Enhanced Savings Rates

This is from our HSA. It’s good copywriting. ‘5X’ is easy to understand. ‘You may be missing out’ is great too. 

The chart excels as well. It’s easy to understand and those Enhanced Rates do look bigger. They look bigger because of level one numeracy. 

We level one think all the time. It’s knee jerk and first blush. We see something and some combination of evolution and experience fit what we see with what we know. Big red ‘Sale’ signs are examples. We first compare the sale price with the previous price rather than the item’s intrinsic value. This makes sense as our first reaction is immediate, requires no additional effort, and is something we are used to doing because it mostly works just fine. 

The posts here, about average, focus on this idea too. Average is easy to compute and conveys certainty about an uncertain (often heterogeneous) world. Average is level one numeracy but we can do better. 

One way to get past this reactionary thinking is to change the what we know part of our lives. Books like The Data Detective (2021), How to Lie with Statistics (2010), Fooled by Randomness (2008), and Factfullness (2018) are wonderful. 

A fast fix comes from Sir David Spiegelhalter. Don’t look at relative comparisons, look at absolutes. Rather than the HSA’s relative rate, look at the dollar difference. 

That’s what I did. 

If someone saves the $2,000 in an ‘enhanced’ HSA account they have sixteen more dollars after twenty years. A lot of years for not a lot of money. For accounts of ten-thousand dollars, the difference is almost eight hundred dollars ($11,543 vs $10,745). Fine, a Series I Savings Bond accrued that same dollar value in six months. 

The don’t look at relative comparisons, look at absolutes is a good starting place – but there are further levels. 

First is to think about the costs. The enhanced HSA rates are an annuity, likely with some new terms. There’s the switching costs too. That’s a potential headache and unwanted contract in exchange for not much money. We will pass. 

Actual health rather than health savings is different. 

For people 25-34, their chance of dying from Covid-19 is about the same as pulling the ace of spades from a shuffled deck – twice in a row. 

For people 55-64, their chance of dying from Covid-19 is about the same as flipping heads eight times in a row. 

For people 75-84, their chance of dying from Covid-19 is about the same as pulling any heart from a random deck of cards – three times in a row. 

Those are low absolute risks but seriously consequential. 

The world is complicated and messy. Not only that, but it changes too. Numbers are helpful, but we have to ask the right questions to start. 

The Covid-19 odds are rough estimates. There are about forty million people in any ten year age group. The number of deaths in the 25-34 group is 11,451. I divided the deaths by size of the group to get the percent chance of death. Odds are multiplicative, three heads in a row are 12.5%, 0.5*0.5*05. Two ace of spaces are one in fifty-two times one in fifty two, or about 0.04%. 

Demand-Side Sales 101 (book review)

Demand-Side Sales 101 opens with a foreword from Jason Fried, from his time selling shoes: 

“I noticed that when people browsed shoes on a wall, they’d pick a few up and bounce them around in their hand to get a sense of the heft and feel. Shoes go on your feet, but people picked the shoe with their hands. If it didn’t feel good in the hand, it never made it to their foot.” 

Authors Bob Moesta and Greg Engle of the Rewired Group wrote this book to explain how sales fits under the JTBD umbrella. Rather than selling, Moesta (whose voice I read this in) wants sales staff to be more like a concierge

Sales isn’t about bringing the product to the person. 

Sales is about helping the person make progress. 

Investors get this. An investor is only able to maneuver to the extent their limited partners allow. An educational endowment may not invest in companies whose business is distasteful to their staff, students, alumni, etc. Other investors can take advantage of this restricted action section. In the words of Seth Klarman: I want partners who cash checks when I write them and write checks when I ask for them

Consumer good businesses get this too. It makes no sense to ‘sell to’ people who don’t want the product. Moesta wants to take this spirit and distill it: move past selling to helping. 

Products that help have to start with what the customer actually needs. This is demand side (rather than supply side) innovation. Supply side tends to be features a business can create. Demand side tends to be the progress a user needs. 

This orientation may lead to novel solutions. Channeling Theodore Levitt, Moesta writes: 

““I need a drill, because I want a hole.” “I need a hole, because I want a plug.” “I need a plug, because I want a lamp.” “Why do you want a lamp?” “Because it’s hard to see, and I want to read better.” Now, we are beginning to understand the customer. They don’t need a drill at all; they need a Kindle.”

Think of your product, Moesta and Engle explain in their Circuit Breaker podcast, as the mustard on a sandwich. That’s how important whatever it is you do. The iPhone is the greatest product created, but it too is just the mustard. The elemental arrangement (a book about that) of sand and plastic is great – but only because it allows progress like emailing, photo taking, and reading Bob’s book. 

There are four forces that affect change: Push of current situation, Pull of the new solution, Anxiety of the new solution, Habit of the current situation. 

Moesta is dyslexic and sees these four aspects as an equation. Customers act when [Push of old + Pull of new] > [Habit + Anxiety]. A lot of copywriting works this way. ‘New’ and ‘Best’ are aspects of pull while money-back-guarantee is an aspect of anxiety.  

Diet can be seen this way. The way we look at the scale is the push of the current and the pull of the new is the vogue diet of the moment. Anxiety is fear of failure and the ambiguity aversion of the unknown. Habit is what mindlessly eat. 

Oh, and a wedding is coming up. 

Understanding the four forces isn’t quite enough to make sales. Customers travel through time, and six stages: 

  1. First thought. In a competitive market it helps when there is no name for a thing because names mean competition. Meanwhile a business has to create the question that leads to progress. “Questions are places in your mind where answers fit. If you haven’t asked the question, the answer has nowhere to go. It hits your mind and bounces right off.”
  2. Passive looking. Buyers consider actions. Push and Pull don’t yet outweigh Habit and Anxiety. 
  3. Active looking. Something happens. I’ve had it
  4. Deciding. What do people really value? Everything has trade-offs. Successful organizations sync their strengths with the customers’ wants. 
  5. Onboarding. A sale occurs.
  6. Using. How well something performs (relative to their(!!!!) expectations). This is 100% subjective. It’s not what you can build, it’s what they want to do. 

The 2011 Betty White Snickers commercial is how Mars used demand side sales to sell more Snickers. 

“When Snickers reframed their product from competing with Milky Way—supply-side selling—to solving the customer’s struggling moment—demand-side selling—they created pull for their product by helping people make progress.”

Milky Way is a treat and competes with glasses of wine and Oreo. Snickers is a snack and competes with Red Bull or Clif Bar. 

“But great salespeople don’t sell; they help. They listen, understand what you want to achieve, and help you achieve it. A better title would be “concierge.””