Posts Tagged ‘rutland walker’

Social Media and The Rule of 150

Published by admin on October 18th, 2012

Original Photo courtesy of

Social Media and The Rule of 150.

Google uses social media engagement as a key metric in giving relevance scores to websites, so, the more “likes” on your Facebook page the better, right?  10,000 is 100x better than 100 and a million is 100x better than that, right?  It’s important to remember that metrics don’t buy your products or services, human beings do, and while social media has changed our habits, our motivations and the size and sphere of our social groups haven’t changed since prehistoric times. Turns out the number you as a business owner need to be focused on is 150.

Social media has changed the conversational medium by which human beings communicate; it just hasn’t changed human beings.  The typical social group size for humans hasn’t changed.  It is and has always been about 150 people.  With the explosion in population, travel and access, and now the internet, social media, etc. one would think our social sphere of influence would have expanded, but it hasn’t.  Dr. Michael Gazzaniga is well researched in this field, and articulates this in his book Who’s In Charge: Free Will And The Science Of The Brain

Dr. Gazzaniga sites the work of Robin Dunbar, head of Oxford University Social and Evolutionary Neuroscience Research Group in the Department of Experimental Psychology:

“150-200 people are the number of people that can be controlled without an organizational hierarchy. It is the number of people one can keep track of, maintain a stable social relationship with, and would be willing to help with a favor.”

But why? What are the limiting factors that keep us at a social group of around 150? Turns out it has to do with the size of the neocortex in our brains.  He goes on to explain:

“To have social relationships, you call on five cognitive abilities:  (1) you must interpret visual information to recognize others, then (2)be able to remember both faces and (3) who has a relationship with whom; (4) you must process emotional information, and then (5) manipulate information about a set of relationships.”

Managing human relationships requires an immense amount of processing power and for whatever evolutionary reason our brains’ cognitive capacity caps out at around 150 people.  Yeah, but you (or someone you know) have 784 Facebook friends, right?  More from Dr. Gazzaniga:

Today’s social networking sites appear no different.  In an ongoing study, Dunbar has so far found that even people with hundreds of “friends” interact with a limited number of them.  “The interesting thing is that you can have 1,500 friends but when you actually look at traffic on sites, you see people maintain the same inner circle of around 150 people that we observe in the real world.”

Still think getting that lady who has 950 Facebook friends to like your page is super influential? Sure she is, but no more than that introverted customer who slips in and out of your business without much engagement or feedback at all.  They both have about the same size social group.  Every customer interaction, from your advertising, your Facebook page, your website, to your phone calls, your trucks and store fronts, is an opportunity to delight each person as if they have direct influence with 150 people, because statistically speaking, they do.

The Conventional Wisdom Trap

Published by admin on June 22nd, 2012

  “In this economy, people are just looking for a deal” – Customer of mine who shall remain nameless

Conventional economic wisdom says that the reactions to price fluctuations should be inversely proportional (assuming there is adequate demand for a product or service).  Drop the price, consumers buy more.  Raise the price, consumers buy less.  But there’s a quirky thing about manipulating price and using price offers…

Prices have meaning beyond “the price”: Because we make decisions emotionally, consumers are irrational beings.  We imbue variables like price fluctuations with feeling or meaning.  The short-term reward from a discounted price offer is disproportionate to the fear of loss over a price increase. Manipulating prices to attract business in the short-term is a slippery slope and it is very difficult to recover from for three scientific reasons:

1)       Loss Aversion- Loss aversion is a conditioned response that refers to a person’s tendency to avoid loss over acquiring a gain. It is an emotion rooted in fear and it is innate in all of us.  The less the emotional connection there is, the more important price becomes as a factor. With no “emotional tie-breaker”, your customer is more likely to revert to the emotion of fear in the form of loss aversion and think in terms of potential losses vs. potential gains, and pay the lower price.

2)       Value Attribution- Consumers attribute value based on their initial perception. Particularly when attempting to attract new customers, the lifeblood of any growing business, “first impression” is difficult to overcome. If you use price tactics to attract customers, you can expect to lose them to a competitor on price as well.  Moreover, price tactics alone make building repeat and referral business a challenge. Asking a customer to pay $20 for a lunch that she paid $10 for the first time she patronized the business is a tricky proposition.

3)       Confirmation Bias- Similar to value attribution, confirmation bias is our natural inclination to favor information that confirms our initial impression.  What we believe is our reality, and we reject evidence that contradicts our beliefs.  Confirmation bias is a key-critical element in long term planning of your advertising.  There can only be one price-leader in any given category, and chances are you are not it. In the long run, raising the anticipated value and creating the confirmation bias of an excellent customer experience is always the more profitable move.



Photo courtesy of