Running a business can be a daunting task. There are so many things to think about, from marketing and sales to finance and human resources. But what about psychology? What role does psychology play in running a business?
Our great psychology schools teach us that psychology plays a big part in our lives. It influences the way we act, behave and think. It can also play a big role in our buying decisions. If you’re an entrepreneur, you will likely use psychology to run your business and keep it afloat.
Psychology can help you understand your customers
One of the most important roles of psychology in business is understanding your customers. Psychology can help you answer questions like: What are my customer’s goals? What do they want to achieve in life – and why is it important for them to achieve these things? How can I make their lives better?
Marketing campaigns that use psychology
One good example of using psychology in business is the Dove “Real Beauty” campaign. This campaign was based on the idea that women are beautiful no matter what their size or shape. It used psychology to tap into the insecurity many women feel about their appearance, and it was very successful.
Psychology can also help you understand your employees
But psychology doesn’t just help you understand your customers, it also helps you understand your employees. Why are they working for you? What motivates them to put in their best efforts each day? How can you make them happier and more productive?
Psychology can even help you with pricing your product
Beyond customer service, psychology has other uses in the business world. It can help you with pricing your products. One way to increase the amount of money people will pay for something is to make it seem like they’re getting more than what they’re paying for – that’s why retail stores try to give their customers small gifts with any purchase, like a free gift bag of candy.
How does psychology play into running a business?
Now that you have a basic understanding of how psychology plays a role in running a business, consider the following types of psychological influence:
- Psychological factors play a strong role in consumer behavior. For example, marketers study how emotions drive customers to make impulse purchases or stick to their shopping lists.
- The way you greet customers can have a huge influence on how they perceive your business and products, so even something as simple as a smile or a cheerful greeting could help improve interactions with customers.
- Psychology is also involved in hiring new employees. If you understand the different personality types that exist, for example, it can be easier to find the best employees for your company.
- When it comes to pricing, psychology can also help businesses make more money. For example, if you can convince customers that they’re getting a good deal, they might be more likely to buy from you.
Applications of Psychology in Business Management
So, we know that psychology is a powerful tool that can be used in various ways to help businesses run more smoothly. Let’s take a look at some specific applications of psychology in business management:
- Employee Motivation: Psychology can help managers understand what motivates their employees and how to best motivate them. For example, some people are motivated by financial gains or working toward promotions. Others are motivated by working behind the scenes to find solutions, so managers should provide opportunities for these employees to shine.
- Converting Customers: If you know what turns customers off, you can avoid it and make them feel more comfortable using your products and services. For example, if you know that some people are uncomfortable yelling orders at a drive-through speaker, you can add a friendly prompt that tells customers to “pull forward.”
- Hiring New Employees: When hiring new employees, managers should look for candidates who demonstrate certain qualities. For example, candidates who show signs of selflessness and altruism tend to be better team players than those who place their own interests above those of the team.
- Decision Making: Making decisions is a key part of business management, and psychology can help managers make better decisions by considering the cognitive biases that may be influencing their decision-making. For example, the sunk cost fallacy can lead managers to continue investing in a failing project because they’ve invested so much time and money into it already.
Running a business, whether big or small, is as much about marketing and sales as it is about finance and human resources. Psychology can play an important role in all of these aspects, giving you the tools to understand your customers better and make them happier with what they buy from you. But psychology also helps you to understand your employees, to price your products correctly, and to make your business more successful. So the next time you’re starting a new business or trying to improve an existing one, don’t forget the power of psychology.