Here’s something we all give for granted but we don’t really think about…
Why is water, which so essential to life, valued less than diamonds (which have very little practical use)?
In economics this is known as the “water / diamond paradox”.
Before economists were able to formulate a theory for why this is, they simply thought in terms of all or nothing.
People either valued water or diamonds.
What they got to was a fundamental way of thinking that influences how everyone makes decisions.
Including your prospects.
It’s called “marginal thinking”: people don’t make decisions based on all or nothing, we decide to have a bit more or a bit less of something, based on what we value at the time. And we do so “at the margin”.
For example, when you’re changing a habit, you don’t just decide to jump into it. You slowly build on it, piece by piece, day by day.
You decide to add just another unit to that habit (whether it’s a couple of pushups or a few minutes of meditation and so on…).
When it comes to drinking water you wouldn’t think of its value in terms of the entire water supply, but just in terms of another glass, or bottle.
Marginal theory explains why understanding your prospect’s situation and their journey to the moment they reach you, is critical if you want to convert them.
And why you should try to get a good picture of where they were 5 years, 5 weeks and 5 seconds before they found you.
It all gives you a full understanding of their decision making process and how it changes or how it’s influenced over time.
You start seeing what they value, when and why. So you can mold your messaging accordingly.
Perceived value at the margins is also influenced by scarcity, too. But that’s a topic for another day.
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