In 2002 psychologist Daniel Kahneman won the Noble prize in economics for his Prospect Theory. I admire how he has applied psychology principles to business, and would like to share one theory with you: The peak-end rule.

What’s the Peak-End Rule?


According to research by Kahneman and later others, we tend to judge an event by how it was at its peak and at the end. This means that we look not at the sum of the event, but the intensity of the most pleasant or unpleasant experience, and the ending.

For example, in one study, two groups of research participants had to listen to a loud, unpleasant noise for the same amount of time. One group had to listen to an additional unpleasant noise that wasn’t quite as unpleasant as the first. Interestingly this group (with the longer duration of unpleasant noise) rated the experienced as significantly less unpleasant than the other group, even though the duration was longer.

How Can We Apply This Principle to Small Business Marketing?

Focus on providing a powerful peak or ending experiences for your prospects or clients.
An Ending that Exceeds Expectations

For example, make a habit of completing your work faster or for less cost than you quoted a client. Let’s say you own a painting business. Quote your prospective customer a reasonable price that you feel confident you can beat. The client hires you and is happy to pay you the amount you quoted. You do a great job and end up finishing even faster than you expect so you can give your client a refund.

What is their “end” experience? It’s a wonderful painting job and money coming back to them! That creates a highly pleasant experience and increases the likelihood of them hiring you again and sending referrals your way.

Create Peak Experiences by Focusing on Values

Consider, also, how to create peak experiences for your client. Make efforts to discover the most important factor to them (it’s not always what they say). For example, do they prioritize time, value, quality, price? Once you discover their value, create a peak experience around that.

For instance, one of my clients is an owner of a management consulting company. She hired me to help her with internet marketing for her business, but after one conversation, I realized that what she really wanted was strategy. She’s a big-picture person and all her focus on keeping up with work left her without a strategic direction. She had been uncomfortable in her business and assumed it was about bringing in new business, but in reality it was the lack of strategic focus.

Once I discovered this value, I was able to provide her with a peak experience with an exciting strategy session. On the final day of our coaching, we reviewed her progress, which also left her with a pleasant end experience, in which she focused on her success.

Putting the Principle into Action

How can you improve the experience your clients receive (and therefore, improve your business referral streams) by focusing on the peak or the end experiences?

The psychology of marketing is powerful—these principles will help you achieve more marketing results with less effort. Be sure to customize your approach by the individual needs of your clients, and observe the excellent responses. Larina Kase, PsyD, MBA is a business psychologist and New York Times bestselling author. She helps service professionals and information experts to build their businesses using the psychology of marketing. Get additional tips on how to stand out at www.pascoaching.com