Beware the salesperson’s incentives

Only 1.5 percent of the purchase price goes directly into your agent’s pocket.

So on the sale of your $300,000 house, her personal take of the $18,000 commission is $4,500… Not bad, you say. But what if the house was actually worth more than $300,000? What if, with a little more effort and patience and a few more newspaper ads, she could have sold it for $310,000? After the commission, that puts an additional $9,400 in your pocket. But the agent’s additional share — her personal 1.5 percent of the extra $10,000 — is a mere $150…

It turns out that a real-estate agent keeps her own home on the market an average of ten days longer and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she encourages you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and to make them fast. Why not? Her share of a better offer — $150 — is too puny an incentive to encourage her to do otherwise.

Excerpt from: Super Thinking: The Big Book of Mental Models by Gabriel Weinberg and Lauren McCann

On how we impose a stronger burden of truth on ideas we don’t want to believe (disconfirmation bias)

When our bathroom scale delivers bad news, we hop off and then on again, just to make sure we didn’t misread the display or put too much pressure on one foot. When our scale delivers good news, we smile and head for the shower. By uncritically accepting evidence when it pleases us, and insisting on more when it doesn’t, we subtly tip the scales in our favor.

Excerpt from: Super Thinking: The Big Book of Mental Models by Gabriel Weinberg and Lauren McCann

On the importance of finding the real, and sometimes hidden, reason for someone purchasing your product

You might assume that a milkshake’s job is to be a special treat to cap off a meal. While it is true that many parents offer shakes as an after-dinner family treat, this restaurant learned that almost half of their shake customers were using them for a different job — to make their long morning commutes more interesting. People felt their trips were more enjoyable as they sipped milkshakes while moving through traffic.

Doing two jobs at once sounds great, but that usually means at least one job isn’t being done particularly well. In this case, parents didn’t like how long it took their kids to drink the shakes.. Yet that was one of the key features for the commuters.

The restaurant chain realized they needed two different products to do the two different jobs well. They decided to further improve the shake for the commuters by making it even thicker, adding more chunks and moving the shake machine to the front of the stores for the fast on-the-go service that commuters wanted. They then needed to market a wholly different dessert product to kids and their parents.

When you truly understand what job people are really truing to get done by using your product, then you can focus your efforts on meeting that need.

Excerpt from: Super Thinking: The Big Book of Mental Models by Gabriel Weinberg and Lauren McCann