income of 10k month
Something to sell
Must first have something to sell that is in-demand by prospective customers, and either…
Monetise via advertising (bring audience to advertisers)
Monetise via sponsorships (bring audience to advertisers)
Get large enough audience/traffic volume to make a living from sales/advertising revenue – bigger volume needed on tighter profit margins.
Produce and use content to pull prospects to sales channel
Allow audience to get to know you
Build trust, likeability
Add value to them
Offer extra help and support
Allow them to see you in action
Advertising online and offline channels
Point all advertising back to content and sales pages
Pay affiliates to drive sales
Influencers with big audience made up of your customer profiles
Get backlinks from other reputable websites
Guest posting on other websites and linking back to your site
Share graphics or unique content with other websites with attribution link back to your site
Optimise website for SEO, using tags, keywords in content text, internal and external links
i.e. Not getting success online
A. Not building volume of traffic to lead pages and then sales pages
to social media pages
B. Not enough engagement/interest in content and then products, no free sharing to help in cost of building volume either
C. No way of monetising or not effectively monetising off back of content
A and B. Is the lack of traffic down to…
#1- Quality of content not engaging and building volume (being shared for free)?
#2- Not effectively marketing well enough?
#1- Producing the Quality Content
Is the subject matter in-demand?
If so, by whom?
Where is the attention of these people?
How can I best reach them?
What are their pains/passions/desires?
What are they having difficulty with?
Where and why are they stuck?
How can I help them get unstuck?
Generating content ideas
Go to forums, online groups, niche thought leaders and see what is being asked, and become part of that community (commenting, asking questions and adding value by giving insight) – Do this for interaction with the community (marketing) and getting content ideas
Check out books in the niche (Amazon) and see what is being written about (table of contents)
Check out magazines and publications within the niche to see what is being written about
Check mainstream media to see what is being written/talked about
Is the content good enough?
Is it attractive? Images, text, video
Is it interesting? – Valuable, useful, well presented – does it benefit the reader?
Am I talented/skilled enough to pull it off (writing skills, video capture/editing skills, speaking skills)
Is the content easily digestible (clear, interesting and valuable)?
Easy to navigate
Links to similar content
Broken into easy to digest paragraphs
Does it cater for different media preferences?
Is it presented from a unique perspective? Not the same as competitors
Are you credible enough?
Proven track record
Past prestigious customers
Testimonials and reviews
Or Documenting my journey – testing “crash test dummy”
What I’ve done up to now and what I’ve learned
Or Collating and commentating on well renown others
Talking about other’s ideas
Testing what other’s suggest
#2- effective marketing of content – look for low acquisition costs (underpriced attention)
Are you using social media effectively (where the prospects attention is focused) to drive traffic to content/sales pages?
Understand the psychology of these channels, the acceptable code of conduct and make sure you don’t break these.
Are there any other marketing channels available to target specific audience that you’re not making use of?
Look at niche specific publications, forums, chat groups, to see if any are being advertised, or discussed.
c. Monetising off back of content
Is there a service or product to sell at the bottom of your sales funnel?
Is the product service valuable (demanded/needed/wanted)?
Sell professional services/products (one to one coaching)
Via ecommerce or drop ship
Via digital media
Are there other methods of monetising available for this niche, that can be lucrative enough?
Not getting results
Online failure points
Failure to get site ranked high in SERP’s
Not enough traffic to website via
Optimise for onsite and offsite SEO
PPC or social media ads
Get to know and understand marketing channels on social media, particularly Facebook, Instagram, Twitter and on Google PPC
Ask for links
Make content usable for other bloggers/content creators
Get content seen on niche specific forums/groups
Get content In front of influencers who will freely promote your stuff or you can pay to do so
Post on – https://www.quora.com/
Get advert clicks on website
Make the offers enticing enough, relevant enough
Blend the ads to look like links to other parts of website (posters) so they click on them by accident
Have enough ads around content area
Convert visitor’s to subscribers or get customer’s on website
Incentivise visitors using content upgrades, free reports, white papers etc
Scarcity – make the offer limited (number/timescale)
Get more customers
Advertise/add value on channels where prospect attention is focused
or where influencers (who can increase your reach) are situated
Having a habit of making bad decisions can severely hamper the quality of your life.
It can be changed by improving your self-awareness and shining a light on what is at the route of why you make your choices.
You may ask yourself “Why did I pick choice X over choice Y?”, by keep asking “why” you can dig deeper, and find the route cause of why you do what you do and don’t do what you don’t do. More about self awareness, here.
There are number of additional things to focus on when looking to improve your decision making…
Don’t be lazy in your decision making, consider your options and weigh them against one another. Remember, doing nothing at all, is an option. Take time out to really think about all the choice open to you.
Bad decisions can also come out of pressured situations. Important irreversible decisions should never be rushed under such circumstances.
Sales people are trained to add scarcity to their offerings in the form of limited volumes of stock or limited time availability, these are designed to encourage impulse, emotionally driven buying decisions. Don’t be fooled by this, better not to buy, than buy and have deep regret later.
Avoid taking decisions when in a strong emotional state. Emotions can severely hamper rational decision making. Psychologically sleeping on decisions is a great strategy for allowing emotions to subside. Come back to the decision later when you can be somewhat more objective.
So, if you find you keep making bad decisions, you owe it to yourself to do something about it.
Don’t be LAZY. Ensure you are taking the time to evaluate all your options
Don’t be PRESSURED into making rash decisions. If a decision is worth taking, make sure you aren’t being rushed into it
Finally, avoid making decisions when in an intense emotional state, good or bad. Rationality and emotions don’t mix well. Take time out and revisit the decision when you feel you can be more objective about it.
For a more in-depth article about Decision Making click here.
Marketing is a subject close to my heart, mainly because it taps deeply into human psychology, and I love trying to figure people out.
The trouble with marketers is they try to game the system all the time, trying to find shortcuts and quick wins, which often means being content with making a quick buck and lacking any kind of long game.
I like marketing when it is used to make people aware of genuine solutions to genuine problems, I like it when it’s used to help people. “The best form of selling is helping.”
Adding value to someones life, and earning something for doing so, means you get to help someone else. That’s the best use of marketing, long term.
So if we are to distil Marketing down to its core, what is it?
Is it the exchange of value? Well “no”, the actual sales transaction is the value exchange, you provide a service or product and the customer pays you for it. Until that happens there is no value exchange.
So what is marketing at its core? How about, the getting and keeping of attention. Sure, good marketing does that, but there’s much more to it then just that, like knowing how to capture attention by targeting the right prospects, and understanding what they want and need. Digging even deeper, we have to understand what prospects will value enough to part with their hard earned money, for. It becomes a rabbit hole of tunnels that are hard to summarise.
So what summary covers a more complete picture about marketing? Well, how about this one. Marketing is all about doing the following…
“Providing the RIGHT OFFER to the RIGHT PERSON, in the RIGHT PLACE at the RIGHT TIME.”
I think that just about covers the necessary basics.
“Providing the RIGHT OFFER, to the RIGHT PERSON” – infers providing something the prospect actually wants or needs and is will to pay for, rather than trying to sell to people that have no interest in purchasing your solution.
“In the RIGHT PLACE at the RIGHT TIME” – infers marketing at a location where your prospects’ attention is going to be, and at a time they will be receptive to listening to you. Much online attention is currently concentrated on social media platforms, particularly for certain demographics, and if that is where your prospect have their attention, you should be there as well.
I would also add a couple of additional points, like giving prospects a reason to TRUST you, to LIKE you and see you as a CREDIBLE provider, but these only come into play once you do the other things RIGHT first and are a big part of your value proposition.
So what do you think. Do you have a better summary that nails what marketing means at its core?
Productivity is one of the most important pillars of getting results, it involves being effective with productive effort, and measures the rate of output per unit of input. To put it another way it’s about getting the most out of your time and effort, by aiming for the most effective use of your resources.
“Focus on being productive instead of busy.” – Tim Ferriss
“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” – Aristotle
“I don’t have time is the grown-up version of the dog ate my homework.”
“If we boost productivity, we can improve economic growth.” – Tony Abbott
“Success is not a miracle, but a product of productivity, positivity and persistent thinking.” – Lawrence Mudau
“A goal without a plan is just a wish.” – Antoine de saint-Exupery
“It’s not about being the best, it’s about being better than you were yesterday.”
“Time you spent thinking about doing something takes away the time you have to actually do it.”
“A smooth sea never made a skilful sailor.”
“The way to get started is to quit talking and begin doing.” – Walt Disney
“Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning and focused effort.” – Paul J. Meyer
“Don’t wait for opportunity. Create it.”
“Nothing will work unless you do.” – John Wooden
“We all have the same number of hours in a day, make them count.”
“The man who makes no mistakes doesn’t usually make anything.” – Edward Phelps
“I like things to happen, and if they don’t happen, I like to make them happen. ”
“Productivity is being able to do things that you were never able to do before.” – Franz Kafka
“There is no substitute for hard work.”
“Nothing makes a person more productive than the last minute.”
“Start by doing what’s necessary, then do what’s possible, and suddenly you are doing the impossible.”
“When things aren’t adding up in your life, start subtracting.” – Anon
“if you wait to be perfect, you’ll never get anything done.”
“Perform the dreaded take now and the unpleasant activity is soon over. Delayed action will nag at you infinitely.”
“The best way to predict the future is to create it.” – Alan Kay
“To improve is to change; to be perfect is to change often.” – Sir Winston Churchill
“The secret to getting ahead…is to get started.”
“Dreams don’t work unless you do.”
“It’s not always that we need to be more, but rather that we need to focus on less.” – Nathan W. Morris
“Time is the scarcest resource and unless it is managed nothing else can be managed.” – Peter Drucker
“Don’t confuse activity with productivity. Many people are simply busy being busy.” – Robin Sharma
Focus is key to success, whether for business purposes, or pursuing your personal goals, focus is going to concentrate your energy on the important things that need doing, rather than wasting time on unnecessary activities. Cut to the chase and get what needs doing, done. Think outcomes rather than activities.
Stop being a paper shuffler and be a get results type of person. Below are a few quotes I use to motivate and focus my mind.
In his book The One Thing: The Surprisingly Simple Truth Behind Extraordinary Results, Gary Keller provides the perfect focusing question:
“What’s the one thing you can do now such by doing it, everything else will be easier or unnecessary.” – The one thing.
I just love this question. It removes any ambiguity and channels your focus onto the single, most important activity you can do to make progress. Ask this each day, and when you’ve done the “one thing”, do the next “one thing”. Difficult to know how you can go wrong with this approach.
“What you do in this moment shapes all your tomorrows” – getresults.org.uk
This is one quote I generated myself when doing some deep thinking about getting results and developing a model for it. Living for this moment, the one we are experiencing right now, which incidentally is all we ever have. What you do in this moment really does shape what comes tomorrow.
“Focus on the one most effective thing in pursuit of your goal.” – getresults.org.uk
This is a variation of the quote above, but is a little more specific with regards to being effective in seeking your goal. Building towards a goal each day adds purpose and we all should have and work towards a goal to give life a sense of direction.
“Do something today that your future self will thank you for.” -unknown
This is another one of my favourite quotes. Another way of looking at this is asking “what do I wish I had done yesterday?”
“The decisions you make and the actions you take shape all your tomorrows.” -getresults.org.uk
“Focus on one thing at a time – multi tasking is an illusion.” – getresults.org.uk
Studies have shown that it is impossible to multi task effectively. Dividing your focus is dividing your effectiveness. Stick to one course of action until successful, as the quote below says.
“FOCUS – Follow One Course Until Successful.”
“Don’t let a mad world tell you that success is anything other than a successful present moment.” – Eckhart Tolle
“There are only two days in the year that nothing can be done. One is called yesterday and the other is called tomorrow, so today is the right day to love, believe, do and mostly live.” – Dalai Lama
“Unease, anxiety, tension, stress, worry – all forms of fear – are caused by too much future, and not enough presence. Guilt, regret, resentment, grievances, sadness, bitterness, and all forms of non-forgiveness are caused by too much past, and not enough presence.” – Eckhart Tolle
“The future is a concept, it doesn’t exist. There is no such thing as tomorrow. There never will be, because time is always now. That’s one of the things we discover when we stop talking to ourselves and stop thinking. We find there is only present, only an eternal now.”
“If you are unable to find the truth right where you are, where else do you expect to find it?”
“Most people treat the present moment as if it were an obstacle that they need to overcome. Since the present moment is life itself, it is an insane way to live.” ― Eckhart Tolle
“Your future is created by what you do today, not tomorrow.”
“The PRESENT MOMENT is the field where the game of life takes place.”
“What the future holds for you depends on your state of consciousness now.” ― Eckhart Tolle
“Nothing ever happened in the past that can prevent you from being present now, and if the past cannot prevent you from being present now, what power does it have?” ― Eckhart Tolle
“When you want to arrive at your goal more than you want to be doing what you are doing, you become stressed.” ― Eckhart Tolle
“You are never fully here because you are always busy trying to get elsewhere.” ― Eckhart Tolle
“Nothing is going to make us free because only the present moment can make us free. That realization is the awakening.” ― Eckhart Tolle
“The present moment is the field on which the game of life happens. It cannot happen anywhere else.” ― Eckhart Tolle
“The most important, the primordial relationship in your life is your relationship with the Now, or rather with whatever form the Now takes, that is to say, what is or what happens.” ― Eckhart Tolle
“Awareness is the power that is concealed within the present moment.” ― Eckhart Tolle
“The past has no power to stop you from being present now. Only your grievance about the past can do that. And what is a grievance? The baggage of old thought and emotion.” ― Eckhart Tolle
“Awareness means Presence, and only Presence can dissolve the unconscious past in you.” ― Eckhart Tolle
“So when you look to the future for salvation, you are unconsciously looking to your own mind for salvation.” ― Eckhart Tolle
We are all guilty of going off at tangents .Chasing that new exciting thing. I have a friend that does property development and he spends every day working on improving his properties and making them more attractive to sell or rent out. He’s focused on this one thing. Each day he adds to his worth via his portfolio. This is the essence of FOCUS.
If I come across any other FOCUS quotes I’ll add them to this post, hope you enjoyed. Please subscribe to my newsletter keep up-to-date with my latest content.
I use this model of analysis to help me achieve my goals by formulating a clear actionable plan
#1- Goal Setting
What do I want to do/achieve?
Do I know clearly enough what my goal is?
If I don’t know clearly, it will be hard to work out a plan. You must have a defined goal so that a plan can lead to its attainment. It’s ok if that goal moves along the journey, but have a goal before you make a start.
#2- Current Cause and Effect
What am I doing currently?
What is happening/not happening?
Why is it happening/not happening?
There should be a clear cause and effect to follow. Do this and this will happen. If not then clarify the plan further if possible.
#3- Remedial action
What can I do to correct?
What am I missing/not knowing which is important?
What am I not doing that I need to do?
Now that I’ve laid out the structure of the model, let’s have a closer look at this model of analysis in more detail:
What do you want to do/achieve?
Do you know clearly enough?
knowing what you want to achieve (having a goal) is crucial to developing an actionable plan to make it happen, but think about it in enough detail so that a plan to achieve it is crystal clear. Check out the example below for more clarity about what I mean.
Lets assume your goal is to make more money. There are a number of ways to look at this, what most people mean when they say they want more money is have more money in their pocket after they have paid the bills.
Now this can be achieved two ways, by making more money (increase in income) or saving money they pay out for bills etc.
Saving money is often easier to do then earning more, so we’ll cover this first. Now there are those essential things we have to pay, like rent / mortgage and utilities, which you can’t avoid but which you could look to reduce the cost of, by shopping around for cheaper suppliers, lower tariffs etc. It’s not exciting but it can really put extra money in your pocket if you take the time out to shop around.
For other costs/expenses, try to cut out the ones that are none essential, and that don’t add some enjoyment or value to your life. That’s the criteria I use for expenses.
Is it essential?
Is it adding value to my life?
If the answer is no to both of these questions, get rid of it. If you have debts like loans etc, pay these off as a matter of priority, don’t fail to pay them back, because this is both morally wrong and can affect your credit rating in the future. If you’ve done the crime do the time, so to speak. Just don’t be in a hurry replacing this debt with more debt in the future.
Imagine if you had no bills to pay and every pay cheque that came through the door was yours to keep and enjoy. When people earn more money they tend to take on more debt, they buy a bigger house and nicer car etc. All this does is keep you having to grind away to pay these things off. Once you have the nice car or nice house do you really feel happier? Really? If they do make you happier, then while they are none essentials they are adding value/enjoyment to your life, which is fine.
Earning more money on the other hand is dependent on the skills and knowledge you possess. Learning new higher-paying-skills, working more hours, and /or earning extra income on the side will help you earn more. There is no magic bullet here. Have a plan and work the plan based on your preferences, skill base and motivation levels.
So having the goal of simply “earning more money” isn’t going to be clear enough. By digging deeper into what this involves, will help you work out what options are open to you.
If you don’t know clearly enough, you will have difficulty working out a plan to attain it. Clearly defined goals make the plan easier to formulate and follow through to conclusion.
Current cause and effect
What are you doing currently?
What is happening/not happening?
Why is it happening/not happening?
There should be a clear cause and effect to follow. If I do this… this will happen. If not then clarify the plan further. There are never any guarantees, there is an element of risk to whatever you do, but progress on a best guess basis.
Look at what you’re doing now to achieve your plan. We are looking for a clear cause and effect. You do X and Y happens. Working backwards can sometimes help with each stage. So for instance, if you want to save money, but you’re not currently doing so, then, look to see if you are taking the necessary actions that will lead to this goal being realised, because it’s not going to happen otherwise.
You have to make it happen. Have you looked at what you’re paying for bills? Have you shopped around for cheaper alternatives? Action is key here. Doing what needs to be done to achieve the goal.
What should you do to correct?
What are you missing/not knowing which is important?
What are you not doing that you need to do?
Use something like the decision matrix to determine amongst alternative options, problem solving techniques to work out a way are around obstacles. Use role models to see if you are missing something, look at the models, systems, habits and relationships they use to achieve what you want to achieve.
This article is designed to make you think with more clarity about your goals and plan of action so that you can formulate and take actionable steps to make it happen. Empowering yourself to find the solutions you are looking for, rather than feeling you have no control about how things turn out.
It’s true that sometimes things don’t work out how you wanted them to, but I have found that having a goal, and a clear actionable plan to achieve it will move you in the right direction. Being flexible in your journey is fine, as long as you know the end destination.. A crystal clear goal makes the plan easier to formulate.
Having a goal of “Making more money” can involve earning extra income or having more money in your pocket at the end of the month by saving. If what you mean is actually having more money in your pocket at the end of the month, then this suddenly opens up extra options including saving on expenses. Be clear what you mean and by do so you find the options open up to you more clearly.
Hope you find this article informative and thought provoking. Please share if you did, thanks.
Whilst developing a model for getting results in selling and sales, I found myself wondering about what people currently tend to spend their hard earned money on. I wanted to know if we tended to spend money on particular types of things over others and if they aligned with their long term goals. It led me to thinking about what similarities and differences existed in our spending habits. I came to the following conclusions.
As human beings we find ourselves trading our most valuable resource, time, in the pursuit of money, so that we can trade it for things we need or want. There seems to me to be only three broad types of spending that we undertake, they are…
Spending to “Consume“
Spending to (exclusively) “Use“
Spending to “Accumulate” (gain more money or wealth)
Spending to “Consume”
Spending to consume covers things we buy that are consumed in the process of using them. They are only used once, and then they are gone. Consumable purchases are frequently experiential in nature, but not always, and include things like food, and drink, and holidaying. Once they are consumed, they are gone.
We may spend our money in a fancy restaurant, buy a take-away or prepare a meal ourselves at home, and for slightly differing reasons. In a restaurant, our priority may be to enjoy the food, but additionally we want to take-in the ambience and enjoy the company we share it with. It becomes more of an experience than just eating in, and as a result we pay more for it, and are usually happy to do so.
Holiday’s also fall under this category along with everyday things like paying for petrol, electricity, gas, ink or toner for a printer, phone call minutes, insurance, and fares, such as flight or bus and train charges. Gifts also falls under this category, we buy it once and after the enjoyment of giving it to the recipient, the value to us, has been used up, we can’t give it to them twice.
Spending to (exclusively) “Use”
We spend to exclusively use many things, these are things we pay for and then use over and over until they are damaged, wear out or are superseded. Things in this category include the clothes we wear, the furniture we furnish our homes with, even the house we live in, and the car that sits on the driveway. There is generally more longevity to these purchases and on the surface probably offer more value for money. I earlier stated that holidays fall under the “purchase to consume” category, but buying a holiday home, would come under the “spending to use” category, because once purchased it can be used again and again.
You can buy things that appreciate in value like a home, or jewellery or art, or that depreciate in value such as clothes and vehicles.
If we lack the finances to purchase the item outright we can choose to rent or lease many big ticket items, such as cars or houses.
Spending to “Accumulate”
Spending to accumulate covers things like investment purchases which are aimed to make more money. Stocks and shares, property you flip or rent out are included in this category. If you run a business than marketing falls under this category as well as asset purchases. Other things may include websites, businesses, land, property, art, jewellery, precious metals, limited editions, and antiques that are bought to make money from.
Some of these items may also come under other categories. For instance jewellery can be purchased to use yourself and as an investment to sell on at a profit when you have finished with it. Your home also can be used in this way. So some purchases are not mutually exclusive to just one category.
If I look at many of the things I spend my money on I see this….
Mortgage – accumulate
Utilities – consume
Digital TV -consume
Phone – consume
Car use – consume
Food and drink include – consume
Holidays – consume
Clothes – use
Furniture – use
Home improvements – use
Studio Rent – comes under all categories, use (rental cost) consume (use the facilities over and over) accumulate (for business)
Cinema concerts – consume
Gifts – consume
Interest payments on loan’s allow you to enjoy the use of something or consume something or accumulate a return, so comes attached to the thing you buy with the money you borrow. If I was to put the actual interest payment under one of the above categories I would opt to put in under consume category, because you can only use it once, and then you pay again.
Having formulated these categories, I wondered which type of purchase offered the best value for money, which led me to ask the following question…
Are experiences better than having possessions?
Experiential purchases largely fall under the first category “Spending to “Consume”, where possessions tend to fall under the “spending to use” category.
Research seems to suggest that experiences are better than possessions for our well-being. although this runs against popular advice. We are taught that buying appreciating assets will make us wealthier because they will be worth more in the future than we paid for them (purchase to accumulate category). Whereas we will have nothing to show from spending to consume. But if we look at it in a different way, at the end of our lives will we look back and value the experiences we enjoyed or the possessions we used?
Dr. Thomas Gilovich, a psychology professor at Cornell University who has been studying the question of money and happiness for over two decades says…
“Our experiences are a bigger part of ourselves than our material goods. You can really like your material stuff. You can even think that part of your identity is connected to those things, but nonetheless they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.”
“We consume experiences directly with other people,” says Gilovich. “And after they’re gone, they’re part of the stories that we tell to one another.”
A few popular quotes on the subject are…
“Fill your life with experiences, not things, Have stories to tell, not stuff to show.”
“collect memories, not things.”
“The person who has lived the most is not the one with the most years but the one with the riches life experiences.”
I couldn’t find any quotes that made the claim that having possession was better than having experiences, but I guess it is a subjective judgement for individuals to make.
So what’s the point in using these categories?
Well, I think it’s useful to use these categorise so that we can see the underlying value we derive from our spending habits and see if they align with our wider, longer term goals. We spend a good portion of our lives trying to earn money, so that we can buy the things we want to buy. but do we take any time out to really think about what we are actually buying and why? If you find you’re spending more of your money on consumable purchases, whilst trying to accumulate wealth, are your spending habits helping in the attainment of your wealth seeking goal? not really. In this example you would be much more successful adopting a “spending to accumulate” strategy. Okay, you still have to buy food and drink to survive, but instead of buying those concert tickets, maybe you should move that money into the “accumulation” category of spending.
If your long term goal is to enjoy the great experiences of life, as the research suggests, things like going on holiday or experiencing new things, and new people then some form of experiential purchase may be the way to go, and just something to think about here, many experiences, like enjoying the beauty of nature, don’t have to cost you anything, they are freely available for all, you just have to take the time out and be present and appreciative enough to enjoy them.
I hope using these categories will give you a different perspective to view your purchasing habits from, and allow you to take a more critical view of them.
Remember the most precious resource we have is time, you should ensure it is utilised well, and for a worthy enough purpose. Trading time for money is a must for most of us, so make sure you don’t fritter away your dosh on things that are not really worth the time you invested in earning it.
We make decision’s every day of our lives, from the simplest decision about what to eat for breakfast or what to wear when we go out, to more complex problem solving decisions such as how to overcome an particular obstacle that is preventing us achieving a particular goal, or which choice of investment will provide the best return.
What is decision making?
Decision making refers to making choices between alternative courses of action. This involves a comparative assessment of the costs and benefits of different courses of action, however the future value of a choice is not always fixed or known before it is made. This means we can only make most decisions based on a “best guess” basis. So there is a level of risk associated with most of the decisions we make, particularly the important ones.
There are many factors that play into our decision making process, and the subsequent choices we opt for. Here is a breakdown of those factors.
Risk taking refers to decision making when the outcomes of particular choices are not guaranteed, and the consequent uncertainty means that an assessment of the probability (chance) of a positive or negative outcome has to occur. Given that human thinking about probability is prone to many errors and biases, there are many important practical implications for risk taking behaviour. We will discuss many of these errors later.
We are constantly assessing the risks against the rewards of taking any particular course of action, especially if it’s an important decision. We have a tendency, as human beings, to prefer safety over risk and will often favour the status quo over action that has the potential of opening us up to risk, danger and uncertainty.
To overcome this bias we have to find the NEED, or WANT within us, to motivate us enough to take the risk, effectively swinging the balance in favour of action over settling for the status quo.
Choice architecture is the design of different ways in which choices can be presented to consumers, and the impact of that presentation on consumer decision-making. It’s the fact people are more likely to op-in to something rather than opt-out, if the default value is already the opt-in option and vise versa.
How things are presented to us has a greater impact on our choices than we realise. Big businesses have long since known this and set things up for their advantage, making the most of our natural tendencies and dispositions.
It’s important to realise that the creators of the modern world, are not necessarily designing things with our best interests at heart, and we should, at least, be aware of the possibility of manipulation from other parties.
For example, social media is designed to keep us hooked and coming back for more, red notification bubbles tap into our innate sense of curiosity, knowing we won’t be able to resist finding out what’s waiting for us on the other side of that click.
Inner conflict between WANT and SHOULD
This is the inner conflict between;
What do I want?
What should I choose? what we ought to choose
If you’ve ever struggled with your weight, this scenario will be very familiar to you. You want that delicious looking chocolate cake, rather than the salad, but you know you should, for the good of your health, choose the salad.
Facing these kinds of choices, uses up your willpower, which will eventually run out and you’ll succumb to the temptations. So remove the temptations or remove yourself from them.
This approach also goes for distractions. If you’re productivity is being adversely affected by your Facebook activities, lock your phone away or lock yourself in a room free of social media connectivity, until your work is done.
Influence of beliefs and values
This is a biggie and I’m not going to go too deep into beliefs and values here, other than highlight their importance.
All behaviours are a reflection of our thoughts, and thoughts that are repetitive, fixed, and invested with a sense of ourselves, are what we call BELIEFS, they are our beliefs. Conditions and rules that are attached to these beliefs become our VALUES.
Beliefs in particular shape how we behaviour, how we interact with other people and the world around us. They affect our affiliations, or passions, what we pay attention to, what we buy, and how we live our lives.
Much of our beliefs come from social conditioning, they are largely built form assumptions, and inferences, rather than facts and evidence. They are stories we tell ourselves to make sense of the world around us.
We look to confirm our beliefs, ignoring or rejecting counter-argument, rather than trying to disprove them, which is the scientific approach. This is what is described as confirmation bias, if you want to find out more about it.
The best way to deal with beliefs and values is to question their origin, their basis and accuracy. It’s much more productive to consider beliefs as hypotheses, which you look to disprove rather than prove, like science does.
If you can’t prove something, consider it a best guess, until more evidence is discovered.
Avoid throwing your opinions and views around, until you know for sure what you’re talking about.
If someone tells you something ask “how do you know?”, and “where is the evidence?”
Unknown consequences and outcomes
Many decisions are made with knowing what the consequences or outcomes will be. Sometimes we just can’t know whether choice A is going to be better than choice B.
We should instead weigh the facts, as we know them at the time, and commit to whatever choice we make and make the best of it, living with the consequences.
We are not passive recipients of the decisions we make, we interact and influence them as time progresses. So by committing to them and stopping questioning and second guessing ourselves, we give ourselves the best chance of getting the results we are looking for.
Choice overload, too many choices
Too many choices can be paralyzing, and results in nothing being chosen, so be wary of thinking more options are better.
Difficulty in evaluating and comparing choices
It can often be difficult to pick one choice over another because they offer different advantages and disadvantages.
It helps to have a goal that you’re working towards, and decide which is most likely to get you closer to it. That way you have a direction you’re heading towards. But even then some things might just not comparable so what do you do in such circumstances?
Well you decide on one based on the facts, and commit to it.
Errors in THINKING
Dealt with below.
How to too make better decisions
We would all like to know how to do exactly the right thing at all possible times, making good decisions in all circumstances. Some help was given to us back in 1738 by Daniel Bernoulli. The equation he came up with has been translated as:
The goodness we can count on getting from a decision we make, which is based on:
The odds of gain
The value of that gain
Expected value = (odds of gain) x (value of gain)
In itself this equation offers an effective decision making framework, but we must be wary of miscalculating the odds of gain, and be mindful about how we value that gain when using it. As long as we sidestep the many errors and biases in our thinking (which we”ll discuss below), we should be good to go.
Much of our decision making, depends on us using memory and comparison in our assessment of PROBABILITY (when we’re working out the odds of gain) and likewise when trying to establish the VALUE of that gain.
For example, if I asked you, would you consider buying a burger for £10. You would likely make an assessment about what else could be purchased for the £10, along with checking your memory to see what you had paid for a similar burger in the past. If you considered the burger to be overpriced, you would likely not purchase, if you believed there to be other things more worthy to spend the money on, you may opt for them instead. What you’re doing here is you’re making use of comparison and memory to determine the burgers value.
Other factors also come into play, for instance, if you’re hungry you’re more likely to opt to buy the burger. How I frame the question, might also impact your answer. If all your friends were buying a burger, you might decide to buy, just to fit in. If you knew you weren’t going to get the chance to eat for a prolonged time afterwards you might again, opt to buy.
So while this is a pretty straight forward decision, to buy or not, there are still a lot of potential factors that come into play. Decision making is not always so clear cut, particularly if there are a number of choices available.
Let’s look at some of the pitfalls that can befall us if we’re not careful, they consist of errors in judgement and personal biases.
Let’s look at a couple potential errors in memory…
If I asked you “What is most common, dogs on leashes or pigs on leashes?”. You would most likely say dogs, largely because you have seen and remember seeing more dogs on leashes than pigs on leashes and because of this, memory is relied upon as more representative of fact. You are likely to be correct in your assessment, but unless you’re an authority about the world of pigs, and pig owners, you could easily be wrong.
If I asked you “Which is more common in the English language, words containing the letter “R” in first place or in third place?” You would probably be able to remember more words with the letter “R” in first place and would likely choose this as a result, when in fact there are more words with the letter “R” in third place. Because these are harder to recall we have a tendency to think there is less of them. These are examples of “Availability heuristic”.
Lets look at couple of examples of errors when we try to compare things,…
A £2000 Hawaiian vacation package is on sale for £700. You think it over for a week, but by the time you get to the ticket agency, the best fares are gone and the package will now cost you £1500. Would you buy it? Most people would say no. because they would not want to pay for something that was cheaper just a week before, even though the vacation is still well priced at £1500. If the price had just gone from £2000 directly to £1600 (without the drop to £700 in between) would you feel any differently even though the holiday is in fact £100 dearer in the second scenario? Many people would be inclined to opt for this situation given the choice.
Another example for you to consider. You are on your way to the theatre. In your wallet you have a ticket for which you paid £20, along with a £20 pound note. When you arrive at the theatre you discover that you’ve somehow lost the ticket. Would you spend your remaining £20 on a new ticket? Most people answer no. Let’s change the scenario and replace the ticket with another £20 note instead, so you now have two £20 pound notes, and this time you lose one of the £20 pound notes. In this circumstance people often change their answer to yes. Why is this? Well in the first scenario they say they do not want to pay twice for the same ticket, in the second scenario they take the opinion that just because they have lost £20, what difference does it make, they came to see the show and still want to see it.
In our last example, imagine you went to your local cinema and saw a small portion of popcorn for £3 and a large for £7, which would you choose? If a medium portion was then added for £6.50, which would you go for now? In tests, when the medium option was added, more people opted for the large portion than before, why? Because in comparison to the medium the large looked better value than it did before.
So you can see from these examples how easily errors can occur when relying on memory and comparison.
Poor assessment of Probability
Lets look at how our assessment of probability can result in bad decision making. There are two methods we use to assess probability these are:
“Representativeness heuristic” refers to estimating the probability of a particular sample of events based on their similarity to characteristics we feel are typical of the whole category population of those events. This may result in thinking some events are more likely than others, and that certain trends can be predicted. But if people fail to follow the true principles of representativeness, such as ignoring information on probability base rates or forgetting that small samples are less likely to be representative, then this can lead to false estimates as is seen with use of stereotyping. For example if we toss a coin, a sequence of HTTHTH is thought to be more probable than a sequence of HHHHH, even through they are equally likely
and secondly “Availability heuristic” (examples given previously) is based on estimating the probability of an event based on how easy it is to remember. This may lead to familiar, recent or popularised events being more available in memory and subsequently seen as more probable. For example murder might be thought to be more likely than other crimes because of its greater media coverage.
Faulty decision making
Rational decision making would involve taking account only of the odds of an expected outcome and expected value gain of each option. In fact, this is rarely the case, and is often influenced by some of these biases and errors in thinking:
Framing effects – how the problem is presented to us. This is particularly so with marketing messages and political messages which are aimed at getting us to react in a particular way. The way the information is presented often intensifies certain facts and downplays others, in the hope of pushing us towards a certain course of action. (check out our post on Hugh Rank’s Persuasion model)
Loss aversion – as humans we are wired through evolution to be more sensitive to loss than gain. As a result we want to protect what we have over reaching for more.
Elimination-by-aspects theory – this involves eliminating options by considering one relevant attribute after another.
Satisficing theory – choosing an option that has satisfactory attributes when it becomes available. Most commonly found when dating, we pick the first suitable mate that comes along, often rejecting others that come later, but that might be a better suit.
Conforming evidence trap – which involves seeking out evidence that justifies our choices and subconsciously ignoring contradictory evidence rather than looking at the whole picture.
The status quo trap – shifting deck chairs on the Titanic rather than jumping over while it’s sinking
The sunk cost trap – which involves throwing good money after bad in the hope of recovering losses rather than simply cutting losses, as evidenced by many gamblers and stock market investors.
Trial and error – where no decision can be considered correct unless it has been subjected to testing and scrutiny in order to accept or reject it. Which appears to be a rational approach, but is prone to subjectivity and influenced by the persons own values.
A few more to consider:
Compensatory rule – “we selected the security system that came out best when we balance the good ratings against the bad ratings”
Conjunctive rule – “we picked the security system that had no bad features”
Disjunctive rule – “we selected the security system that excelled in at least one attribute”
Lexicographic rule – “we looked at the feature that was most important to us and chose the security system that ranked highest on that attribute”
Affect referral rule – “everything they do is outstanding, so we decided to have them install our security system.”
Biases with Time
Time also plays a part in our decision making:
If I offered you £60 now or £50 now, you would likely go for £60 now.
2.If I offered you £60 now or £60 in a month most would go for the £60 now.
3.If I offered you £50 now or £60 in a month most would go for £50 now – because they don’t want to delay gratification.
4.If I offered you £50 in 12 months or £60 in 13 months many would elect to go for the £60 in 13 months because they think to themselves, what’s the difference between 12 or 13 months, I might as well hang on for another month and pocket an extra £10. But in reality the only thing that has changed between our third example and this one, is the time frame, and the fact that it is further away from the present moment. When we actually get to month 12 we will probably change our minds and wonder why we didn’t settle for the £50 in 12 months rather than wait and extra month for the extra £10.
What else plays a part in poor decision making outcomes
Decisions are made with our best interests at heart, and with positive intent, however we don’t always get them right as discussed. This is partly due to the “faulty thinking” we have talked about above but also other things play a part
External influences and pressure forcing our hand or influencing our decision making, such as time limit, peer pressure, salesmanship, fraudsters, threat
Luck plays a part in the final outcomes and we shouldn’t underestimate its role.
Unforeseen events and circumstances outside our knowledge at the time of the decision or after a decision is made. Unless we have a magic wand, there is little we can do about this. “With hindsight I would have….”
Deductive and Inductive Reasoning
We have included reasoning as part of this discussion on decision making, to highlight how we can easily stray away from accurate thinking, which can later impact our decision making effectiveness.
“Reason sits firm and holds the reins, and she will not let the feelings burst away and hurry her to wild chasms. The passions may rage furiously, like true heathens, as they are; and the desires may imagine all sorts of vain things: but judgement shall still have the last word in every argument, and the casting vote in every decision.”
— Charlotte Brontë
Reasoning or accurate thinking, as it is sometimes described, most commonly comes in the form of Deductive and Inductive reasoning and is often used in the search to find logical explanations for things around us. Why does this happen? How can I make this happen?
Inductive reasoning – is an hypothesis or idea about things we don’t know. It is built on arguments that do not have categorical support for the conclusion. We make many observations, discern a pattern, make a generalization, and infer an explanation or a theory. An example of inductive reasoning is:
Lots of people are interested in internet marketing, Mr Turner is a person, so Mr Turner likes internet marketing
The premise that “lots of people are interested in internet marketing” is true, as is “Mr Turner is a person”. The conclusion that follows “Mr Turner likes internet marketing” is logically correct, but may not be true. The reason for this is that while we have stated that lots of people are interested in internet marketing, Mr Turner may not be one of them.
Because inductive reasoning is based upon probabilities, conclusions are considered to be cogent, rather than true. This is because the probability exists that the two accepted premises may not truly lead to the acceptable conclusion.
Deductive reasoning on the other hand is when we have the facts or appear to have the facts and the arguments provide absolute support for the conclusion.
Deductive reasoning makes the strong assertion that the conclusion must follow the premises out of strict necessity. Denying the conclusion means that at least one of the premises is self-contradictory and thus not true. For example:
All human beings need oxygen to survive. Mike is a human being, therefore, Mike needs oxygen to survive.
For deductive reasoning to be effective the original premise needs to be true, as with the example used above. However check out the example below. Although the conclusion follows on logically from the premise, there is possible doubt over the validity of the original premise that “Every website that has an opt-in form on it, is collecting subscribers”. If this premise is invalid, the conclusion will also be invalid.
Every website that has an opt-in form on it is collecting subscribers, if I put an opt-in form on my website, I will get subscribers.
So the key to a creditable conclusion lies in the premise. If this is valid then so will the conclusion, if not, then neither will be the conclusion.
Another form of deductive reasoning is the Syllogism. A Syllogism consists of a minor premise and major premise and a conclusion and are of the form If A=B; and B=C; then A=C.
A=B (minor premise/specific instance) i.e. Patch is a dog
B=C (major premise/generalisation) i.e. All dogs can bark
A=C (conclusion) i.e. Patch can bark
There are a number of Syllogism fallacies that can producing faulty conclusions these include;
undistributed middle – some dogs (rather than all)
illicit major – last part (C) of the conclusion is broader than premise allows
illicit minor – first part (A) of the conclusion is broader than premise allows
Check out this article for a more in-depth analysis of Reasoning.
So as you can see, it is easy for poor reasoning techniques to impact our decision making effectiveness, and we should always be mindful of ensuring we are using accurate thinking in our decision making.
So as you can see there are many ways of making bad decisions. Below are more tactics designed at improving decision making.
Common Decision Making Methodology
There are often 3 levels of decision making that are generally employed:
The simplest THE REFLEX ACTION (knee jerk reaction. Unconscious, without considering the alternatives i.e. profits down – costs need to be reduced, or sales are slipping – prices too high. Here is a great example. A racket and ball together cost £1.10, Racket costs £1 more than ball, how much is the Racket? work this out for yourself, most people say £1, the answer is actually £1.05.
ALGORITHM or checklist. i.e. You come face to face with a tiger, You instantly go into flight or fight mode. You’re mind within a nano second asks itself, is it a big one? If the answer is yes, you run, if no, you ask yourself, do I have spear with me? If yes you might fight, if no, you run.
Using more sophisticated methods like, Cost Benefit Analysis and The decision matrix approach. Which involves listing alternatives and weighing the pros and cons of each, scoring them against each other and choosing the winner (see worksheet at bottom of post).
As individuals we usually make decisions using the first 2 of these. The first (Reflex action) is not recommended in most cases other than were you have no choice such as flight or fight/life or death situations. The second (Algorithm or checklist) takes the hastiness out of the situation and can help you to be more logical in your thought process. Most of the time we make decisions using our emotions and feelings and this can cause us all sorts of problems, it’s best to give yourself some space to remove the emotion from the situation and consider rationally the best course of action to take.The third option (decision matrix) discussed above is much more considered and allows analysis of the alternatives, but is likely to be biased by subjective preferences. You can ask for a second opinion as a type of check and balance, to help correct this.
More decision making tactics
Identify all factors that affect a decision (weight them against one another) for instance Cost versus Comfort plus emotional factors such as attractiveness felt by having/wearing etc. avoid letting emotions affect decisions. Write down the options and canvas opinion from trusted others.
Be aware of your perception of loss or gain. For instance offering people £20 or giving them £50, taking back £30 and offering a bet to win back the other £30. This framing effect will result in more people taking the latter option even though they would be getting the same thing. People will make bolder decisions to avoid loss (loss aversion)
We tend to post-rationalise decisions after the event. Avoid dressing up bad decisions.
Be aware of Priming – images/words/temperature/smells can colour peoples decisions later on. For example getting people to hold a hot drink can illicit warmer feelings towards someone soon after. So be aware of others trying to manipulate us.
Use a two-tiered approach with a small group of core people who set the standards that a larger group can implement with autonomy but within those standards
Tap into as much knowledge as possible (mentors and mastermind groups)
Ensure those carrying out the decisions are involved in the decision making process.
Harvard Business Review blog recommends using the Trick acronym to aid decision making.
Two – tiered approach (detailed above)
Rapport with strategic team and implementers
Involve all – from management to customer in the decision making process
Cause and effect reversals – to remove self limiting beliefs that are effecting how you approach strategy. i.e. Is your strategy impacting your success, or is you success impacting your strategy?
Kahneman perspective – 12 question checklist to identify and reduce bias
In his book “Think and Grow Rich” by Napoleon Hill he describes the using accurate thinking as being the foundation of all successful achievements.
He advises to separate important facts from unimportant facts. An important fact is one that aids you in the achievement of your goal, if it doesn’t do this consider it unimportant.
Be wary of opinions prejudice and biases that come with them. Look for proof of hard facts. Ask “How do you know?” and stand firm until they have answered to your satisfaction.
If someone has a negative attitude about someone or something, be wary of what they say because it is sure to be negatively framed.
Free advice is usually worth what it costs
Never accept anything as fact until proven
Negative attitude = negative framing
Don’t give away what you want the answer to be when you ask a question, cause people want to give people what they think they want to hear
Ask “how do you know” when you can’t identify if something is true
Check out his book on Amazon by clicking on the image below.
Personally I like to use the “Decision Making Matrix” template below and get other people involved to get some perspective and offset some of my biases. while it has served me well, I would suggest finding what works best for you, however if you check out my post on problem solving you will find a large list of tools and techniques to help in your decision making.
I suspect the biggest takeaway from this post will be in identifying the biases and errors in thinking that may affect many of the day to day decisions that you make. Hopefully by being more aware of these you will look more critically at the decisions you make and what might be motivating them. Decision’s are mainly made on a best guess basis and are sometimes influenced by factors outside our control and span of knowledge at the time we make them. We can only control the actions we take and by examining our biases and errors in thinking, try to improve our decision making strategies.
When we think about things in the distance future we have a view of them, but as we move closer to them we change our minds. Our brains have evolved from a very different world, where we needed immediate gratification to survive. We need to be more aware of these old habits which are no longer relevant to our modern way of living, and be more willing or open to, delaying gratification.
For a working excel spreadsheet version of the form above please join my mailing list. All the calculations are done for you, just enter your own data. Alternatively I’ve got an interactive online version you can check out here.