Your Startup Guru

One of the best podcasts for business or for learning anything really, is the Freakonomics Radio podcast. This particular episode was especially interesting because it has direct relevance to sales. One of the biggest issues for any business is generating revenue. In order to do that, your revenue centers have to be skilled at influencing clients to purchase from your business.

The social psychologist Robert Cialdini is a pioneer in the science of persuasion. His 1984 book Influence is a classic, and he has just published an expanded and revised edition. In this episode of the Freakonomics Radio, Cialdini discusses the seven psychological levers that manipulates our self-described rational minds and lead us to act, follow, or believe without a second thought. The seven levers of influence are reciprocation, liking, social proof, authority, scarcity, commitment and consistency, and unity.

Some key excerpts from the interview:

• Reciprocation – Reciprocation is the rule that is installed in all of us, in every human culture, that says we are obligated to give back to others the form of behavior they’ve first given to us. 
  • “For large groups, he would ask the first person for an order, and no matter what s/he ordered, he would frown, lean down so everyone could hear, and say, “That’s really not as good tonight as it normally is.” And then he’d recommend something slightly less expensive from the menu. “This, this, and this are really good tonight.” So, what he did was to say, “I’m being so honest with you, I’m willing to recommend something that will give me less of a tip.” Then when he returned at the end, he would say, “Would you like me to recommend a dessert wine or a dessert?” And people would all look at each other and say, “Of course, Vincent, you know what’s good here, and you have our interests at heart,” and they would spend on wine and dessert.”
• Liking – Being likable makes you more persuasive
  • “But how do you make someone like you? One is to point to genuine similarities that you share. The other is praise. Because first of all, people like those who are like them, and secondly, they like those who like them and say so.  Car salespeople, for example, are trained to look for evidence of such things while examining a customer’s trade-in. If there is camping gear in the trunk, the salespeople might mention, later on, how they love to get away from the city whenever they can; if there are golf balls on the back seat, they might remark they hope the rain will hold off until they can play the 18 holes they’ve scheduled for the next day.“
• Social Proof – We are more likely to say yes to a proposal or a recommendation if we have evidence that a lot of others like us have been doing so. 
  • “The power of social proof is so substantial that people who watch a presidential debate on T.V. are said to be significantly swayed by the magnitude and direction of the applause at the live event. This is not at all a recent phenomenon.“
• Authority – Deferring to authoritative figures and sources
  • “In one study, someone called the nurses in various wards of hospitals and claimed to be a doctor on the staff who the nurse had never met and ordered the nurse to give a double dose of Astrogen to a patient. They’re not supposed to take these orders by phone. The dose was twice the maximum dose that was on the bottle of Astrogen. But 95 percent of them were on their way to give the drug to this patient before they were interrupted by a researcher who said, “Wait, don’t do that.” The researchers concluded that one would think there would be multiple intelligences operating to decide whether to give this amount of drug or not. But it turns out that, because of the principle of authority and the deference that the nurses were giving to the physicians, there was only one such intelligence function. As highly trained and intelligent as nurses are, in a fast paced challenging environment, it is easy to unthinkingly follow an authority’s directive.”
• Scarcity – An insufficiency of amount or supply
  • In the book, you tell the story of your brother when you were much younger, that he would buy and resell used cars. And his big trick was to tell all the prospective buyers to come view the car at the same time, so that he’d have everybody come Sunday at 2:00 p.m. to create a sense of demand or a false scarcity.
  • Another example is companies that create an artificial scarcity, essentially by limiting the amount of production they engage in. Let’s say it’s a T-shirt, a sneaker, a luxury watch. They could make a million a year. They choose instead to make 10,000 a year and charge 100 times what it might go for on the market as a mass-market item.
• Commitment & Consistency – Seeming to appear true one’s decisions, beliefs, and/or actions
  • In one study, when six- or 12-person experimental juries were deciding on a close case, hung juries were significantly more frequent if the jurors had to express their opinions with a visible show of hands rather than by secret ballot. Once jurors had stated their initial views publicly, they were reluctant to allow themselves to change publicly. Should you ever find yourself the foreperson of a jury under these conditions, you could reduce the risk of a hung jury by choosing a secret rather than public balloting method.
• Unity – The power of social identities to drive people’s behavior
  • In the United States, citizens agreed to participate in a survey to a greater extent if it emanated from a home-state university. Amazon product buyers were more likely to follow the recommendation of a reviewer who lived in the same state. People greatly overestimate the role of their home states in U.S. history. Readers of a news story about a military fatality in Afghanistan became more opposed to the war there upon learning the fallen soldier was from their own state.

The most fascinating take-away is that the more “rational” aspects such as features, benefits, quality, value, or pricing is not a major direct decision making factor. Although, it is arguable that quality, features, etc. can fall under Like; they prefer substance over style, etc.

Listen to the whole episode here:

Another effective marketing strategy is using the MAYA approach, “Most Advanced Yet Acceptable” also incorporates some of the levers of influence namely Liking and Commitment & Consistency. Read about MAYA here.

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