#001: Psychology of Sales

Transcript:

This is Omar Bravo with Bravo DeLaPaz and in this session of the eMarketing PlayBook we’re going to be discussing the Psychology of Sales.

If you haven’t already done so it’s paramount that you go through and watch the Simon Sinek video. The Simon Sinek Ted Talk where he talks about leadership and what inspires people to follow you whenever we’re looking at sales we’re asking people to follow us, we’re asking people to believe us, we’re asking people to accept the statements that we’re saying about our fact or our group and what Simon Sinek says is that people don’t buy what you do, they buy why you do it. People don’t buy what you do, they buy what you believe, and what you do only proves what you believe. It’s absolutely imperative that you understand this perspective because this is a perspective that we’re going to apply to our approach throughout this discussion. It’s only a fifteen, maybe seventeen minute video and the link is here and the link is in the notes so you can jump over to that real quick and then come back.

In addition to the Simon Sinek video there’s an Amanda Palmer video that talks about the art of asking. Whenever you’re trying to sell something essentially you’re asking a potential customer to buy. You’re asking them to trade their hard earned money for your product and so understanding that you are asking is vital to this process as well. Amanda Palmer is a punk rock artist who did a wonderful Ted Talk and the link is there so I strongly encourage that you watch that as well as it’s really really powerful lecture. Amanda Palmer raised 1.2 million dollars on Kickstarter to promote her Indie rock album. Prior to this Kickstarter she had released an album with a major record label and the major record label said that her album was a complete failure because it had only sold just about 25 thousand copies and in the music business that is not a success. What’s really interesting though is that her following was so strong that when she did that Kickstarter and raised that 1.2 million dollars, that was raised from just under 25 thousand backers and so the idea that you need millions of people to follow you in order to be successful I think is false. We just need the right people to follow us and Amanda Palmer is an absolute testament to that and it’s all because of the way she asks people to support her.

Gary Vaynerchuk is a eMarketing genius and social media guru and an author of a number of books. He wrote Crush It ,he wrote the Thank You Economy, and his latest book is called Jab Jab Jab Right Hook. In the Thank You Economy his second book he talks about how the landscape has changed for marketing. With the advent of social networking there is a whole different outlet where It used to be this one-way communication from corporations selling products into the home via radio and TV now there is this two way exchange and two way conversation and his statement is that if we don’t understand that there is a back and forth and if we don’t understand that our potential clients have so many more option and so many more resources to have their needs fulfilled and if we don’t build relationships with them then we’re not going to last. This is a really great book. Its available on audiobook and the link is right there. Thankyoueconomybook.com A wonderful wonderful read and Gary Vaynerchuk just gets it. He understands customer service. I highly recommend it.

The fourth resource I’m going to give you right now is what I base the majority of this presentation on. It’s a book called Influence: The Psychology of Persuasion by Robert Cialdini and his website is Influence At Work and he goes through a number of different principles. I’m not going to go through all of them here. I’m going through many of them and give demonstrations of how they actually work when it comes to persuading someone to buy your product or join your group or support your cause and I’m going to throw in a couple of my own as well. So let’s go ahead and get started.

These are the motivations for behavior because that’s what we’re really trying to do if we’re actually selling something to somebody. The saying is that selling starts at no. If you’re convincing somebody, you’re changing somebody’s behavior. If they’re just buying what you’re providing then you’re a provider. You’re not selling them anything, you’re simply providing for them what they need or perhaps what they desire, but sales is when we’re changing behavior and when we’re motivating people to buy and that’s the biggest difference. And we do that in a number of different ways…

I’m going to go over eight different principles here and the first one is going to be Consistency.

1. Consistency

Why do people buy what they buy? Why do people vote the way they vote? “I buy Chevy because my dad buys Chevy and I vote republican because that’s what my family’s always done” or vice versa. “I only buy Ford, forget Chevy” or “I refuse to buy foreign made cars” or “I only shop at Target and I don’t shop at Walmart” or whatever those lines in the sands are that people draw. The reason they do that often times is simply because of Consistency. “It’s what I’ve always done it’s what I know and so I’m going to keep doing it.” The second reason would be because of their past experience. If they had a good past experience somewhere they’ll keep going to that place. If they’ve had a bad experience at a restaurant they’ll never go back again and they’ll tell all their friends that they’ll never go back again. When we talk about consistency one of the thing’s that’s normally consistent in our life’s is price. If it’s expensive, it must be good. If the dinner is very expensive, it must have been really good. If the car is very expensive, it must be good. If it’s very cheap or inexpensive or affordable or there’s lot of coupons or sales on a specific product, it must not be that great of a product.

One example of this consistency or the way we can influence consistency and get people to build that relationship is through the rewards card. You see them all over the place. Everybody has rewards cards. Perhaps the most popular one would be the frequent flier miles card. If you’re earning miles on a certain airline and it takes a lot of work to do to get that free ticket, you’re more likely to continue going there and if nothing else, at least giving them first right of refusal and looking at their prices first before you look at anybody else’s. The same with the gas card; When you get a certain credit card from a gas station you’re going to fill up there. Everybody’s got relatively the same quality of gas so why would you go one place as opposed to another if the price difference might only be a cent or two cents. Well, if we give you those rewards and we get you in that habit and then after ten years of always going to Shell or always going to Chevron you’re more likely to continue doing that. I’ve talked with folks who only go to Chevron and I ask “why do you like chevron so much?” and they say “well, my dad always went to chevron and he said it was just the best gas and I guess that’s the way I grew up and so that’s what I do.” They’ve never done any studies to see if it was the best gas, but “you know, it’s what I’ve always done” and its consistent in their lives. As much as people dislike change, this consistency, if you can lock in to someone’s consistency and develop it into a habit to do business with you, that is something that can be very, very, long lasting and very effective for your business.

2. Likability

Here’s one where it doesn’t make so much sense and some examples of likeability are celebrity endorsements or attractive models. The fact of the matter is that people want to do business with people they like. They don’t have to give their hard earned money to people they dislike or that they don’t believe what they believe. “People don’t buy what you do, they buy why you do it” and so if they don’t agree with those things they’re less likely to do business with you. When we look at these celebrity endorsements and attractive models… I’ve got a picture here of LeBron James. Now, LeBron James knows a lot about basketball. I don’t know how much he knows about headphones and yet he’s endorsing Beats and doing really well. People are thus buying Beats because they like LeBron James and LeBron James uses Beats headphones, so you know what, they must be good and I’m going to give them a try. But really, what does LeBron James know about headphones. He knows about basketballs, but what does he know about headphones? Then, we have over here Danica Patrick. She is a NASCAR driver. What does she know about the internet and domain URLs? And yet, she is the spokesperson for GoDaddy. So, the only relation we can have is that “well, an attractive model is endorsing it” and so I’m willing to pay more attention to it. That is the principle of likability.

3. Authority

The next one is similar to likability but it carries more weight and that weight is authority. Okay, so we’ve seen many commercials where they’re pitching diet pills and they’ve got a guy that’s dressed in a white lab coat and he looks like a doctor. Who knows if he’s a doctor or not, but because he looks like a doctor we associate that “hey, there must be some actual authority to this.” The next piece is going to be lawyers and car accidents; When they’re pitching a business they have the suit, they have the title, just like the doctors have the badge and the glasses and it looks like have authority. Whether or not they do, that’s the principle they’re trying to appeal to. Now when we look at actual authority, I’ve got some examples of Michael Jordan here and these examples are that he was a professional athlete. He was the best in the game and he was endorsing basketball shoes. He was the best basketball player in the world. He knows something about basketball shoes and so when he says “I wear Nike”, that’s a really big deal. So that’s an effective use of authority. When Michael Jordan sponsors Gatorade that’s another effective use of authority. He knows about getting dehydrated while playing sports and Gatorade cures that. So if Michael Jordan says it true, then we are more likely to believe it.

Now what I’d like to do right now is show this video of a Gatorade endorsement for Michael Jordan.

When we watch this video we can see he’s an exceptional athlete. He knows what he’s doing on the court. He’s a fun guy. He smiles. He laughs. Again, he’s at the top of his game and people imitate him. People what to be like him. Oh, and he drinks Gatorade. Little kids like him. He’s playful. He’s fun. Little kids want to be like him. Little kids look up to him. He’s an exceptional athlete. Grown men look up to him. Men want to be like him. He’s fun to be around. He’s good. He’s so good and he can still have a good time as well. He’s not all serious, all business, and he drinks Gatorade. He’s one of the guys, but girls like him. Guys want to be him, girls want to be with him, and the little kids love him too. He’s a great role model. The little kids are aspiring to be like him. He’s jovial and he’s a winner. Above all things, he closes. He comes through in the clutch. He crushes other team’s dreams. He’s so good. Be like Mike: Drink Gatorade.
There are so many pieces of the authority and likability and influence they put into that one message. It’s such a wonderful example of how companies can market and use these principles of likeability and authority, especially in that segment.

4. Social Proof

The next one is social proof. As you just saw in the Michael Jordan Gatorade commercial, there was social proof because the guys wanted to be like him, the girls wanted to be like him, and the kids wanted to be like him. And if everybody wants to be like Michael Jordan, then he must be a good guy to imitate and he drinks Gatorade, so I’m going to be drinking Gatorade. That’s the social proof. That’s the herd mentality and it’s also momentum based. The more people who are looking at something or interested in something, everybody else wants to get in on it too. For fear of missing out on the next big thing, nobody wants to be outside of the loop. So, that momentum, once it starts to pick up things go viral and this is especially true with teens. Teens are very, very influential and the worst thing for a teen is to be left out. So teens are much more apt to join and to follow things because their peers are following and their peers are pressured. The way we see that in online advertising at this point is here’s two examples both from Amazon and Facebook. Amazon says customers who bought this item also bought this and they show you customer reviews. “Four out of Five Stars” so people really like this and if they like it then you’ll probably like it or you should like it. That doesn’t mean that everybody does and they even put in a one star and two star reviews there to show that “hey, not everybody likes it, but most people do” and that gives more corroboration and validity to these claims and these reviews. Facebook does the same thing; They show you your friends who like a specific store. They like Target or they like the Cantina down the road or the restaurant or they like this phone or this product. They show you that in hopes that you’ll see that your friends like it, then you’ll probably like it too. That’s that social proof for branding and marketing.

5. Contrast

Another principle would be Contrast, both for setting expectations and perceived values. What we see here is we’ve got the sale price, but rather than just giving you the sale price they show you the regular price as well and how much you save. If they were to just come in and say the price is $619, you would have nothing to compare and contrast that with. But, when they show you the regular price and show you how much you’ve saved, now you perceive that you’re getting a good deal. The same thing with Amazon; They show the original list price and then they scratch it out and they show you this extremely low price. Then they show that you’ve saved $356 and they show it to you in dollars and in percentages so when you buy it you can justify both to yourself and to your spouse or neighbor or whoever else. It’s like “Man, I couldn’t pass it up because I was saving 60%! It was such a great deal!” and you’re able to justify it through that contrast. If they came in and said it was $250, then it wouldn’t be a good or bad deal. It would have just been $250.00. But, when you’re saving over $356.00, now it is a great deal or at least you perceive it to be a great deal. So, that contrast is an effective tool as well.

6. Commitment

This is a little bit more abstract, but the idea that if you can get somebody to commit either verbally or through a handshake when you’re closing the sale and when you’re closing the deal, it’s a lot easier to up-sell them in the future. So, the first thing is that once people commit in general they don’t want to break their word. “My word is my bond” and so there’s a tactic here that we often see like “See sale price in cart”. It’s like “why do I have to actually add it to my cart to see the price?” Well, the fact is once you add it to your cart, you’re one step closer to buying. You’re one step closer to checkout and if we can get you to take one step closer then the chances of you actually completing the sale increases. So let me “add that to the cart”. We’re already in the process, we’re walking down that line as opposed to not even putting it in our shopping cart. Ron Popeil is that famous TV commercial infomercial salesman and his deal was often “if you promise to tell just one friend I will give you a discount” or “I’ll give you this great price” and it doesn’t seem like he’s asking a lot. “Hold on, he’s going to give me a further discount if I promise to tell one friend? Well, that sounds super easy and so I’m going to ahead and say “yes, I promise to tell one friend.” The fact is that once you promise to tell one friend, once you make that verbal commitment to a sales person and they give you that discount, through the principles of reciprocity and everything else you are now committed to that. And people don’t like to break their commitments and so out of default they will go tell one friend: “Hey, I bought this new Ron Popeil gadget on TV” and weather its good or not they will probably won’t divulge too much. But, when they tell their friend their friend is now influenced by that idea of social proof: “Well, if my best friend bought it, I should think about it or maybe I should look into this.” “I’ve never even heard of that” so the whole “frequently bought together” that amazon uses comes from “hey, you already bought the drill why don’t you go ahead and get an extra battery.” Now this is the classic upsell: you’re already committed, you’ve already bought into this, you’re already spending a legitimate amount of money, why not just go all the way? A much smaller, but similar example would be: “You already bought a burger, you’ve got a drink, would you like fries with that? … Sure, why not? My wallet’s already open! I’m already spending money, the cash is already flowing.” Now is the perfect time to get me to throw in a little bit more. It’s only a 10% add at this point. Once you walk down that line of commitment it’s a lot easier to get you to keep going.

7. Scarcity

This is a really effective tool here. By telling somebody that the “sale ends today” or that it’s a “limited time only” people are much more aggressive in their behavior. Here we have a screenshot from an airline ticket. I think its orbitz.com and often times you’ll see the price and its usually the cheapest price and it says “act fast – only one ticket left at this price”. Why is there only one ticket left, I have no idea but if they say there’s only one ticket left at this price then it’s going to motivate you to make a decision quicker as opposed to them saying this is always going to be the price and you can take as long as you want. They’re saying “No, if you don’t act now you’re going to risk having to pay more, so you should really go ahead and make that move now.”
Here is a little secret on the airlines: They store cookies in your internet browser so if you go look for tickets and then go another website and go back to the initial website to look for tickets again because maybe you’re price matching or trying to shop the market, they’ve stored a cookie in your internet browser. So when you come back, often times you’ll see that the price has gone up. Sometimes it’s significant, but sometimes it not. Because they know that you’re now coming back and they’ve raised that price, they are using the principle of scarcity in order to make you think and to influence you to say “Oh my gosh! The price just went up! I need to make a move now before it goes up again! I can’t continue to shop around!” But, the fact is the price hasn’t really gone up. They raised the price on you for sure, but that’s because they knew you just came back. If you were to go into private browsing mode and disabled all your cookies and not allow them to track you, they wouldn’t be able to know whether or not this was your second time coming back. So the price would’ve stayed the same. Just a little tip there, but that’s them implementing the principle of scarcity that low fare tickets are in high demand. That they’re not going to be around much longer, so you better act now.

8. Reciprocity

This is the principle of “If I give you something, you are by default going to feel obligated to give me something back.” You’re going to feel obligated that you owe me something, even though I never said you owed me anything. Even though I just gave you something for free, you’re going to feel that you need to reciprocate and give me something. Whether that is you actually giving me something or whether you just give me a moment of you time or you give me an opportunity to earn your business. That’s why you see again the rewards cards.

If a company is giving you some sort of benefit for shopping there you feel like “hey, I should keep going shopping there because they are treating me well.” The same thing with free trial periods; If you go in and use a service in a trial period the product owner is giving you that free trial because of a number of things: 1) they believe that once you try it, you’ll really like it and you’ll want to buy it. But also, they figured if they give you something, you’re going to give them an opportunity to earn your business and that’s also the principle of commitment coming into play. Because you’re now using it and you’re one step closer to already having purchased it and so they’re pulling you in the door through that as well.
Some very simple examples of exercising reciprocity are birthday cards from the dentist or the insurance agent. They don’t cost much, but the fact they say “Hey! We’re thinking of you! You’re important to us!” We actually care and we know your name makes you feel like “hey, I like those guys.”

Why do I like those guys? You probably don’t process it, but subconsciously it’s like “well, they’re giving me time and they’re being nice to me” and as such, it earns them one ounce of loyalty. This alone doesn’t necessarily win business but when you use them all together, when we pile all these things up, when we show them the social proof and we show them the contrast in the pricing, and we use the scarcity model; Even where it says “in stock” that’s showing the scarcity model. The fact is that when you see that, subconsciously you say “yeah, it’s in stock. That’s great, it’s in stock right now. But, that doesn’t mean that it always will be and so I should probably act now, because if I come back later it might not be in stock!”
So, when you pile all of these up with the rewards and the free shipping and when we move into the up sell of commitment, all of these things are very effective tools. They play into the psychology of how we actually market and how we sell and how we close deals and not just close one deal but close multiple deals. We get customers and clients to not do business with us once, but to do business with us consistently and grow our market and grow our reputation and grow our loyalty. Because it’s very simple to become a market leader once, but to stay a market leader is incredibly difficult. Using all of these different principles of psychology for influence will help with that process.