Posted tagged ‘Sales’

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People Buy From Those They…Like?

June 19, 2009

The fourth weapon of influence is one Cialdini attributes as “liking.” The classic example of this weapon in action is the Tupperware party. The Tupperware party actually employs several weapons at once (attendees win prizes – putting reciprocity in play), and each participant has to speak to the value that they receive from using Tupperware (public commitment and consistency) and, of course, social proof as each purchase reinforces the belief that other similar people want to buy the product.

Make no mistake, though, the foundation for success is predicated on the belief that you will be going to a friend’s house and she will be “asking” you to buy Tupperware products. While the Tupperware person may do the “ask,” the hostess sitting off to the side is the reason that you are even there.

The key success factor in many of these types of sales presentations is the referral from a friend.  Turning the salesperson away in these circumstances is like turning a friend away and that is exceptionally difficult for most people to do.

Cialdini, however, uses a very broad definition of the term “liking.” For example, physical attractiveness encourages people to like a person. In fact, we frequently attribute talent, honesty, kindness and intelligence to those people who look good. (Can someone say Billy Crystal’s impression of Fernando Lamas saying “It is more important to look good than to feel good.”) This is such an important element that for beer or car ads, “beautiful people” are frequently the spokespeople. And Cialdini cites studies that physical attractiveness impacts court settlements and sentences.

Sometimes those same car and beer manufacturers employ a different flavor of “liking,” one that Cialdini calls “similarity.” We like people who are similar to us. People, who dress, think, look and talk like us are ones that we relate to. Some sales people use this to great advantage by citing similar backgrounds (“You’re kidding — I grew up near Montana, too!”) so that we may relate to them more closely. Studies have also shown that people respond extraordinarily well to compliments…even if they are not entirely true.

The final component in his liking section is one devoted to contact and cooperation. This section is perhaps the most important element he discusses, because of its implications for tolerance among races and countries. Cialdini points out that where there is more contact between groups, familiarity breeds friendship – with one notable distinction.

When people are placed in competitive environments where rewards are perceived as zero sum games (only one or limited winners), enmity actually increases. This is an astounding perception because it crystallizes why school desegregation doesn’t usually create greater understanding among races and why longstanding political conflicts continue. Cialdini cites studies that suggest that if people share a critical (important because it encourages cooperation) goals and work together toward achieving it, friendship and respect are created.

As he does with all his sections, Cialdini concludes his discussion with how best to mange this weapon of influence. He recommends that we cognitively separate the message / offer from the messenger so that we may weigh the offer on its own merits.

Categories: Leadership, Sales, Strategy
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The Compelling Role of Reciprocation

June 4, 2009

At its core, a “weapon of influence” is a trigger. It stimulates a response that is truly compelling and one that we have difficulty ignoring.

The first “weapon of influence” is one that Cialdini refers to as reciprocation. You can see the concept of reciprocation being put into play every single day. Those address labels that accompany the letter requesting that you donate to a worthy cause… reciprocation, in this case, in the form of an uninvited debt. Gifts to politicians with the intention of receiving support later on…reciprocation. Even the free sample given by manufacturers with the intention of exposing someone to a product is still another form of – you guessed it – reciprocation. And it is core to the way we raise our children (i.e. the golden rule and if you want him to be nice to you, you have to treat him nicely)

The rule of reciprocation states that “we should try to repay, in kind, what another person has provided to us.” The need to reciprocate is a self-imposed obligation that we place on ourselves. You can even see it in our language as “much obliged” has become synonymous with “thank you.” In fact, this sense of obligation is pervasive in all human society.

In reading Cialdini’s work, I was frankly ambivalent. On the one hand, I was concerned that I was becoming wise to ways that I was being manipulated (or, dare I say, in fact, manipulating others). However, as I reflected more and more on the book, I realized that these influence factors are truly an engine for advancement and care.

Some sociologists note that this sense of future obligation has made a significant difference in our ability to evolve because it meant that what we shared, gave, or even taught, would not be lost. Reciprocation is the basis of trade, mutual defense and perhaps even friendship. Those who do not live by the rule of reciprocation are ultimately scorned (i.e moocher or ingrate). Reciprocation does indeed create a positive cultural norm.

The rule is also overpowering that it can even overcome dislike for the requester. Cialdini cites the Hare Krishna as truly understanding the rule. When they would solicit passerbys, they would not only offer a flower, but they would insist that the flower be accepted. They referred to it as “gift” and would not accept no for an answer. Fundraising was so successful that two important phenomena should be noted.

The first is that the passerbys often discarded the flower at the first available trash can. The Krishnas were thus able to recycle the gifts. There is also now a common practice in many airports to restrict solicitations to certain discrete areas simply because the power of obligation to accept a gift and to repay it is so overwhelming.

The reciprocation rule can also trigger unfair exchanges. Cialdini cites a woman whose car wouldn’t start. She was helped by a young man. About a month later, the young man asked to borrow the car, and while the woman hesitated, she felt compelled to lend him her car, even though she had misgivings about his age. Needless to say the young man totaled the car. The lesson though is that indebtedness and the need to reciprocate is an itch that we must scratch.

There are exceptions and they typically fall into the category of circumstance or ability. If circumstances or ability prevent us from reciprocating, we allow ourselves that latitude

The area that was particularly enlightening to me was the concept of reciprocal concession. This is a common tactic in negotiations where one party asks for something that would be deemed inappropriate simple so that the offer can be withdrawn and replaced by a less outrageous offer. The other party often feels a need to reciprocate to the concession and agrees to the new request.

To make this point, Cialdini draws on the testimony of Nixon associate Jeb Stuart Magruder, upon hearing that the Watergate burglars had been caught, responded by asking, “How could we have been so stupid?”

As the story goes, it seems that G. Gordon Liddy, who was in charge of the intelligence gathering for the Nixon campaign, had initially asked for $1,000,000 in cash for a wide range of activities. Magruder and Campaign Director John Mitchell kept declining the offer. Liddy kept scaling back the request until finally the rule of reciprocal concession kicked in and his request for $250,000 in cash for the break-in was approved.

As to more mundane examples, think of the salesman who shows you the top of the line product so that he can scale you back to sell you a more “affordable” item in the product line

Is there a way to say no? Cialdini suggests that one can say no if one adopts a mindset that recognizes the tactic for what is. This requires us to cognitively understand that reciprocation is a tactic and be present so that the tactic can be effectively managed.

Categories: Leadership, Sales, Strategy
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The Psychology of Persuasion

June 1, 2009

About a week ago, I had dinner with one of my favorite friends. Andy’s mind is always racing. He had served as CEO of a very successful company in Buffalo, NY that was recognized as being a model for one of the most outstanding places to work in that region. Andy is also a serial entrepreneur and his quick and agile mind has enabled him to create, build and overcome almost any challenge.

I enjoy our dinners for so many reasons. It is a chance to catch up with a friend whom I admire and at the same time, I always discover that I have learned something insightful and valuable after we have spent time together. After four hours of dining and conversation with Andy, I found myself mentally exhausted but intellectually stimulated.

A significant portion of our evening’s discussion focused on the work of Dr. Robert Caldini. He’s the Ph.D. referenced in one of my earlier posts. I had bought his seminal work, Influence, The Psychology of Persuasion, about the same time as I had read the Time Magazine article. It was on my list of must-reads – I just hadn’t created the space to get through it.

Andy had met with Cialdini and was very favorably influenced by his thinking. This was the impetus that I needed to pick up Cialdini’s book.

Cialdini’s book is a mix of theoretical study and empirical research. He cites the works of others but frequently intertwines their research with his own experiences and investigations into how our minds assist others in moving us to certain decisions – often without us even realizing it.

His work is important. While it teaches us how our minds work, it also teaches us how to move people to appropriate directions. I don’t view his book as a study in manipulation. In fact, I believe it to be just the opposite. If you subscribe to the strategy of pre-eminence, that is, that as leaders and business consultants we have an obligation to help people past their fears while addressing their concerns, Caldini gives us methods to consider. Like everything in the world, it can be used appropriately or not.

With that as introduction, let us look at the six factors that he refers to as “weapons of influence.” These six are:

  1. Reciprocation
  2. Commitment and Consistency
  3. Social Proof
  4. Liking
  5. Authority
  6. Scarcity

Effectively employing these six factors allows one to perform a mental ju-jitsu on the other party. In his terms, it allows one to leverage the natural beliefs and inclinations of the buyer to create a preferred outcome for the seller.

To illustrate these weapons of influence / ju-jitsu perspectives, he poses the question about whether a salesperson would be more effective selling a high priced item before selling a low priced item or the other way around. In other words, which approach is more likely to result in both items being sold?

One’s initial thought might be to sell the low priced item and establish a “foot in the door.” However, marketers have discovered, particularly with higher priced items, that the exact opposite is true.

Think about it.

After you have bought the tailored suite or the fashionable dress, it is only then that the salesperson suggests that you might want to look at shirts, ties, socks, or accessories and shoes. There is a simple reason for this approach and it is the concept of “contrast.”

After spending a significant amount of money, the cost of the additional item does not seem all that much. By contrast, buying a sweater to complete a look is an insignificant purchase.

In our next post, we’ll look at the first of these weapons that Cialdini outlines – reciprocation.

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How the Obama Administration Motivates Behaviors

May 26, 2009

The Time Magazine article was extremely instructive in helping us to understand the behavioral science oriented steps being taken by the Obama administration. In this post we’ll focus on a number of them. Specifically, they are:

  1. Supplying knowledge
  2. Making it easy
  3. Creating social norms
  4. Legislating the activity

According to the Time Magazine article, studies suggest that better information can help us make better choices. This information can be disseminated in the forms of public service announcements (PSA’s) or appeals from well respected figures (remember our discussion about the use of Hubs in building communities) and even serial dramas.

What this means is that aggressive rules for disclosure and clarity will likely result in people making more informed and better choices. Documenting best practices will also produce meaningful results.

The second way to influence behavior is to make it easy for those who wish to make the choice that you wish them to make. This is why default options – opt-out instead of opt-in – are very successful. The push to create an electronic health record (EHR) is one step along the path of making generic drugs our default prescription of choice.

The creation of social norms is yet another way to influence what we choose. An appeal to conformity is very effective as we are a herdlike species. If our peers are obese, we are more comfortable choosing to be that way. What works is creating a sense that choosing not to participate in an effort sets us apart from social norms and therefore, we will take steps to be in sync with our peers. This is a technique that has been used successfully even in forwarding goals that are inappropriate or morally wrong (think McCarthyism).

The last factor that the Time Magazine article addresses is what happens when a nudge is insufficient. At that point, a strategy of making something mandatory is very useful. That’s why there is interest in taxing undesirable behaviors such as cigarettes, alcohol and even trans-fats consumption and subsidizing desirable behaviors such as weatherizing a home or the purchase of fuel efficient cars.

Now, when we hear a new initiative being proposed by the Obama Administration, our awareness to the work of the behavioral scientists will be present. Let’s hope that these efforts though are used to move us in the right directions.

In the ensuing posts, we’ll look at like some of the other models and variants that allow us to influence others.

Categories: Leadership, Sales, Strategic Plans, Strategy
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Understanding the Science of Change

May 22, 2009

I have always been a big believer that the universe has a tendency to bring ideas, concepts and even people to you when you need them to be in front of you. When that occurs in my life, after I finally recognize that it is happening – and yes, sometimes it takes me a while to notice — I begin to immerse myself in the idea or get to know that person better.

Lately, a new concept has been showing up and so over the next few posts, I’m going to write about it. I’m also going to read about it and share what I learn along the way.

In the April 13th, 2009 edition of Time Magazine, there was an article by Michael Grunwald called “How Obama is Using the Science of Change.” The article cited the work of behavioral scientist Robert Cialdini who found that that the most powerful motivator was that “people want to do what they think others will do.” Cialdini is the author of the best seller “Influence.” (For what its worth, Cialdini is the name that keeps popping up…more on that in the next few posts)

According to Time, Obama leans heavily on the work of the behavioral scientists to understand what makes people tick and then, using this knowledge, he intends to spur behavioral change throughout the country. He’s leveraging what he learned about people to move forward his agenda on the economy, healthcare and energy.

The power of these nudges is huge. For example, is there a difference in the number of people who participate in a 401 K plan if they have to sign up or would that number change if they were signed up already and had to opt out? Well, a 2001 study showed that only 36% of women joined a 401K plan when they had to sign up for it…but when they had to opt out, 86% participated.

The implications of using behavioral science in our business and personal lives are huge. This notion affects sales, marketing, management, leadership and even how we lead our communities or exist within our families.

So how is the Obama Administration using what they have learned? Consider the way Americans received the $116 billion in payroll tax cuts from the stimulus package. Obama chose NOT to send one lump sum check even if that would have put the money in the hands of Americans faster. His administration was concerned that a lump sum check might be viewed as a windfall and deposited in a bank account instead of being spent to rev up the economy. Instead, the money is being released through decreased payroll withholding. Smaller amounts spread over time are more likely to be spent. The idea is to subtly nudge us to spend the extra cash.

Make no mistake – this is a radical departure from the way that we have let the free market dictate how things work. Some might call this “manipulation,” but to change our ingrained behaviors, this might be necessary. And we may discover that behavioral science is compatible with free market thinking as it may prove to be an accelerator in how we interact with the free markets.

The Time magazine article goes on to highlight several elements that help us to change behavior. And that will be the subject of the next post.

Categories: Hiring, Leadership, Sales, Strategic Plans, Strategy
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Lesson 2: The Only Way to Fight the Tyranny of Kings is with Creativity

March 23, 2009

Carl had exposed an interesting point to consider. If indeed this situation had occurred before, there probably would be some lessons to be learned in how these challenges were met in the past.

The solution, he explained, lies in creating a consumer franchise, a brand that is powerful enough to necessitate that the retailers seek your product out and put you in a position where negotiation is from strength. In consumer franchising, the goal is to communicate distinctive brand attributes, develop and reinforce brand identity that is consistent with the image of the brand, build long-term brand preference, encourage repeat purchase and long-term patronage, and engage active consumer involvement.

Put simply, if you are operating in a commodity category, you must bring something unique to the party.

There is, however, significant complexity in our particular challenge. In the housewares industry, there is a low frequency of purchasing items, that is, unlike other items, people do not purchase them again and again or very often. This attribute does not allow for the investment of heavy marketing dollars to create the brand.

Given that constraint, how can a housewares company develop their brand?

According to Carl, one of the most important elements is communication at the point of purchase. There are many factors, including packaging and color that can make the difference in getting consumers to try a product. He referred to this as the “sell-in” effort. (More definitively speaking, sell-in typically means how well one has been able to get the product into stores. Sell-through refers to how well the stores have been able to get the product into the hands of consumers.)

To be successful here, one must apply the greatest levels of creativity. He then offered a few insightful examples.

To sell a purse mirror for women, his company developed an end of aisle spinner that had mirrors placed on all sides. It proved effective because his target market, women who wanted to have a mirror available at all times to see how they were presenting themselves, would catch their reflection as they passed the display. They would stop, pause, and then notice the purse mirrors. Getting them to notice the product was the key first step in making the sale.

With corn brooms, his company took the unusual step of displaying it upside down, which was not how brooms were usually displayed, and again, would catch the attention of the consumer. By adding a distinctive angle to the handle, the product was further distinguished.

To achieve these distinctions and to create a unique selling proposition, one must look at each item separately and develop the element that makes it unique and impactful.  Should the design be simple? Can you “dress it in a tuxedo” and make it feel more upscale? What would make the difference to the consumer?

This means that inventing the product is only the beginning of the effort. The next step is to dissect the use of the product.

  • Visit stores and analyze how comparable products are displayed.
  • Who buys them?
  • Which displays and packages made the person stop?
  • Define the profile of the person who stopped at the display.
  • Ask them what caused them to stop.
  • Find out the process that they went through in making the buying decision.
  • Once the product has been bought, ask them why.
  • Be curious and creative in discovering why your products are worth buying.

Carl closed our discussion with a very interesting story.

A long time ago, Carl’s team was tasked with the responsibility of selling toothbrushes. The division had been losing significant money. To learn more about his targeted consumers’ motivations, Carl arranged for a focus group with a local dental clinic. The focus group members were asked why they were choosing certain toothbrushes and the answers he received were about the size of the brush head (husbands had larger mouths than wives and children required smaller toothbrush surfaces) and that some brushes were harder than others.

Valuable information…

The participants were then led into a room and on the wall of the room was a display of every possible toothbrush on the market at that time. The participants were then told that as a reward, they could select toothbrushes for their families.

After selecting their toothbrush reward, the participants were then led into another room and asked why they had selected these particular toothbrushes.

Their answer most often…color!

It seems that at this particular time there were only four colors available in the toothbrush industry. Carl and his team learned that even though it was never mentioned as a factor in the focus groups, color was deemed to be the most important attribute. Armed with this information, his team began to produce toothbrushes in 24 colors! The net result the product, which was a losing venture a year earlier, became a source of substantial profitable revenue within a year.

Carl had illustrated his point – creativity and research on an item by item basis was critical in establishing a brand and challenging leverage.

Categories: Leadership, Sales, Strategic Plans, Strategy
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Growing Locally to Grow Your Business

January 11, 2009

For much of the last decade, we’ve heard about the importance of the global economy. The mantra you may have been reading is something like “grow global or you won’t grow at all.”

The Internet has certainly made that approach more viable but there is an equally meaningful perspective that warrants your consideration.

Seth Godin champions this point-of-view. He’s a best-selling author of about a dozen books on marketing or blogging and he is an original thinker. I subscribe to his blog and I do so because his thinking inspires me or it reinforces or extends my own thinking.

You likely will have noticed that my sales related posts are about becoming more related with your own customers. Seminars and referral meetings are really – at its core – about becoming more related to your own relationships. This is because for many small businesses, going global isn’t an option. They need to be effective in their own zip code.

Today’s blog from Godin presented a new twist on the art of becoming related locally. He suggests that you start your own local “newspaper.”

The way he’d go about it is to briefly interview a local business, a local student or a local political activist by phone. Get 20 households to ‘subscribe’ by giving you their email address and asking for a free subscription. You can use direct contact or flyers or speeches to get your list and then release the newspaper via e-mail twice a week. In no time at all, you’d build a mailing list and if you do it well, in not time, it would be the talk of the town.

More important, for you and your business, you will become related on a very local and personal level. You will know about people and the value they contribute to the community. You will become a source for connecting others. Most important, you will be transformed into a valuable resource associated as the source for learning about all of the wonderful things going on in your own backyard and in your community.

And that sounds like a fantastic position for you to be in and a source of strength for any local business.

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