Stimulus Response Theory and Your Business
Charlie Cook
I mentor business owners who want to have more fun, be more successful and make a difference.
How to double or triple your revenue and profits
Ever touch a hot stove, or in my case, stick a pocket knife in a 120v electrical outlet by mistake??
I was helping a friend install paneling and trimming it to fit over an outlet. When I hit a live outlet sparks flew and I ended up melting a part of the blade of my Swiss Army knife.?
Just like touching a hot stove, it hurt and surprised me.
It’s called The Stimulus Response Theory. Stimulus (120 volts hitting my hand) Response (drop the knife and never make that mistake again)
Applying the Stimulus Response Theory to your business
Growing a business is all about managing behavior, the behavior of your prospects, clients, team members, suppliers and partners.?
The simple trick is to apply the stimulus response theory. Here are a few examples:
Marketing
All too often I hear people say, email marketing, internet marketing, advertising, direct mail marketing, etc don’t work. And sure, it’s true, for a lot of people it’s not working and a total waste of money. So what can you do?
Apply the stimulus response theory to marketing. If people aren’t opening your emails, it’s not email that’s the problem but the headline. Change the headline and see what happens. Include known emotional “power words” and you'll see response rates increase by 1000%. The same is true with your ads.
The simple truth is if people aren’t responding to your marketing, it’s not that marketing doesn’t work but you haven’t landed on the right stimulus to use yet.?
Sales
Not closing enough sales? Just like in marketing, the sales process is based in stimulus response theory. The right stimulus or offer is most likely to trigger a sale. The wrong stimulus or offer will send prospects elsewhere.?
What can you do to increase close rates?
As I mentioned above, in some cases it’s the offer. In other cases it’s how you present the offer. Some people don’t mind being pitched, but most people prefer a consultative approach where you elicit their concerns and then offer a solution to them.? Change the stimulus and the response will be more sales.
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Management
I had one client ask me what he could do to increase teamwork and decrease internal competition with one group of employees. The key here is to know which stimuli work and which don’t. Managing your team is all about managing behavior too.
My first question for my client was, how was he paying his team? Was he paying for individual performance or team performance? You guessed it. He was trying to build teamwork but rewarding them for individual and competitive performance, the opposite of what he wanted.
At my agency, when we started to grow our sales team, we paid the traditional base plus commission. Which worked okay for a few years. Then we started growing the sales team and needed the seasoned folks to train and help the new folks and work together by region. Which was when things fell apart.
Our senior sales people didn’t want to give up any clients or any time helping the new sales team members. With the commission pay structure, they would have made less by helping others on the sales team.
Which was when we shifted to paying all the salespeople a flat annual salary - equal to their base and commissions. The result was, the following month we had one of our top sales months ever.
Turns out selling is a team sport. When you get your sales people working together and helping each other, collectively they sell more. Not to mention, most people strongly prefer having a steady income, one they can count on versus. one that goes up and down based on market conditions and their sales for the month.
Which stimulus you use depends on your long term goals. Obviously everyone wants to get paid a fair wage, but the fallacy held by some, is that everyone is just in it for the money and employees will do anything to make more money. Which in my experience isn't so.
Top employees respond best when their provided with purpose, given a job which taps their passion, shown appreciation, and are part of a team and yes get fair compensation and benefits.
The number of places the stimulus response theory applies to business is endless, from generating leads, to increasing conversion rates, to improving retention rates, to reducing accounts receivable, to building collaboration and productivity.
While there is more to growing your business than just managing behavior, applying the stimulus response theory to every part of your business can make a huge difference.
Discussion Questions
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? 2023 Charlie Cook