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High or Low? Comparing Makes it So!

William Shakespeare penned this famous line in Hamlet, “There is nothing either good or bad, but thinking makes it so.” Two people can experience the very same thing and one person views it as good while another person sees it as bad. This happens because when we make judgments about good and bad we’re making them in relation to something else.

If you’re in sales and I asked what objection do you face the most when trying to make a sale, I have no doubt the vast majority of people reading this would say, “Price!” When someone says your price is too high it’s because they’re comparing it to something else.

Is $20,000 a lot to pay for a car? Some of you reading this don’t think so because you may drive a high-end car like a Mercedes or BMW, and your ride costs much more than that. Others might view $20,000 as expensive because you’re not into cars and therefore pay a good bit less than that for your vehicle of choice. In both cases, you’re comparing what you’ve paid in the past to $20,000.

As a salesperson here’s what I want you to remember:

“There’s nothing high or low but comparing makes it so.”

The next time you face the price objection, recognize this simple fact and then look for ways to ethically change the prospective customer’s point of comparison.

In the end everyone wants to feel like they got a good deal or great value. In our sales training we define value as follows:

V = WIG / P

Value (V) equals what I get (WIG), divided by price (P). If I can get more for the same price I feel like I got a better deal. Or, if I can get the same thing but pay less, I still believe I got a better deal.

This is where you’ll see advertisers tout “25% more” or “2 for 1.” In both cases you get more (WIG) for the same price (P). On the flip side we see sales all the time. During a sale we get the same item (WIG) for less money (P).

I’ve often shared the following example in training.

A company in Southern California sold spas and hot tubs. Prices ranged from $6,000 on the low end to $15,000 on the upper end. As you might imagine, most salespeople started low and tried to upsell customers. The problem with that approach is once you start at $6,000 the $15,000 spa seems very, very expensive…by comparison.

During a consultation with Robert Cialdini it was mentioned that people who bought the $15,000 spa used it more than some rooms in their homes. The logical question was – how much would it cost to add an additional room to a home in Southern California? Most people said anywhere from $60,000 – $80,000. Ah ha! A potential new comparison point!

Dr. Cialdini advised the spa client to start the sales process with the $15,000 spa and weave the room addition question into the sales conversation. It might go something like this:

Salesperson – “Customers who bought the XP5000 spa love it. In fact, many say they use it as much or more than any room in their house and quite often use it to entertain. If you were to add a room to your home how much would that cost?”

Customer – “I don’t know, maybe $60,000 or $70,000.”

Salesperson – “Well I have good news. You don’t need to spend $60,000 or $70,000 to get that enjoyment because the XP5000 is only $15,000.”

And how well did this approach work? Sales for the high-end spa rose 520% in the three months following the change in sales approach. In the three months before the change, the company only sold five high-end spas. In the three months following the change they sold 26 spas!

No new advertising, no television commercials, and no price discounts were needed. All of those approaches would cost a good bit of money. Instead they simply tweaked their sales conversation to include a legitimate new point of comparison.

So for my salespeople out there, here’s your take away when dealing with the price objection – “There’s nothing high or low but comparing makes it so.” Look for legitimate comparison points then weave them into your sales conversation. If you have a good product that’s worth the asking price you should see sales take a nice jump up as you reframe how customers view your price.

How Are You Doing? It’s Relative.

 

Not too long ago I got a medical bill and was shocked by how large it was. As I thought about paying it I had the feeling many of you might have had in the past – it seems like I can never get ahead.
Sleeping on it didn’t help because it was top of mind when I went for my run early the next morning. Running is good for me because it allows me to clear my thoughts and gain perspective.  As I considered the medical bill the Oklahoma tornado tragedy came to mind. All of a sudden my “problem” paled in comparison to those who lost loved ones and the thousands who lost homes and possessions.
Please don’t get me wrong, I didn’t think of the Oklahoma tragedy to make myself feel better but the reality is this; no matter how good or bad we have it, someone else has it better or worse. How we’re doing depends almost entirely on what and who we compare ourselves to.
During the Principles of Persuasion workshop I talk about something called the contrast phenomenon which tells us how we experience something is directly related to what we compare it to. For example, saving $5 on a $10 item makes feel pretty good but saving $5 on a $100 item doesn’t have nearly the same effect. It’s the same $5 but how we view it is relative to something else.
Much of life is spent making comparisons:
  • How much we make
  • The house we live in
  • The car we drive

This can lead to a lot of problems and a good amount of discontent because there’s always someone who makes more, has a nicer home or car, a better looking spouse, smarter kids, etc.

My faith teaches that comparing ourselves to one another is foolish because we’re comparing to the wrong thing. If God is the standard then on one hand we’d all fall short no matter how “good” we are. Fortunately God doesn’t ask us to measure ourselves by His perfection but rather by His love. When it comes to that, He is clear – we can’t earn it and there’s nothing we’ll ever do that will make Him love us more or less.
Personally I find this freeing. No matter how productive I am today, or unproductive, no matter how well or poorly I do, nothing changes His standard. For me it means pursing whatever I do not for the accolades, money or some other external reason but rather for the enjoyment it brings me and the opportunity to help others.
So here’s my advice the next time you’re feeling blue; take a moment to explore why and ask yourself if perhaps the state you’re in has to do with comparing who you are or where you are in life to some arbitrary target. If that’s what you’re doing, then you can change the frame of reference just like I did during my morning run. The bill remains the same but I’m in a much better frame of mind and that’s priceless.
Brian, CMCT®
influencepeople 
Helping You Learn to Hear “Yes”.

When a Sale isn’t a Sale

 

Do you enjoy getting a good deal? I know I do
and so do most consumers. The reality is, very seldom do we know if we’re
getting a good deal because “the deal” is always relative. For example, a $300
smart phone is a good deal when you realize the normal price is $600. In other
words, when you think you’re saving money you believe you’re getting a good
deal and that’s extra enticement when it comes to the purchasing decision.
How would you feel if you were told you were
saving 50% off of the original $300 price of luggage only to find out you saved
nothing? I know I’d be upset because it’s very likely I would have factored in
the “sale” price into my buying decision, consciously or unconsciously.
In a class action lawsuit, a California court recently said
consumers have a right to sue retailers if the price advertised is fake. Kohl’s,
the retailer involved in the suit, says its advertised price was truly a sale
and besides that, “the lawsuit was originally dismissed because a judge ruled
that the customer couldn’t sue because he hadn’t lost money by buying
merchandise that wasn’t as much of a bargain as he thought it was.”
So imagine you have the luggage and it works
as well as you expected, would you still be upset that the “sale” price was
just the price that you’d get anytime you visited the store? Would you feel
manipulated to some degree?
It’s one thing to buy something and then
realize you could have purchased it elsewhere for less – shame on you for not
doing your homework. However, should you have to do your homework to know
whether or not the store is telling you the truth about their “sale”?
In an article titled “Permission Marketing,” in
Fast Company, William C. Taylor
wrote, “This year, the average consumer will see or hear one million marketing
messages – that’s almost 3,000 per day.” Wow! Now here’s a scary thought – that
quote is 15 years old! How much more do you think you’re exposed to with the
explosion of the internet and social media? No one can possibly process it all
and that’s why so much of our decision-making happens at the subconscious
level. In fact, Martin Lindstrom, author of Buyology,
contends that 85% of what we do on a daily basis comes from unconscious
decisions.
One way we wade through the myriad of choices
comes from decision triggers, or reliable bits of information, that guide us
into what we believe are good choices. Seeing “sale” is one such trigger.
Studies show that simply by advertising a “sale” or using some other feature
like a yellow “Everyday Low Price” sticker can sometimes double sales even if the
price hasn’t changed at all.
When I teach people about influence I stress
ethics because I want students to feel good about how they apply their new
knowledge. As people work in small groups to come up with some criteria about
what constitutes an ethical request every group always mentions honesty and
truthfulness. To a person they feel if someone is going to make an ethical
attempt to persuade another individual they have to be telling the truth.
If you consider what I just shared about
decision triggers and how retail sales increase based on using the word “sale,”
do you think it’s deceptive of a store to advertise sale prices when in fact
they’re not any different that the regular prices you can get every day at the
store? In other words, if you shopped at Kohl’s every week and saw the 50% off
luggage, wouldn’t you come to realize the price is just $150 because it was
never sold for $300?
Like it or not, when we see a sale being
advertised it gets us into stores far more than if there was no sale. Once
we’re in the store we buy more so wouldn’t it be nice to know we’re truly
getting the good deal that’s advertised?
Brian, CMCT®
influencepeople 
Helping You Learn to Hear “Yes”.

How is Cool Influenced?

 

I read an article questioning whether or not
Apple had lost, or is losing, its cool. Why should Apple be any less cool than
it was several years ago? After all, it’s the most valuable company in the
world at the moment. Is it because Steve Jobs and his dynamic, rebel
personality are gone? I’m not so sure about that because as an Apple user I
think the company’s products are fantastic and I’d imagine long time users
would say the products are better than ever.

As I started to ponder “cool,” it brought to
mind an episode from The Office in
which Michael Scott was trying to plan a celebration of his 15-year anniversary
with Dunder-Mifflin. To do this he enlisted the help of Jim, Pam and Dwight. At
one point during the brainstorming session Jim said of Dwight’s idea, “Now
you’re trying too hard and that’s just not cool.” Dwight responded, “Then I
guess I just don’t know what cool is.”
This begs the question, “What is cool?” I’m
dating myself with this reference but for those who grew up in the ‘70s one of
the icons of cool was Fonzie from the television show Happy Days. Fonzie was cool because he was so different from
Richie, Potsy, Ralph and the rest of the cast. Part of Apple being cool is that
it’s always been different than its competition. The tough part about that in
business is you never stay different for long.
Samsung’s Galaxy phone has many of the same
features the iPhone has and it has some things you can’t get with the iPhone
like the bigger screen. Marketing the bigger screen taps into the principle of scarcity. This principle of influence tells us people value things and want
them more when they’re less available, unique or different.
I believe scarcity goes to the heart of cool.
Fonzie was cool because he was different, a one of a kind. Part of the cool
factor for Apple is how it stays ahead of the curve with technology and usually
offers you something, or a package of things, you can’t get elsewhere.
Consider this question. If everyone had
dressed like Fonzie in Happy Days would
we have seen him as being so cool? Probably not. If everyone has an iPhone do
you think people will view it as being quite as cool as years ago? Probably not,
even if the technology is better.
Like beauty, cool is also relative. A
beautiful woman will not stand out as much when every woman is beautiful. If
you doubt that consider beauty pageants where every woman is a knockout but most
contestants quickly fad into the background as the pageant progresses. However,
those same women in your office, at the mall, or on the street would turn heads
because in those environments they’d stand out compared to the population in
general. That’s scarcity again, along with the compare and contrast phenomenon.
Much of cool’s scarcity comes in based on what
it’s compared to. Kids think they’re cool compared to their parents but within
the group of teens at school some of those same kids may not be considered cool
at all.
Ever notice how celebrities continually
reinvent themselves? Think Madonna, the queen of reinvention! Part of the
reason celebrities change so much is because their cool factor wears off as their
looks and character traits become more commonplace.
So how do you use this to be more influential?
Two areas to consider are you as an individual and your company.
When it comes to you on a personal level what
makes you unique compared to your peers and competition? I’ve seen people whose
signature is a bow tie and others who always wear colored shirts. Both stand
out in the world of dark suits, white shirts and regular ties. Remember, cool
is up to you to make. Being a “nerd” became cool after Revenge of the Nerds hit movie screens. All of a sudden being
really smart was cool if you could use that in ways to benefit others.
When it comes to promoting your company what
makes it stand apart from the competition? Does your business card look like
everyone else’s? Boring! Remember, if you do everything like the competition
then nothing stands out and you get no cool factor. In recent years many
insurance companies have gone from boring and bland to  much cooler through humorous ads. No longer do
people think of them as giant companies run by a bunch of grey–haired, middle-aged
men. They have a much younger, hip feel based on their ads now.
Whether it’s you personally or your company it
comes down to this; take time to consider your uniqueness. Can you combine that
with your strengths and passion to stand apart from your peers? If you can
leverage that you’ll gain some cool and probably more customers because
everyone loves cool.

Brian, CMCT®
influencepeople 
Helping You Learn to Hear “Yes”.

Some Problems with American Politics

I spent a good bit of time before New Year’s
flipping between CNN, MSNBC and Fox News to find out about the progress being
made on the “fiscal cliff” talks. The more I thought about that fiasco the more
I decided to share my view of the problems in American politics.
The average American seems to understand much
more than our elected officials. Married people know if you want a marriage to
work you need to learn to compromise. For the most part the ability to
compromise is seen as a good thing in life – except with our politicians.
In order to get out of the primaries,
representatives have to pander to the extreme elements in their party. That
means politicians take a hard line on many issues. They soften only slightly in
the general election with a goal of winning over as many undecided voters as
possible because neither party has such a stronghold that they can rely solely
on their base to get them elected.
Once the elected officials get to Washington
they’re beholden to those who elected them and the extreme positions they
espoused. The principle of consistency, the psychological
trait that tells us people want to be consistent in word and deed, makes it
difficult for politicians to move from their original positions even if new
data dictates that doing so would be best for the majority of Americans.
Despite what we learned about democracies and
majority rule it’s never that simple because of procedural rules that allow
each party to bring things to a halt or a snail’s pace. While there are good
reasons for these rules, they seem to be abused by both sides and the result is
the gridlock we’ve seen in Washington for far too long.
Another issue is the mentality politicians
seem to have about re-election. It’s almost the same mentality American businesses
now have about quarterly earnings. Businesses can be so focused on the
short-term that they make bad long-term decisions. For example, too often
companies don’t make needed investments in things like technology in order to keep
expenses low and boost quarterly earnings which makes the stock price look good.
In the same way politicians seem to do what’s best for them in the short-term
(i.e., get re-elected) as opposed to the long-term good of the country.
Personally I think term limits would help alleviate
this to some degree.
Lastly, I’ll share what I call “the law of the
gym.” When I was just out of college I was competing in bodybuilding contests.
My weight was around 225 lbs. and I would diet down to about 195 lbs. for
competitions. I quickly learned I could not burn enough calories through
exercise alone to lose those 30 lbs. In fact, exercising too much would
eventually be counter-productive to my goal. To put this in perspective,
consider this – running two miles burns approximately 250 calories or the
equivalent of a Snickers bar. Which is easier to do, run two miles or skip the
candy bar? It was obvious I needed to restrict my diet in certain ways. The
good news was, between the exercise and dieting I was always able to reach my
goal weight.
Let’s apply “the law of the gym” to politics
and our current debt situation. Tax revenues are like exercise; we can’t raise
them enough to get out of debt and raising them too much could actually hurt us
if jobs are lost. Our nation needs to go on a diet – spending cuts – in addition
to our exercise – recent tax increases. To go on spending as we are will only
cause the debt to grow. Hopefully our politicians can reach some compromise and
start reducing government spending so the debt begins to come down.
And speaking of the debt, we’ve become desensitized
to how large it’s become. Hundreds of millions, billions and trillions are
figures that no longer cause us to bat an eye. Only when you compare and contrast the debt to something
can you begin to wrap your mind around it, so here’s a comparison point for
you.  If you spent $1 million a day since
the time of the Egyptian empire you would only pay off a trillion dollars of our
debt. More than 2,700 years at a million dollars a day hardly makes a dent!
Now consider our national debt at roughly $16
trillion. If we could pay it down by $1 million a day it would take us more than 48,000 years to pay it off!
When politicians talk about it being immoral to pass on our debt to the next
generation that’s not as big a problem as passing our debt on to  thousands of generations! How would you feel if we were still paying down the
debt of the ancient Egyptians or Romans?
I no longer consider myself an affiliate of
either party because neither represents my views any longer. There are elements
of each that I agree with but there’s so much with both that I disagree with
that I can’t consider myself a Republican or a Democrat. It’s my hope that
sometime during my lifetime we get a third or fourth alternative to choose from
because right now most of us find ourselves choosing between the lesser of two
evils.
Brian, CMCT®
influencepeople 
Helping You Learn to Hear “Yes”.

How is the Wealth Pie Divided?

I read an article in The Atlantic recently that was a bit shocking and eye-opening, titled “Americans Want to Live in a Much More Equal Country (They Just Don’t Realize It).”  The article focused on people’s ideal, actual estimate, and the reality of how American wealth is divided up amongst the population.
Let’s suppose there are 100 people in a fictitious society and the average “wealth” per person is $50,000, for a total of $5 million in wealth for the whole society. Of course that $5 million would not be divided evenly because some people do better than others whether through luck, perseverance, or a little of both. On the opposite end, some don’t do well for a host of reasons.
Speaking of how well people do, let’s divide the 100 people into five groups of 20, so we have the bottom 20%, the next 20%, the middle 20%, another 20%, and finally, the top 20%. My question for you would be this: how would you divide the wealth pie between the five groups? In other words, how much of the $5 million should each group get?
In the article referenced above, people were asked a similar question without referring to actual dollars. According to their answers, in an ideal society, the top 20% would get 32% of the wealth. That would translate into $1.6 million, or 60% more than everyone would get in an “even” split. Then they were then asked to estimate how much total wealth the top 20% actually had, and they guessed almost 60%, which would translate into $3 million of our $5 million pie.
So what was the actual split in America? The top 20% in our society have 84% of the wealth, or $4.2 million of the $5 million pie! More shocking than that, is what the bottom 40% have to split – a whopping .3%. That means in our fictitious society the bottom 40% would have $15,000 of the $5 million wealth to share among 40 people. You read that right, $15,000 to share among 40 people.
In the field of influence, we talk about the contrast phenomenon which tells us what is presented first, i.e., how things are ordered, can make all the difference in how people assimilate the information. On this subject, in an article I posted last year, I wrote:
“We would do well to always ask ourselves what we’re comparing to and whether or not it’s a valid comparison or the best comparison. For example, I heard on a conservative news channel the Illinois state legislature was considering a 66% increase in the state income tax. Wow, that should be cause for revolt in this economy! But here’s the perspective from the other side; the state income tax would only go up 2 percentage points. And here’s where both comparisons come from; the tax will go from 3 percent to 5 percent. That’s 2 percentage points, a 66% increase. I’m sure those opposed to the tax talked about a 66% increase whereas those in favor focused on the 2 percent change. Both are valid and both will elicit completely different responses! Compared to what?”
As people see the inequity in our country more clearly it’s a sure recipe for discontent and that discontent will manifest itself somehow. We saw the beginnings of that with the “We are the 99%” and “Occupy Wall Street” movements. I don’t think people expect everyone will get the same slice of the pie but many feel they have very little opportunity to better themselves because of the obstacles they face. On the other end there’s the old saying, “the rich get richer,” because wealth reinvested usually creates income without the obstacles so many people have to overcome.
With the presidential election coming up, both sides are talking about the same issues but in very different ways. How each candidate presents his case will impact how Americans think about the issues and ultimately vote. As we struggle with record deficits, there is quite a bit of talk about how to rein the deficit in. In the most basic terms we can collect more money through taxes, reduce government spending, or have some combination of the two. My encouragement to you is simply this; during the election season pay very close attention to what is presented and how it’s presented so you can make the most informed choice.
Brian, CMCT
influencepeople 
Helping You Learn to Hear “Yes”.

Will J.C. Penney’s New Business Strategy Positively Influence Sales?

Have you heard J.C. Penney is going to radically change its business strategy? The giant retailer is getting rid of its traditional sales in favor of low prices all the time, slashing many items by 40% or more! In addition, they’re going to do away with confusing pricing for a simpler approach. No more $14.99 items, they’ll be $15, and those $19.99 items you love will be a nice round $20 or $19. Yahoo Finance ran an article, J.C. Penney gets Rid of Hundreds of Sales, which gives more details on Penney’s new strategy and some of the reasoning behind it.

On the surface you might think this is great for the consumer but don’t forget, Penney’s isn’t doing this for customers, they’re doing it to help the bottom line. The company believes sales and profits will be stimulated by the new strategy of lower prices and simplified pricing. To help with the implementation, the company has brought in some heavy weights in the retail industry from Target and Apple. This is obviously no ill-conceived idea but I want to look at whether or not it will positively influence sales.

Let’s start with doing away with the “the sale.” The sale is as all-American as baseball, apple pie, and motherhood! People love a big sale because it makes them believe they’re getting a great deal and that makes the buying decision easier for the consumer.  When you buy something on sale, part of the purchase decision is triggered by the contrast phenomenon. While $26 might sound reasonable for a certain item, it looks really good when compared to the normal $45 price, and you know saving $19, more than 40%, is a great bargain.

The downside is Penney’s is losing the bang for the buck, so to speak, because there will be no higher price to compare to and thus create the desire to take advantage of the deal. Considering nearly three quarters of Penney’s sales revenue came during promotions last year where prices were slashed by 50% or more, you begin to see how much they could lose if this strategy backfires.

And what’s up with that pricing? Charging $39.99 for an item doesn’t fool anyone because we know it’s practically $40. Selling an item for $14.99 can’t possibly induce more sales than a $15 price can it? It sure can!

In William Poundstone’s Priceless: The Myth of Fair Value (and How to Take Advantage of It) he cites a study in which sales were tracked for an item which sold for three different prices: $34, $39, and $44. Unit sales were highest for the $39 price as was the total revenue. When the item was priced at $39 total revenue was 9.5% higher when compared sales coming from the $44 price. When the $39 revenue was compared to the $34 price, total sales revenue was a whopping 50.6% more than when the item was sold for less! There are different theories as to why sales tend to be higher for items ending in $9 or $.99, but one thing is undeniable – it works. If it didn’t work retailers would have abandoned the strategy a long time ago.

As noted earlier, with former Target and Apple executives this change looks like it makes total sense on the surface and the new strategy might work. But let me bring to mind something many of you probably remember, New Coke. The new flavor for the world’s best-selling soft drink was a well-planned, thoroughly tested idea. Because New Coke was preferred by a margin of 2 to 1 in blind taste tests over regular Coke, it was thought to be a sure thing when it hit the shelves.  After all, what could be better than improving the best-selling product in the world? And yet it was an abject failure, considered one of the 100 worst marketing ideas of the 20th century. And you know the rest of the story as New Coke gave way to Classic Coke, the old standby!

J.C. Penney’s new strategy may not have the same kind of response as Coke, but my gut tells me after the initial PR wears off, Penney’s will be no better off and perhaps worse off because it will have abandoned some of the psychology that goes into the buying decision for many consumers.

 

 

The Influential Steve Jobs

I
recently read Steve Jobs by Walter Isaacson. It was an interesting book about one of the most influential people of the last 100 years. When I say Jobs was influential I don’t mean in the sense of necessarily using the science of influence. I say Jobs was influential because the products he developed are used by so many people around the world and have set the standard for many communication devices today. Indeed, the iPhone and iPad are the standards when it come to phones and tablet technology.

I found an interesting paradox as I was reading the book, because I enjoyed the book but found myself disliking Jobs the more I got into it. At times I caught myself thinking, “I love my iPhone but can’t stand him.” I almost felt guilty that I enjoy so much what he invented because of the path he took to get there and how he negatively impacted so many people along the way.
There were certain descriptions used of Jobs throughout the book that I found to be nonsensical, particularly his “reality distortion field.” The author and many people he quotes talk about Jobs’ vision – be it for a new product, deadline or something he simply believed – as if he had some magical power to distort reality. He was certainly a visionary and he had a strong will coupled with a bully-like approached that helped get things done. For those reading this who played sports, think of your meanest, toughest coach and multiply that person many times over and you begin to get the picture of the approach Jobs used with people. Nonetheless, if you enjoy Apple products or just biographies of people who shaped history then I encourage you to pick up Steve Jobs because it’s a fascinating look at the man who’s had so much impact on the world we live in.
The following paragraph caught my attention and is the basis for this post because it relates to the science of influence and sales:

“When it came time to announce the price of the new machine, Jobs did what he would often do in product demonstrations: reel off the features, describe them as being ‘worth thousands and thousands of dollars,’ and get the audience to imagine how expensive it really should be. Then he announced what he hoped would seem like a low price.”

Whether or not Jobs understood he was using the science of influence, he was, by tapping into the compare and contrast phenomenon. This is used all the time in sales because the price of a product can neither be high or low unless it’s compared to something else. That something is quite often another price. For example, when I first started running I went to a department store and got a pair of running shoes for about $40. They were much better than anything else I’d ever worn so I was happy until I realized I needed a better shoe after logging lots of miles. Imagine my sticker shock when I saw good running shoes at a real running store sold for $65 – $115! Fortunately for me there were some good salespeople who could clearly explain what I was getting for my money.
Sometimes the comparison point isn’t another price; rather it’s describing everything someone will get. A good description makes them realize they’re getting quite a bit and can soften the blow price might deliver. We see this all the time on infomercials when we hear, “But wait, there’s more!” That’s where the infomercial host goes on to describe all the extra ginsu knives we get for the same low price we were considering buying a single knife for.
Another example comes from my area of expertise, insurance. In your auto insurance policy there’s a coverage called “liability” which protects you in the event that you cause bodily harm to another person or damage their property in an auto accident. The most common amount of coverage people carry to protect themselves is $100,000. The bad news is that really doesn’t go very far in today’s litigious society when some cars are worth nearly that much and even a short
hospital stay can easily exceed that amount.
Having more than 25 years in the insurance industry I’d never recommend selling someone less than $300,000 in liability coverage. Of course the natural objection from a customer would be paying three times more for all of the extra coverage. But the good news is it doesn’t cost three times more! A good salesperson would use a similar approach to Steve Jobs and might say, “If you’re like most people you’re expecting to pay three times more for three times more coverage. While that’s a reasonable assumption I have some great news, it will only cost $X more, not even close to three times as much.”
The value of this approach is that it lets a customer see there’s clearly a need for the extra coverage (they hear about lawsuits in the media almost daily), and their satisfaction level will go up when they realize they’re getting triple the coverage for a fraction of what they expected to pay.
No matter whether you’re a salesperson, involved in marketing, work with advertising or just trying to convince your spouse to spend some money on something you want, look for legitimate comparisons that will make your request look like the best, most reasonable choice. You may not have as much success as Jobs did with Apple but science tells us the odds of you hearing “Yes” will go up rather dramatically.
Brian, CMCT
influencepeople 
Helping You Learn to Hear “Yes”.

Why the “We are the 99%” Movement?

Earlier this year a movement began in the United States known as “We are the 99%.” If you live in America it’s hard to believe you would not have heard about it because of the considerable media coverage the Occupy Wall Street protesters have received in major cities across the country. It’s a good bet most of my foreign readers have heard about it too because of the world-wide economic depression we find ourselves in, and of some similar protests internationally.

Why such dissatisfaction in the land of opportunity, the country where almost everyone wants to live? Certainly the financial crisis that led to the economic downturn in 2008 helped start the movement as many unemployed and underemployed Americans looked at what they perceive to be injustice caused by Wall Street and other large financial institutions.
I believe one psychological reason for the movement is rooted in a phenomenon Robert Cialdini, PhD., likes to call “compare and contrast.” This phenomenon tells us we experience things as being more different than they actually are depending on how they are presented.
According to the Congressional Budget Office, between 1979 and 2007 Americans known as “the middle class,” approximately 60% of wage earners, saw their income increase by 40%. Most people would say that’s not bad, until they compare it to the top 1% of American wage earners who saw their income increase an average of 275% during the same period. To make matters worse, when you group the bottom 90% together that group actually saw their incomes go down by $900. While the reasons for these gaps are many, the bottom line is this; it’s human nature to compare and contrast and the widening gap is a cause of discontent.
Is a person good looking? You can only make that determination by comparing that person to other people. Do you make a lot of money? Again, that’s a relative term and can only be answered by comparing your income to someone else’s. Many people are happy with their salary…until they find out they make significantly less than some coworkers. When it comes to compare and contrast, we all do it to one extent or another.
We live in a time of unprecedented wealth and even people who don’t earn much live far better than their relatives from decades ago. Indeed, it’s rare when Americans don’t have cable television, a computer in their home and a cell phone – hardly necessities of life. Yet there’s a tremendous amount of dissatisfaction because of the perceived income gaps and that they only seem to be growing larger as time goes by.
How did we get here? One statistic I share in my Principles of Persuasion workshop has to do with CEO pay. In 1980 a typical CEO made about 42 times more than the average American worker. By 1990 that figure had grown to 109 times. In 1993, the Fed mandated full disclosure of CEO compensation in an effort to help curb this trend but unfortunately their plan backfired big time. I bet you didn’t know this; by 2005 the difference between the typical CEO and average American worker’s pay had ballooned to 525 times! You read that right. In all fairness, in more recent years the gap has shrunk to a mere 269 times.

How could this have happened? After all, some of the thinking behind the full disclosure of compensation was to let everyone see how much CEOs and other top executives were earning so stockholders could put the brakes on the incredible income growth. It failed because of consensus.

Consensus, sometimes referred to as social proof, is the principle of influence that tells us we look to the actions of others when making decisions and this is heightened when we’re not completely sure what to do. Prior to the federal mandate about compensation disclosure it was an educated guess as to what the market was paying other CEOs in a given industry. Once it because public knowledge it wasn’t unlike what we see with star athletes in sports. Salaries for those athletes have skyrocketed because once an athlete knows what other top performers make their sports agent begins to negotiate an even bigger deal for the athlete. It’s a keep up with the Jones’ mentality and so it’s been with CEO compensation.
Perhaps we’ve now reached the point the Feds thought we would back in the early 1990s when they implemented the full disclosure rule. The Fed thought people would say “enough is enough” back then but it seems to have taken a worldwide economic depression to wake up the voice of the majority of Americans. Where it goes is yet to be seen because there will be a tug of war between the average American comparing their income to the top earners and the power of consensus as companies vie for the best CEO talent they can find.

Brian, CMCT
influencepeople 
Helping You Learn to Hear “Yes”.

Influencers from Around the World – My Favourite Principles of Influence Used by Online Marketers

This month our Influencers from Around the World guest post comes all the way from Ireland courtesy of Sean Patrick. Sean owns his own sales training company, Sean Patrick Training, and writes a blog, Professional Persuader. We met through Facebook several years ago because of Dr. Cialdini and we’ve maintained regular contact ever since. I know you’ll enjoy what Sean has to say this week.



My Favourite Principles of Influence Used by Online Marketers
The following is a list of my all time favourite principles of influence used by online marketers and how I see them used; the good, the bad and the ugly.
1.     Authority
Marketers use this principle to create a sense or feeling of how the potential customer is in safe hands because they make the prospect feel as though they’ve found someone who has or can demonstrate ability, credibility and proof of concept by knowing the exact pain, dissatisfaction and problem that the prospect is currently feeling. It’s a demonstration of experience by telling a story of how the knowledge to overcome the problem or dissatisfaction came about, the journey of anguish and frustration followed by one “Eureka” moment that just blew the problem apart and facilitated a solution.
Solutions imply success and this is where testimonials come in handy. The marketer will supply oodles of proud and happy customer testimonials which make the prospect’s imagination itch with anticipation. Unfortunately all too often the testimonials are nothing more than cronies and affiliates who have an interest in the product’s success by earning commissions on each sale.
The real heavyweight to this principle is when the marketer offers a cast-iron guarantee or assurance as to the efficacy of the product that the prospect will only ever experience success. This deflects any come back to the marketer by implying that it’s the customer’s problem if they don’t experience the same results as all the other customers.
The last piece of the authority principle that the marketer needs to employ is by bringing in the heavy-weight celebrities, famous affiliates or mentioning some major event they sponsor.  The principle of authority when used credibly creates and confirms expertise, but when done in an egotistical manner it implies “Guru Status.” There is a world of difference between the two and self-appointed gurus are best avoided.
2.   Scarcity (Fake Urgency)
When done properly and all other conditions are met this is the one principle to send a would-be buyer over the edge. It makes them buy, especially when potential customers are spoon-fed the notion that what they are pondering is about to be taken away from them due to two things:
a. Limited stock or supply, or
b. Time limited price offer
Scarcity is often perceived as the one to watch out for because it’s been used over and again, but if all the other principles are used effectively then scarcity becomes the trigger that’s easily pulled. The easiest way this is done on the web is by stating right from the start that what is about to be sold is scarce either because of limited supply or because the guy in the stock room messed up and priced all the labels incorrectly, stupidly at a much lower price so therefore the marketer can’t afford to sell the product at the launch price for an extended period.
The reality is that scarcity is quite often fake and the sense of urgency is false; just a ploy. The majority of products sold on the web are information products so how can something produced digitally be of limited supply? The same rule applies with price simply because no one sells anything at a loss; unless it’s a liquidation sale where all stock is liquidated at low prices in order to pay the exorbitant fees of the liquidator. This why a time limited price offer can be extended and often is when the guy in the stockroom screws up again and finds a ton of stock that was hidden under a polythene cover.
In my opinion scarcity is really powerful when people travel and they see something that is scarce back home but is abundant in the region they are travelling through. But the conundrum is either to buy there and then or to go on the web and buy via direct mail when they get back home. Generally, the window of opportunity is narrow for both seller and buyer and most of the time the tourist will succumb and purchase on the spot.
3.   Reciprocity (Concession)
The principle of reciprocity has been killed to death by marketers on the web. The usual tricks follow the pattern of exchanging an email address in return for some pointless or semi-useful report, whitepaper or mp3 that contains only self promoting messages rather than ready-to-use-instantly-valuable information.
A new wave of reciprocity is to receive an invitation from a marketer to a live web-conference where you can learn X and Y and achieve Z for free. It’s like a 3 for 2 offer. This tactic achieves both receiving the identities and email addresses of prospects that sit at the beginning of the sales cycle and during the lead nurturing process the marketer can choose to offer more freebies of varying scales to the prospect with the aim of qualifying the prospect further. The principle of reciprocity states that I’m more compelled to do something for you because you gave me something first that was both personal and timely.
Prospects will begin to find the marketer as a source of authority through a repetitive experience of this principle.
4.   Contrast
Perceptual contrast is one of the sneakiest tricks that a marketer can play out in the online world. The same tricks that a mentalist employs are played out online all the time.
This principle plays stage to how a menu of prices can confuse and distract and leave the customer financially worse off. Just the like the 3 for 2’s you see in the shops a similar price structure ensures that the marketer is maximizing every dollar from every customer. But the pricing structure can be a lot more complicated if bonus materials and legacy products are offered at supposedly discounted prices.
Just like price, how problems are solved can be distorted very easily by using this principle. Questions a lot of people don’t ask themselves before buying include:
a. What will this product really do?
b. How much time do I need to invest in order to get a return?
c. How does the product really work?
More often than not the obvious gets blurred by the use of other principles melding together that creates dissonance in the prospects mind. This in turn creates a contrasting perception of where they are and where they’ll be in the future but at the same time seeing their potential future self in the present because they’ve convinced themselves to buy the marketers product and now feel a part of a tribe of successful like-minded people. They trust wholeheartedly the marketer to be their sole authority over their problem.
5.    Liking
I like you because you appear to be similar to me because of experience, status, color, race, sexuality, football team, or our stamp collection.  ; )
Liking is powerful because it brings about a sense of trust that is long lasting. We all want to be a part of the same crew, tribe, team and corporation or we like people who value our sense of freedom and independence and therefore feel camaraderie. This tactic is very popular with online marketers who launch membership sites that take in monthly fees or marketers who create pre-launch events that bring together the entire pool of prospects who suffer the same dissatisfactions and allow them to network, mingle and produce fellowships by way of interacting in web-chat facilities, forums and social media sites.  It also goes hand in hand with the social proof principle that facilitates the need to purchase even more because people who we came into friending are buying, and those who bought before had huge successes and you know what they were pretty cool people too and I like them!
Hopefully your eyes are open a little wider now and you can spot legitimate use of certain principles of influence vs. illegitimate use.
Cheers,
Sean

To read about Influential Negotiations on Sean’s site click here.