Value in a Worthless Lottery Ticket
Is there value in a worthless lottery ticket? Yes, and it’s a perfect illustration of how our prospective clients (and all of us, actually) make buying decisions based on intangibles which have nothing to do with our services, experience, or credentials. The Price and Value Journey is presented by John Ray and produced by the North Fulton studio of Business RadioX®.
TRANSCRIPT
John Ray: [00:00:00] Hello again. I’m John Ray on the Price and Value Journey.
John Ray: [00:00:03] The largest single lottery pool in United States history was a Powerball jackpot of 1.6 billion in January 2016. Three winners in California, Tennessee, and Florida each had the option of receiving a $533 million pre-tax annuity or a lump sum payment of 327.8 million. Now, the odds of picking the correct six numbers in such a lottery are one in 300 million. Now, expressed another way, the chances of success in this game are essentially 0.00000033. Yes, essentially zero.
John Ray: [00:00:54] Now, any logical analysis of this purchase would deem these lottery tickets to be essentially worthless. So why would anyone spend $2 to buy what is basically a worthless piece of paper? Moreover, why would they stand in long lines like thousands did in the days that led up to that drawing to buy a ticket, which essentially has no monetary value? What drives the purchases of these tickets? Well, hopes and dreams, for one. The dream might be to pay off the mortgage or student loans or both. Maybe they want to buy a house for mom or something more extravagant, like a vacation home in Spain or Costa Rica. Maybe it’s an around-the-world cruise.
John Ray: [00:01:44] Whatever the motivation, visualizing the realization of that dream is something lottery ticket buyers receive. It’s intangible. Buyers are also motivated by identification. Everyone else is buying, so maybe you ought to give it a shot. Another motivation is the fear of missing out. It’s the I can’t win if I don’t play thinking.
John Ray: [00:02:09] Now, where I live here in the state of Georgia, lottery proceeds fund scholarships to in-state colleges. Some buyers, while accepting the extremely long odds, justify their purchase as a contribution to education. What’s the common thread in all these motivations? They are all intangible. Clients buy for intangible reasons which have nothing to do with the features and benefits of the product or service or what you might think might be logical about those products or services. This is true for all customers and everything they buy. This is true for you. This is true for me. Everything. Everyone.
John Ray: [00:02:58] And if you’re a professional services provider, you might think it’s different for you and you’d be wrong. Your clients aren’t any different. They’re motivated by their own mix of intangibles, many of which have nothing to do with your features and benefits. They will buy from you based on reasons you might think are crazy, meaningless, silly, or irrational. They will also turn down your pitch or even fire you based on reasoning you think is illogical. They will buy worthless pieces of paper for two bucks and find value there when they do. The extent to which you understand and internalize and act upon this fundamental aspect of human behavior will drive your ability to effectively market your services, price your services, and serve your clients.
John Ray: [00:03:51] I’m John Ray on the Price and Value Journey. Past episodes of this series can be found at pricevaluejourney.com. Or you can email me directly, john@johnray.co. Thank you for joining me.
About The Price and Value Journey
The title of this show describes the journey all professional services providers are on: building a services practice by seeking to convince the world of the value we offer, helping clients achieve the outcomes they desire and trying to do all that at pricing which reflects the value we deliver.
If you feel like you’re working too hard for too little money in your solo or small firm practice, this show is for you. Even if you’re reasonably happy with your practice, you’ll hear ways to improve both your bottom line as well as the mindset you bring to your business.
The show is produced by the North Fulton studio of Business RadioX® and can be found on all the major podcast apps. The complete show archive is here.
John Ray, Host of The Price and Value Journey
John Ray is the host of The Price and Value Journey.
John owns Ray Business Advisors, a business advisory practice. John’s services include advising solopreneur and small professional services firms on their pricing. John is passionate about the power of pricing for business owners, as changing pricing is the fastest way to change the profitability of a business. His clients are professionals who are selling their “grey matter,” such as attorneys, CPAs, accountants and bookkeepers, consultants, marketing professionals, and other professional services practitioners.
In his other business, John is a Studio Owner, Producer, and Show Host with Business RadioX®, and works with business owners who want to do their own podcast. As a veteran B2B services provider, John’s special sauce is coaching B2B professionals to use a podcast to build relationships in a non-salesy way which translate into revenue.
John is the host of North Fulton Business Radio, Minneapolis-St. Paul Business Radio, Nashville Business Radio, Alpharetta Tech Talk, and Business Leaders Radio. house shows which feature a wide range of business leaders and companies. John has hosted and/or produced over 1,100 podcast episodes.
