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The companies that know us better than we know ourselves

Ramit Sethi

Well, well, well. We have a bunch of farmers’-market geniuses reading IWT, I see.

On Monday, I told you how I tried to bargain over a $10 t-shirt. A bunch of you wrote answers on why the guy didn’t take my lowball offer of $8. And — you nailed it!

The t-shirt guy knew he didn’t have to lower his price. He even knew I’d be back.

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In fact, I wanted the shirt so much that after I got rejected, I walked back in the stall later that afternoon and sheepishly asked to buy it. Full price. He just smiled and nodded. Ugh.

That wasn’t just guesswork on his part. This is the way real business works.

You think McDonald’s or Mercedes licks their finger and holds it in the air to decide on pricing? You think they look at their sales reports and say, “Huh, I guess we sold that much last month?”

They know down to the decimal place what their sales will be today, tomorrow, and 3 months from now. Restaurants know exactly how many people will add on fries or a Coke, and car companies know how many will spring for the optional leather-trim package. And the farmers’ market guy knew he didn’t have to lower his price, because his real customers would buy it at $10.

This is where it gets interesting. See, you and I walk into a store thinking we have free will, believing that we make our own decisions of our own accord…

…but a company knows that out of 100 buyers, exactly 18 will opt for the higher tier. Not 17, not 19. Precisely 18.

We know this at IWT, too. So it makes me laugh when I see people complaining about how stupid companies are.

If you’re complaining about how dumb a company is — “ugh, websites that use popups are stupid” or “McDonald’s, if you just made your food taste good, I would eat there” — you have 2 options:

  1. Automatically assume you are smarter than a multi-million-dollar company.
  2. Take a different approach and use a framework I call the D-to-C Principle: Disparagement to Curiosity. Instead of saying “LOL SO STUPID,” ask yourself, “Assuming I think this person/company is pretty smart, why would they do that?”

Here, I’m unlocking a video from one of my premium courses to show you how the Disparagement-to-Curiosity Principle works:

Here’s a video on exactly how the D-to-C Principle works. This viewpoint changed my life.

Remember, it’s easy to sit back and criticize. “Why does this company charge so much? They must be trying to rip people off.” “Why does she stay with him? Ugh, it’s so obvious he’s bad for her.” “LOL if they just lowered their price to $10, I’d probably buy.”

Easy to criticize. Much harder to try to understand the underlying reasons why they made that decision.

For example, why can’t you buy any IWT product you want, any time? Are we stupid? We don’t accept anyone in our flagship programs with credit card debt, a decision that personally costs me millions of dollars a year. Am I a moron?

Cue DISPARAGEMENT TO CURIOSITY: Instead of insulting others, start listening and digging around. Use this phrase when you notice yourself calling someone or something stupid: “Shut the hell up and try to figure out what’s going on here.”

For example, I recently spent $10,000 to attend a week-long executive education class at Columbia on accounting. Why? I don’t even run a public company, and I have accountants and bookkeepers that work for me.

Two reasons:

  • The most successful people invest in themselves with time and money. Interestingly, the more successful you are, the bigger impact even one idea can have on your life. (Imagine if you could show Bloomingdale’s how to improve sales by 1%. That would be worth tens of millions of dollars.)
  • This isn’t just about spending lots of money. I still buy $10 books and $200 programs from people who earn a fraction of what I do. Why? Because nobody’s too good to learn. Ironically, it’s usually beginners who are arrogant enough to think they know it all, while successful people realize how little they know.

 

Can you think of an example where a company did something that a lot of people thought was dumb…but it was good for business? (Bonus points if your example is IWT.)

Leave your comment below.

-Ramit

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70 Comments

 
  1. Alden

    I’ve heard rumors of certain businesses not accepting those with credit card debt to purchase their products 😉

    • Carmen

      ayy lmao. 😀

  2. Maulik

    The easiest, and most referenced example would be Apple.

    After releasing the iPhone, and getting major competition from Samsung and other android platform device makers, Apple had two options:

    1) Get in a bidding war to maintain market share
    or
    2) Hold to their price level and create a niche market for their customers

    Choosing option 2, Apple now has a niche market for customers that love their product and are addicted to their ecosystem. This is why, after more and more releases people are still buying/updating to Apple products.

  3. Angela

    I read a great article last year in one of those women’s fashion magazines that you wouldn’t think would have good stories. It was all about how Netflix “took a chance” on Orange Is the New Black, except, they DIDN’T take a chance on it. HBO and various other networks passed on the show, because they didn’t see their audiences wanting to watch a show about a mostly-female, mostly-minority cast set in a prison. They just didn’t think it would work.

    Netflix, on the other hand, since they have MILLIONS of datapoints to know WHAT people watch, by WHICH directors, staring WHOM, in WHAT genres…. they KNEW that Orange Is the New Black would be a success. They have SOOO much data on what their customers watch, that basically Netflix could turn anything into a hit.

    • KK

      Angela, You had me nodding yes all the way to the end. Then the stumble: Netflix cannot make ANYTHING a hit. That Marco polo show cost them $100m and turned out to be a poor decision. They aren’t infallible. This shouldn’t be written as off anecdote. One mistake at the $100m level is not an anecdote.

  4. Steve

    Perhaps one of my favorite, gym decides to ban obese people because it ruins the experience for others…

    http://i.imgur.com/2NNDPOl.png

    Much like your credit card debt rule, he will point them to gyms that cater to their fat-loss needs, but he doesn’t want them in his gym because they ruin the experience for those he is really targeting.

    • Carmen

      That honestly read like something from The Onion.

  5. Drew

    Google – everyone thought they were stupid for offering great products like Gmail and drive for free, but they were simply attracting people to start profiling them for their advertising market, which is their huge money maker.

  6. JJ

    While I won’t mention the name, there’s this guy who teaches a course on Online Marketing and portrays himself as this laid-back stoner. He has plenty of free videos where he explained many important concepts and techniques very articulately and I had gotten some results with them so I eventually bought his course which was less than 100 dollars. While the quality of the course isn’t up to par with most of Ramit’s, I still have to say I feel I’ve gotten my money’s worth with his very intricate teaching style and the sheer amount and quality of material. (And no, I’m not in ZTL yet so I can’t offer a point of comparison.)

    Very few courses on starting an online business tell you upfront in the marketing materials that it’s gonna be hard work, even the legit ones. I thought it’s stupid that they don’t since a lot of lazy people will sign up then don’t get any results and end up calling the product a scam when in fact they haven’t worked hard enough to follow the system entirely. But after curiously asking a few folks in this industry why this is so common even among the legit products is that they simply won’t get anyone buying their product if they told straight up that it’ll require working hard.

    • Jez Nicholson

      Absolutely. Ramit says in his post “isn’t just about spending lots of money..”. You could add that it is an investment of time, effort, and energy….all three of which can be in short supply.

  7. SR

    This is core not just to understanding others’ marketing campaigns — it’s at the center of all persuasion, whether politics, advocacy, or social change. (Check out “Switch” by the Heath Brothers.)

    Since you asked for an example, do you remember the (likely numerous) emails you may have gotten from the Obama campaign — with content-free subject lines, like “Hi”? These struck me as pretty stupid. Later we learned that they did it because they tested it, and it worked. (Check out “The Victory Lab”.)

  8. Ross

    This morning, On Point in NPR was discussing the airline industry, and why their pricing has gotten more convoluted and opaque. I even recently had to deal with taking an hour or two to find the right flights at the right times at decent prices. Southwest, for example, doesn’t allow third parties (orbitz, priceline, etc) to even display their fares; you have to go direct to their website. Other airlines are starting to follow suit.

    To someone who doesn’t understand data, their pricing is stupid and arbitrary, and their fees all over the place are a ripoff, and it’s a huge hassle to find a good ticket price, if you even can. By all counts, they should be failing miserably.

    Newsflash: THEY WERE! Back when tickets were cheap and they treated customers well, they were hemorrhaging money. But now that they have data analytics, they know that they can price based on demand, not cost. They can charge additional fees and get away with it. They can do business practices that customers dislike, yet customers still go along with it and give them money? Why!?!?

    Because at the end of the day, they provide a service with a high demand: long distance travel that’s quick (a few hours by jet beats 20-30 by car) and cheap enough to be worth the time savings. In reality, it’s good for customers, as well as their business. We just got spoiled.

    • Jon

      It’s funny you mention this. Kind of proves just how our definition of ‘fair’ is actually more abstract than we think. Even wholesalers of airline tickets aren’t allowed to just list all of their fares….the ‘unadvertised’ fares are unadvertised either by contractual agreement or because they know that most people will just buy up the cheapest fare without considering other aspects of their travel. You are likely to add value by calling in and finding out that there were certain legs of the travel or seat arrangements that might be better fit. This builds a relationship with the client instead of just being the cheapest option.

  9. Delmania

    For me, an eye opening event was taking the Introduction to Marketing course offered by Coursera. It hit on many of the points you talked about here, and for me, the takeaway was that if you don’t understand a companies advertising strategy, it’s probably because you’re not in the market segment the company is targeting.

    I will take a leap of faith and use your decision to reject people with credit card debt as an example. I suspect it’s a matter of profile. I can think of several reasons why you wouldn’t want these people, but I’d offer up the sense of financial stability. Starting and running your own business requires patience and a tolerance for failure and setbacks. You need to be able to withstand a few blows before things take off. People with debt are either looking for get rich schemes to pay off debt, or are not financially literate enough to run their own business. In your case, it’s less of a chance of repeat customers.

  10. Adrian

    I’m still shocked that CVS doesn’t sell any more tobacco products. It doesn’t affect me that much because I’m not a smoker, but aren’t cigarettes a great source of revenue? And doesn’t CVS sell other things that are “unhealthy”? So why single-out cigarettes?

    Still, I don’t recall hearing any of my smoker friends complaining about the change. And business still seems to be all right at the CVS’s that I visit.

    • Philip

      Their data showed them one of two things. 1) announcing they would not sell tobacco products any more would be good PR and lead to more sales because they were becoming a health-conscious, wellness store (even though as you correctly point out they still sell lots of unhealthy products; doesn’t matter, perception>reality).

      Or most likely 2), data showed that whatever they planned on selling in the space that used to be taken up by tobacco would be more profitable than selling tobacco.

  11. Brett

    When I first started investing in real estate I would occasionally get outbid early on. The higher offer would be high enough that the investment wouldn’t work. I wondered who was stupid enough to buy these places at such a high price. After some time I discovered that they were bidding high to get under contract, then they would negotiate a lower price during the inspection period. Ultimately they would either get the property for the price they wanted or they would walk away. But it cut out all the competitors and gave them access to the gritty details of the place. So there’s a free advanced course in real estate negotiating 🙂

    • Michelle

      Wow. I’m sure it’s not an illegal practice but it sounds really shady ethically.

  12. Justin Stowe

    Just this week, Virgin announced that they’re giving 1 YEAR of leave for new parents.

    That goes on top of last year’s announcement of unlimited vacation days for Virgin employees.

    You know that tens of thousands of business owners cringed, saying those were stupid ideas. But from an employee’s perspective, Virgin is quickly becoming more and more attractive to top talent.

  13. Tina Huynh

    The Apple watch is an excellent example of this. Releasing a $10,000 watch had most people calling Apple ridiculous and stupid but it was a smart move on their part.

    They established themselves as a high name brand and kind of flaunted their status by releasing that watch. People who can’t afford it are segregated and the people who can are a part of their own high-status community.

  14. Patrick Szalapski

    I recently called a garbage pickup company asking for a better rate than advertised. They replied and offered me the standard promotion from their Web site. To them, it was a call out of the blue. I signed up anyway, as it seemed like they were the best option.

    If you know you have a competitive advantage, you don’t need to offer discounts.

  15. Dan

    CVS stopped carrying tobacco. That was an immediate drop of billions in revenue that they didn’t have plans to quickly make up (especially at the register). I even thought it was a little dumb.

    But they plan to make it back over the long haul by positioning themselves as committed to health care. (Reminds me of Ramit rejecting people with credit card debt positioning himself as someone who’s committed to financial health–oversimplified, but you get the idea.)

    • WinBlogger

      I agree with this, With the new trend coming the wise would quick to change but ordinary stick to old mindset.

  16. Rob

    In the first year Earn1k launched Ramit had an additional course called Beyond1k. He chose to shut it down because it wasn’t getting the results he wanted. Note that it wasn’t financial results – he WAS getting paid as many people had signed up. But the students weren’t getting the results Ramit wanted. I wasn’t a member but Ramit sent an email about this a few weeks after shutting down.

    A lot of people would call this “stupid” for giving up all that revenue. But in fact I think I think it caused me to trust in Ramit and IWT even more. Same goes when I found out he refuses people with CC debt.

    • Carmen

      > I think it caused me to trust in Ramit and IWT even more

      Agreed! It showed me he isn’t “gobble, gobble! all the monies!” when it comes to his business.

  17. D

    McDonald’s is not the brilliant business they once were…
    …seeing as how they are closing 700 stores in the US.

    Their menu has way too many items since they chase every single food trend that comes along (salads, premium burgers, premium coffee, smoothies, burritos, etc.) which makes it take too long for the customers to receive their order.

    Their employees range from extremely indifferent to downright rude.

    • Carmen

      Didn’t McDonald’s get a new CEO recently? If I remember correctly, they did and it was stated that they were going back to the blueprint because they had done way too much over the years and it was actually hurting business here in U.S.

  18. John

    Kim Kardashian made a sex tape with Ray Rice and America laughed at her for being a slut.

    America still laughs, but while Kim is taking trips to the bank and Kanye Junior, they are taking trips between their dead-end job and their mom’s basement.

    • Adrian

      I believe you meant to say Ray J, who is an R&B singer.

      Ray Rice is an NFL running back who got into trouble after video footage was released of him punching his wife in the face on an elevator.

    • Carmen

      >Ray Rice

      It was Ray J.

      >they are taking trips between their dead-end job and their mom’s basement.

      Yes, because the only people that hate the Kardashians/Jenners don’t have huge bank accounts. Please, give me a break.

      Nonetheless, I will give credit where credit is due: If anybody deserves to laugh while walking to the bank, it’s Kris Jenner. Also known as Mama Kris. Without Mama Kris, we wouldn’t really know Kim Kardashian or the rest of the ilk.

      I gotta hand it to Mama Kris, she’s a genius salesman and could run one hell of a presidential campaign if one ever needs her.

  19. Jason B.

    I’m privileged to be able to work with a very premium coffee brand. The area I work in is to extend our brand through everyday retailers that millions of people shop in every day. I’m lucky to work with the biggest retailer on earth to accomplish this.

    We spend a lot of effort and resources understanding our mutual customers. We do this to “orchestrate” the buying behavior most beneficial for all involved, including the consumer.
    It’s easy, as marketers to fall into a “status quo” mentality and assume consumers are all making very deliberate, logical choices. However, wwe consumers are not as rational and logical as we think we are.

    Ramit, your T-Shirt example illustrates this perfectly. Your head told you the shirt was worth $8 bucks, but your head never had a chance to overcome the “I WANT THAT” feeling coming from your heart and gut.

    Successful brands know how to not only select (and de-select) their target customers, but know how to stimulate the mind and emotions within them. This “orchestration” is intentional, and multi-faceted. From the way a package looks, smells, feels to the way a store presents it, to how a store employee speaks to you. It’s not just one thing, and it creates a magic which transforms a simple cup of coffee, bought in a routine kind of way into something more. Something worth paying more for, something that is connected to you in a personal way. But the truth is, all science looks like magic to the outsider, doesn’t it?

    Great post, and thank you for allowing us to share Ramit!

    • Philip

      Same as new car dealerships. Everyone that ever buys a car has a story about how they talked the sales guy down to the number they bought at. Someone car dealerships stay in business.

      Ask a car salesman (especially luxury car sales) about this and he will roll his eyes and tell you that the “negotiation” is all part of the orchestrated sales process. The customer wants to feel like they fought to get something they wanted.

  20. Kyle

    Google. I recently downloaded Google chrome because the software I was trying to install was not compatible with my version of firefox. I immediately noticed the in text advertising. It is EVERYWHERE! Even clicking a “next” button in a picture gallery might open up a new window or an advertisement. I found it unbearable and stopped using chrome one day later. I guess Google knows a certain percentage of users will actually click on an in text advertisement (even by accident. I’m assuming they get paid by the click).

  21. Matt

    Patagonia’s “Don’t Buy This Jacket” campaign (http://www.patagonia.com/email/11/112811.html) . They flat out told their customers not to buy a product and to take a pledge to recycle their clothing. Patagonia customer’s have serious brand loyalty and are willing to pay a premium for Patagonia’s ethics and image, even if they are obtuse at times. I am certain sales went up and customers became even more entrenched. I know I did.

  22. Sarah

    I was very dismissive about social media. Especially for business purposes. Social Media to me was really shallow, one-dimensional, and I thought businesses should focus more on their products/services than “playing around” on social media.

    What changed my mind was getting a job at a company I really admired. The only position they had available was, ironically enough, “social media manager.” I found out that social media was a great way to communicate with customers, get opinions, connect with other businesses, and even help persuade people by sharing outside content and resources.

  23. Gary

    “For example, why can’t you buy any IWT product you want, any time? Are we stupid?”

    This is actually a great strategy. You see this a lot with other online courses, TV informercials where you get x amount of free product if you buy in the next hour, and even McDonald’s.

    Diehard McRib fans (*points at self) would love for the McRib to be an everyday item, or at least this is what we tell ourselves. However, at the end of the day, McDonald’s is a multi-billion dollar business that knows exactly what they’re doing. They’ve measured this.

    It’s a great sell for the 3-4 months it’s made available, but it’s actually not a huge seller year-round. They market the McRib as the premiere limited time item and it generates a sense of urgency. This is exactly what Ramit does with his premium courses.

  24. Jay Cross

    The classic example I always tell people of D-to-C is Pepe’s Pizza in Connecticut.

    Instead of slicing your pizza before handing it to you, they wait till you get to the counter and ASK whether you want them to slice it.

    Why?

    I’m not sure. My theory is they are extremely busy so if even 20% of customers say “no, don’t slice it” then it saves them a little more time per order

    Maybe I’m wrong. Probably. My friend points out that no other pizza place does this.

    But I don’t think a restaurant with lines out the door morning noon and night (that’s consistently ranked in the top five pizza restaurants in America) does anything by happenstance.

  25. Peter

    One of my favorite recent examples was this story of how personal style blogger Danielle Bernstein charges between $5,000-$15,000 for ONE sponsored Instagram post.

    (http://www.harpersbazaar.com/fashion/trends/a10949/how-bloggers-make-money-on-instagram/)

    While everyone was blowing my twitter feed about how ridiculous it was, saying “Someone should pay me to Instagram” (forgetting that she’s not getting paid to physically post, she’s getting paid so brands can leverage what she’s built)

    I got curious.

    Even the writer of the article seemed upset at interviewing her, trying to paint her as snobby by wanting the story to only be about her and labeling people like her as “so-called creators”.

    I give her huge props for negotiating an exclusive and understanding her reach/value.

  26. Chris Horner

    Ferrari.

    They run one of the most interesting business models I’ve ever seen. They dictate to their clients, not the other way around. If you want the rarest limited edition models, Ferrari INVITES you to buy it. After you fill out an application of course. I heard directly from a Ferrari dealer that a sports figure ordered a new car in an unusual but not garish color scheme. The car came delivered in a different color combo that Ferrari thought was more appropriate. Their words “That is what you meant to order”. The car was purchased anyway. They don’t pay for their spots at auto shows because they have the attitude “If our cars are there people will come”. Any they’re right. Car and Driver wanted to test a limited edition model in the mid 90’s (the F50). Ferrari was not providing press cars. So C&D went looking for private owners who would let them test the car. Many were willing, but always got a call from their dealer saying if they allowed their car to be tested, that person would no longer be invited to purchase another Ferrari. I believe it took two years for the magazine to finally track down an agreeable owner. The rest of them caved into Ferrari’s demands.

    And when you think of the average new Ferrari buyer, they’re a person with the means and clout to dictate to others. Yet they cower like babies to Ferrari’s demands. Despite all of this, very often their brand new models have waiting lists stretching out for years.

  27. AJ

    Girl Scout cookies are the same concept. There is great demand when they are on sale once a year…but if I can buy them anytime I wanted then they aren’t “special” any more
    (and I think that many of us would buy too many at first, then we wouldn’t buy any more)

  28. KsF

    I thought Coke made a dumb move putting people’s names on cans. What am I going to do? Hunt around for a can with my name or the name of a friend/co-worker? Why do I want to drink from a can with a random name ??

    Turns out per an employee I talked to that their sales BOOMED last year after they launched this campaign. They just brought it back again this year and expanded it with other names.

  29. Alessandro

    Hi Ramit!
    In Italy, everybody says that Ryanair has a terrible approach with clients and they should not charge for water on the airplane. I did the same at the beginning, but then I understood that I was completely stupid. People use Ryanair cause in cost less and they are willing to suffer

  30. Martin

    I still remember when the iPad was first released and almost all pundits laughed about it and called it useless, claiming there was no market and no one would buy it.

    In April 2015, Apple had sold over 250 Millions. Multiply that by $350 profit (rough average between the different SKUs) that’s about $88 Billion in profit total since its launch.

  31. Antoine

    Apple launched the iPhone 5C at $100 cheaper than the 5s. A lot of people thought they were stupid, they could have made it much cheaper and would have grabbed a lot of marketshare from Samsung.

    In the end, Apple got what they wanted. They wanted more customers to upgrade to the 5s when it came out, instead of them buying older versions of iPhones, like the iPhone 5. In the past people would buy the older version of an iPhone when a new one came out, as the former was then discounted. This was hitting in Apple’s profit.

    So they launched the 5s, discontinued the 5 and offered the 5C instead. The result, more people bought the 5s instead of the cheaper 5c = more profit for Apple!

  32. Craig

    I can remember when Nintendo had the Gamecube, and it sold so poorly, that Nintendo needed to go in a different direction. It announced a new console in 2006 called Wii. People made fun of that name, just like IKEA, and Google. The name “Wii” was the worst name that was ever thought of for a video game console. So many people prefer the codename “Revolution”. The name Wii was so bad, that it made worldwide news, but it was also disruptive, because it caught the attention of the world.

    When the Wii launched, it sold out like crazy. It was extremely popular, that people were selling Wii’s on eBay to make a profit. That console that came with a remote control for a controller, and the most bizarre name for a video game console, sold over 100 million, and was the new Tickle Me Elmo for a few Christmas seasons. It was hip, cool, different, and unique. Even President Obama has a Wii in the White House.

    A decision about a bizarre name that people made fun of, ended up on worldwide news, and changed the landscape by going with a different name and a different demographic. The remote control was so disruptive, that Nintendo’s competition copied that unique controller to their own systems that they most thought of as a “gimmick”.

  33. sunny

    People probably think “reading every email response” is dumb. But its obvi good for IWT business.

    Another thing could be starbucks closing down a chunk of their fleet of stores a few years ago. Some ppl may think having less stores is dumb. That strategy clearly worked. Focus on making the good stores better and close the hopeless ones.

  34. Josh the CRM Guy

    I read an article that Chipotle was being pushed by McDonald’s (McDonald’s used to own Chipotle) to start installing drive-thrus.

    Can you imagine Chipotle with drive-thrus? The company would have a totally different vibe.

  35. Carolynn

    The first IWT example I can think of is you banning people with credit card debt from buying your premium courses even though that costs you money. It doesn’t sound like that’s hurt your bottom line or your brand. If anything, it sounds like it’s helped. The people who remain are the top performers who will do anything to work with you.

    Unrelated to IWT:

    I recently started going to a skincare place that is doing VERY well for itself, even though its website is ugly as sin (link: http://tinyurl.com/pdfjyab). The owner is an unassuming Russian lady who looks like someone’s mom. As I sat in the chair during my first appointment with her, I realized she was a marketing genius.

    “How did you find us?” she asked.

    I said I found her through Google, and that her online reviews at Yelp were through the roof, but what sealed the deal was her website. Once I saw the website, I had to work with her and no one else.

    She laughed. “My website is really ugly, isn’t it? It’s okay, you can say so. To be honest, I have no time to work on the site because I’m so busy with clients.”

    Here’s why the site is so good even though it’s “so 2003” as she put it: the owner immediately establishes herself and her team as authorities on all things skincare. If you don’t want to work with her, fine, but she’s still going to educate you so you can at least find the right specialist elsewhere. Her website is a crash course on how to find the right person to work with, what qualifications they should have, what questions you need to ask, how long treatment takes, and what results to expect.

    You don’t have to guess at ANYTHING. This lady lays it all out for you. She takes your dream and gives you the tools to make it happen.

    (And she hints: by the way, you don’t have to work with us, and that’s okay because honestly we’re very busy already, BUT we do have the latest and most high tech equipment that’s the best in the industry and ensures no pain, etc etc.)

    No wonder she’s busy as hell. The best part? She had a new client in the other week, a corporate executive who told her, “Your website is really ugly. You need to change it or you’ll never get customers!”

    The owner said, “Do you build websites?”

    “No.”

    “So why are you here if the website is so ugly?”

    “Well, clearly you know what you’re doing, so I didn’t want to go to anyone else.”

    There’s always a critic 🙂

    • Carmen

      100% SPAIF.

      However, I’m seriously considering electrolysis and need to obtain as much as information as possible from legit people who actually really know what they are talking about and doing, so thank you for the link. 😀

  36. Brett

    I use D-2-C all the time. I often find I am disappointed at the ethical level for the decisions driving those decisions. I think that if C2B D-2-C will work, there is no reason to think B2C D-2-C wouldn’t work. The question for a business making decisions regarding outliers would have to be substantiated by a specific example in their market research. It would be like making decisions based on the average horse versus decisions made for a Secretariat which had a heart 3x the size of the average. You need a cooperative Secretariat in the stable to even know what you’re missing.

  37. Zach

    In line with the IWT method of excluding those with credit card debt from purchasing a flagship course, apartment communities eliminate move-in incentives like “$79 moves you in” or “First Months Free” type promotions. At first glance, this is bad for move ins and slows the leasing process. However, after a few months, it lowers bad debt (delinquent rent) in a huge way and attracts and higher quality tenants.

  38. Ellie

    The example that popped into my head was from a company I use to work for. They had a new VP and he brought in experts to train us on Lean and Six Sigma. None of the employees had ever heard of the concepts and thought it was another ‘flavor of the month’ deal.

    Low and behold appox. 5 years after training started, a plant that was running 24/7 during peak season was able to cut back in most areas to 2 shifts or at some points 1 shift and no overtime. I really wish I knew how much labor hours were saved because I know it was extremely substantial.

  39. George

    The biggest thing I can think of for a business move the public initially criticized, then loved, was casting Heath Ledger as The Joker in The Dark Knight. EVERYONE looked at Ledger’s acting history and thought Christopher Nolan and his team were crazy, that Ledger would ruin the movie. But now a near majority of people look to Ledger’s performance in that role as being the definitive Joker.

  40. Chris

    I used to run a daily deal site. Every so often I would submit it to deals.woot.com . One time I was playing with pricing and trying out free, just pay for shipping ( I think $5). “$5 for shipping? For that much they better have a navy seal delivering that to my house.” Really? It was going to cost me $3 to ship which meant after merchant account fees I was making about $1.80… But ya, you keep expecting a navy seal to deliver that. What the idiot didnt realize, he could have ordered up to 5 of them and I would have charged a flat $5.

  41. Ingimar

    A large aluminum corporation, I believe it was Alcoa but I am not a hundred percent, wanted to turn the company around and make it profitable once again. They brought in a new CEO for the job, and to everyone’s surprise he declared that the priority would be to make sure that there were no accidents on their sites. This flabbergasted many, the prevailing wisdom was that accidents were an inevitable part of heavy industry. He kept pushing for it, making many changes across a wide array of facilities.

    To the surprise of many, he was successful in giving the company several accident free years. But even more surprising was that profits started to rise dramatically. Now the rising price aluminum helped, but didn’t account for all of it. Turns out that the insistence on safety created a culture of excellence throughout the company. By making every employee responsible they created a culture where everyone held each other accountable and this transferred into much higher quality work.

  42. R

    Hi Ramit, excellent video again, and very thought provoking. Like the people in your example, I started a new way of eating and in 18 months went from looking like a chunky middle-aged woman to being the same size I was in college and having my doctor tell me I’m in excellent health, with a normal BMI. And now my mother, who was after me for years to lose weight, is terribly worried that I might be too thin. Oh, my! What a problem to have! I LOVE it. (And no, I’m not too thin. Just right, actually.)

    Anyhow, I have been forcing myself to reconsider many of my snap judgments for a while, and it has expanded my gratitude for life and for what other people can do. Years ago I may have put down people in marketing, but last fall I took an intro to marketing class and now all I can say is it’s brilliant to be able to make something look obvious and like common sense but only after the fact, and very difficult to do.

    I am not sure what I would say I disparage–lately I feel just so grateful to be here. For example, the people that empty the trash cans in office buildings and run the vacuum and such. It’s a valuable service, and some of them (maybe all, how do I know?) are quite smart. They just have different objectives than me, at least for the moment. And perhaps a lot more free time to pursue outside interests. There is always a trade-off.

    One thing that I have disparaged in recent years is the sale of rather poorly written novels online, self-published, or more to the point, the way some of those writers brag about themselves. I still don’t like poorly written novels, or bragging, but I can see that there is money to be made that way, while it is very difficult to make money when struggling to write to a higher level and find commercial publication with a reputable house. Still, it’s a choice–do you go for the easier money or do you go for the sheer joy of language and hope the money (and readers) will find you some day?

  43. Darren R

    some aspects:

    mcds is very good at what they do data-wise. they pretty much know when you are going to show up at their front counter or drive up before you do.

    a family friend sells bikes/bike parts online at shows, via craigslist & so on. he stays with his asking price because people who try to lowball stuff are typically nuisance customers, in his view, a buyer trying to lowball is advance warning that they’ll be late paying, they’ll complain about this or that, ask him to drive across town to meet them & they’ll be late or not show up, they’ll ask for free overnight shipping, etc. so he weeds people like that out via price.

    or for any tshirt vendor: there are plenty of chintzy people who’d talk the vendor into $8, pay with a $10 bill and expect $2 change back.

    on the other end, if seller stays at full price then they’d best be worth it. if i wanted a certain tshirt badly enough to pay…. fifty or a hundred for one, it had best not fall apart in the washing machine the week after!

  44. M

    This was one that my [far more marketing-savvy than I] friend pointed out to me. I had been complaining about Chik-fil-A after they made their anti-LGBTQ rights stance clear. I said that I would never eat there again. My friend explained that it was actually a good business decision for them. I’m not the type who eats at Chikfila regularly anyway, so losing me and other tree-hugging hippies as customers didn’t matter. However, their politics probably endeared them to their conservative Southern customer base even more. Plus by now it’s been long enough that most people have probably forgotten about that incident, and frozen iced lemonade does sound pretty good as it gets hotter, so anyone who isn’t completely committed to their boycott is probably slinking back like Ramit to a t-shirt stall.

  45. Cassie

    Nothing really comes to mind. I
    I guess I would go with the current arrangement of chicken farmers, who seem to be somewhat exploited in away to where their emotional vulnerabilities detract from their legal abilities to “make a Bloomingdale’s” proposal. Chicken is well advertised as being better than beef, and there are many chicken specific restaurants that come to mind when one is asked to think of restaurants. I think the context of good business is in earnings. This would be good business for that there is an avenue, or avenues in which a great amount of shift in practices would maximize branding on local levels, and encourage such mass changes in a structured way, to expected ends, and under existing brand names that allow for profits and sustainable future of the chicken industry, and where the ability to document such changes would be able to be bought and utilized by industries in similar circumstances.

  46. Eric

    I’m sure tons of people try to give you advice about how having a 100% remote company is dumb. I’m also sure it’s hard not to laugh at them.

  47. Abhishek

    Just some great examples from IWT. IWT products are high price products, and they could probably get more customers if they were to lower prices. But they know that the people who are willing to pay the high price are actually those who will take action, who value the materials and are likely to buy other IWT products as well. So you maintain high price, get high quality students, subsequently get high quality testimonials, and over the long run, that leads to more sales.

  48. Austin M.

    Example: Coca-Cola – New Coke is remembered as one of the largest flops in marketing history, indicative of a company that betrayed it’s base while trying to appeal to a broader audience. Many people mistakenly believe that Pepsi has outsold coke ever since. In fact, after they brought back Coca-Cola Classic, sales rose higher than pre-New Coke levels, and stayed there. Now both Coca-Cola Classic and Diet Coke outsell Pepsi.

  49. Luke Nyman

    Abercombie & Fitch CEO said he doesn’t want to sell to fat people. People think the bad PR is hurting them. I think everything is going according to plan.

    “In every school there are the cool and popular kids, and then there are the not-so-cool kids,” he told the site. “Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely.”

  50. Caitrin

    I have a few that spring to mind…

    Reality television in general. I am DEFINITELY not in the target demographic for that though, I grew up without tv channels in the house and even now only watch about 2-3 shows regularly and only when they’re posted online. I am active in avoiding advertisements and do not use television as an escape at all. So really. I can’t see the point of reality tv because it fulfills nothing for me. It really must for other people though.

    Facebook groups. I really hated that the communities for Ramit’s courses are in Facebook groups. Up until I lived abroad (and wanted to stay connected to friends and family back home) I didn’t even have a Facebook! But realistically, FB is somewhere most people spend plenty of time. Checking FB is already a habit for most of Ramit’s customers, residing where people are already sending their eyeballs can only be beneficial for his communities.
    Plus I imagine finding a group forum more accessible/easy to use/habit forming than Facebook… well I don’t even know if such a thing exists.

    Starbucks recently (in Canada at least) rolled out a new branding initiative for their baked goods called ‘La Boulange’. I was really curious when it happened! They had light pink sleeves for the cups, pink aprons for the baristas, and brochures ALL over the place almost like menus. Now the rebranding was fine, actually it was brilliant because the pink was REALLY reminiscent of the breast cancer awareness campaigns.
    My disgust though was realizing upon looking through the brochures… that all the food was EXACTLY the same as before. There were a handful more gluten-free items added, but all the staples like sandwiches, croissants, brownies, cake pops, etc… were precisely the same recipe/look/taste as before. It just seemed like weird timing since they’ve been slowly adding these food items for years! Perhaps there is a significant customer base that never buys food so never looked that closely at the display cases and wouldn’t notice that despite the rebranding: everything is the exact same. At any rate, I still just buy the yogurt.

  51. Matthew

    Mark Zuckerberg didn’t sell Facebook back in ’06 when Yahoo! offered to buy for $1B.

  52. Jez Nicholson

    I nominate mobile (cellular) phone companies and their hugely confusing range of tariffs and bundles. They continue to generate money from a mostly commodity product combination of handset + talktime + SMS messages + internet data.

    In the UK, this has been taken up by energy providers. They were forced to allow easy switching between competitors so made up loads of confusing tariff combos so that consumers have no real idea what they are paying.

  53. K

    Deviantart.com increased the price of their premium membership from around $30 a year to $50 a year and people started going crazy. As a free user of the sight, I felt a certain amount of frustration as well because the services offered aren’t that great. No ads, you can add pictures to comments, you can poll people, give and get critiques, etc. But in retrospect, my response was typical of someone who wasn’t ever going to be a paying customer of the site.

    I believe Deviantart was smart with this decision as they aren’t losing any business, but making more money from the people who would pay anyway. For those who did take their presence on the site seriously, an extra $20 a YEAR is miniscule. The people who usually buy premium are adults with jobs. Not preteens, teens, or college kids who are art majors and are strapped for cash; i.e. the ones who were complaining about the price increase.

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  56. Financial Canadian

    Speaking of people doing things that are perceived as dumb…Brexit anyone?

    The difference here is that it isn’t even good for business.

    FC