When it comes to our relationship with power and money most of us struggle, writes Verandah Magazine columnist and business mentor Sonia Friedrich, who has just released a new DVD on how to set terms for customers.
There seems to be a weird relationship the majority of us have around money. So often we lose our power when the subject comes up. We find it a difficult to discuss, let alone ask for money for the services we offer. We whisper our fees and terms, start to sweat, or even discount the fee right on the spot. Many of us simply avoid the topic of money all together, and divert the conversation to something completely different. But of course none of this serves us at all. Money, or abundance, is such a central part of our life and actually helps life flow. We need to learn basic skills for these discussions and to love and embrace the topic rather than fear it.
When you run your own business, being able to talk about money, without fear, is a critical part of the daily conversations – and it needs to be. After all it creates the survival of your business, helps pay the bills and ideally, is what allows you to make a profit and live the life you dream. Understanding human behaviour toward money (including your own) can help you understand how customers behave around money too.
Did you know that you (and all humans) fear loss more than you value gain? You do this at a ratio of 2:1. This means that you prefer to stay in a situation that you are in, even if it isn’t good for you. What is the implication of this in business? It means even if you know a product or service is good for you, your default position is the status quo. This default position remains the same until you emotionally engage with the product or service and this tips you over to disrupt your status quo. Your customers are exactly the same. Customers will fear losing not only the position they are in, they will also fear losing the money they are about to part with for your product or service. Even when you know something is good for your customer this fear of loss is one of the reasons they simply cannot make the decision to purchase it and walk away.
You physically feel pain when you pay. Seriously! The insula (or insular cortex) in the brain fires when you are about to part with cash. This is one area of the brain associated with anxiety and pain. No wonder it hurts to pay. You literally have the pain of paying.
Have you ever seen Apple discount their products? No. Never. Why? They know that discounts permanently damage the perceived value of the brand. So when you’re thinking about having a discount to bring in some short-term revenue, be aware that the relative value now associated with your brand is reduced forever.
There are many factors involved in the interaction and association we have with money. Understanding some of these not only helps put customer decision-making and judgement in perspective. You can learn to use some of these aspects to the financial advantage of your business.
Instead of fearing money it is time to embrace it. Make money your friend. Love the numbers and start to see and feel a shift in your relationship and power with money.