The herd mentality is more prevalent than we ever imagined
A recent study published in the Journal of Consumer Research called “Social Defaults: Observed Choices Become Choice Defaults” found that when people didn’t have a strong opinion about the choices presented to them, they just mimicked other people around them. Instead of asking questions, or spending time learning about products, people just automatically deferred to the “social default.”
Products that were clearly inferior were chosen by study participants simply because people around them had also chosen those products. The authors concluded: “Our research demonstrates that automatic forms of social influence are more pervasive than previously thought.”
This is bad news for consumers as manufacturers will always be able to churn out inferior products and captialize on the ‘herd mentality’ to sell them to us. But it’s good news for anybody who wants to rise above their competitors – just do things differently to the business herd in your industry.
So what do the herd do that you can do differently? It’s probably more what they don’t do: In the investment world, it’s known as the ‘Herd Instinct’ – “A mentality characterised by a lack of individual decision-making or thoughtfulness, causing people to think and act in the same way as the majority of those around them”. This type of mentality was the primary cause of the dotcom bubble and subsequent crash at the turn of the century.
“A lack of individual decision-making or thoughtfulness” sounds more like something you’d expect from a reckless few than from the majority, but sadly this is not the case. So why this lack of decision making?
The herd are disabled by fear
Like deer frozen in the headlights or a car, the herd are terrified. They fear change, they fear failure and they fear the possible humiliation that comes with it- so they’re reluctant to try anything new. According to the Australian Bureau of Statistics, only 18.8% of Businesses introduced any new or significantly improved marketing methods in the 2012/2013 financial year. That means over 80% of Australian businesses are doing the same thing over and over and hoping, just hoping that this year will be different...
Customers and clients are the lifeblood of any business, but 9 out of 10 businesses have no marketing plan and no idea where their customers and clients are going to come from aside from word-of-mouth, a directory listing and perhaps a sign. Without a steady stream of new clients or customers, it’s very hard to make a business profitable.
That’s probably why only 39% of Australian businesses actually make a profit and just 21% of them are successfully sold when the owners want to retire!
If you own a business, you probably have most of your assets tied up in that business and are counting on it to provide you with a livelihood and retirement. So it’s incredibly counter-productive to be shackled by fear – even that emanating from negative past experiences, such as costly marketing you tried, that failed to bring any results.
American lecturer and poet from the 19th. Century, Ralph Waldo Emerson wrote: “Fear always springs from ignorance” a statement few would disagree with today.
Knowledge will empower you to conquer fear and leave the herd!
In the book “7 Habits of Highly Successful People“, author Dr. Steven Covey devotes an entire chapter to what he calls “Sharpening the Saw” – investing in ourselves, improving our skills and knowledge. This is something the herd don’t do, because it is hard work and is an investment in future benefit rather than instant gratification.
And this is precisely why most marketing methods fail – business owners and their staff are uninformed, even clueless when it comes to marketing. They will blindly throw money at what’s known as “image advertising” or hire advertising experts who will do the same. In fact, 95% of all advertising you see on television and in print is image advertising. Image advertising is really designed to remind consumers of your brand and products and services, rather than bring in inquiries and sales directly. Image ads are effective at building brand awareness. The problem is, it takes time to translate into sales– time you probably don’t have.
There is another type of advertising, that evokes an immediate response and compels people to take specific action – picking up the phone and calling for more information, or placing an order. It’s known as “Direct-response” advertising- and it works with any product in any industry. Direct-response advertising can be run online or offline, in social media, print publications, on television, by email or direct mail in almost any form you can imagine.
Successful people have failed more times than people in the herd. They don’t fear failure, they just get back up, learn from the failure and try again!
We all make mistakes, that is human, the problem is that often we don’t learn by those mistakes. We keep doing the same things over and over again, expecting a different result. Some say that’s the definition of insanity, but then if it is, insanity must be commonplace. Perhaps it’s more the definition of normality.
To succeed we must be different and certainly not learn the same lesson over and over again. Nobody has time for that. The Streetsmart CEO Ian Marsh, himself a multimillionaire, often cautions: “Don’t get too comfortable – You’ll blink one day and life will all be over, so experience as much of it as you can, while you can!”. You must dare to do things differently, dare to be everything you can be and make your business everything it could be!