Here’s another game you can play this week and compare your results to the majority of the population:
In a game you receive $1,000. In addition, you have a choice between a certain gain of $500 OR a 50% chance of winning an additional $1,000 and a 50% chance of winning nothing. Which do you choose?
In a game you receive $2,000. In addition, you have a choice between a certain loss of $500 OR a 50% risk of losing $1,000 and a 50% chance of losing nothing. Which do you choose?
Before you read on, please do make your choice.
These are the situations that Kahneman and Tversky (1982) presented to hundreds of subjects. Situation A and B are 100% identical but most people choose differently in each situation because of the “framing.” In both situations you are deciding whether you want $1,500 guaranteed or have a 50/50 chance of ending up with either $1,000 or $2,000.
How do most people respond?
In Situation A, 84% of people choose the certain $1,500 (the first option). Only 16% gamble at the 50/50 chance of ending up with $1,000 or $2,000. In Situation B, 31% of people choose the certain $1,500 (the first option). A full 69% are willing to gamble at the 50/50 chance of ending up with either $1,000 or $2,000.
The situations are 100% identical yet the FRAME makes ALL THE DIFFERENCE IN THE WORLD as to how people decide.
Question: Examine the two frames (situations) carefully. What is the difference between the frames and why do you think people choose the way they do? How might you utilize your hypotheses in your own interactions? (This will be discussed at length in Volume 4 of The Science of Influence CD program.)
Here are a few lessons we learn from research that examines Frames and Choices:
Lesson A: People do not necessarily decide what is best for them, they decide what PRESENTATION of facts is more attractive.
Lesson B: Because we all succumb to the presentation of facts (and fallacies) and not to reality itself we all need to look at any important decisions from all points of view!
Lesson C: People will lock in a sure gain in favor of any risk in the future, but they will let their losses run. (Example: People hold a stock today at 10 that they bought at 70 because they have so much in the stock. This is one of the stupidest things people do. They should take the money and invest in the instrument that holds the highest probability of appreciation and theoretical gain.)
Now, let’s move this to a more real world scenario and see how the way people think causes them to make bad decisions, and how you can influence them to do what is in their best interest once they blow it.
You see a brand new car that you have been drooling over for months. It’s priced at a price that is $500 below invoice plus a $2000 rebate! But because money has been tight, you decide against buying the car. Three months later, your financial situation has improved and you see the same car still priced at $500 below invoice but the rebate program ended last month. Do you buy the car?
If you are like most people the answer is no. Why would that be? You can get a car at below INVOICE (That’s supposedly what the dealer pays for the car, not the price on the car!) The reason is that most individuals experience what is called the “avoidance of anticipated counterfactual regret.” In English, that means that if we bought the car now, we would feel as if we had missed out on last week’s bargain and don’t want to regret it. To avoid that pain people will continue to pass up great opportunities, even though they aren’t quite as great as “the one that got away.”
However, IF you drive past the dealership every day on your way to the office, the daily exposure to the car is often enough to overcome the inertia of inaction and allow you to change your mind and buy the car. You’re going to be seeing what you could have had…every single day…and therefore you are experiencing regrets of another kind anyway…so you become more likely to stop back and buy the car.
Now, if you can understand this you can influence others to your way of thinking in ways you have never dreamed of.
1) You’ve met with a client or customer and given them a grand opportunity which they declined. How can you stay in front of that customer over the weeks and months so they ultimately will do business with you? (Out of sight = out of mind)
2) How can you change an offer or restructure an offer so that the client/customer feels as if they are getting the same original price on something and therefore not need to psychologically avoid buying from/saying “yes” to you?
Another example. You see a TV and know it retails for over $600. In the Sunday paper you see it for $397 but it’s for one day only. It’s a super bargain, if you ever saw one but you decide against it for some reason. The following Sunday the set is still on sale but this time for $497. You missed the first opportunity for some reason or another and now you have an opportunity to still get the TV at a big discount…and of course you don’t buy it because you will feel the loss of the $100 that you would have saved had you purchased it last week!
The research of this phenomenon shows that inaction inertia occurs when the second action opportunity is in some sense “worth” substantially less than the initial opportunity, even though the current action opportunity has positive value in an absolute sense. (Tykocinski, 1998)
Therefore once a customer or potential customer/client says “no” to you, you must develop a strategy to overcome inaction inertia or you will lose this client forever.
How can you structure your initial offer so that it is a tremendous value while allowing the customer to feel the perception of a similar tremendous value later…if they say “no” to you now?
In the case of the TV, perhaps you might include a service contract at no cost. This expense costs the company next to nothing and is quoted at $80 to the customer.
In the case of the automobile, you could offer to do 18 months of free oil changes and tune ups. Total value could be as much as $500 and the real cost is next to nothing because virtually no one comes back to the dealership for their maintenance, especially in the first year and a half. (Even if they did, the cost of oil and a filter is negligible compared to the profits on the automobile sale.)
A person of influence must preclude the “no” reaction in the first place. The best way to do this is utilizing tools of anticipated regret that overcome resistance.
Publishers Clearing House has done this for years. (Many would say unethically and I might not argue that.) Here’s how they have used anticipated regret in their mailings in the past:
“Suppose we told you …You were recently assigned the winning super prize number, but you didn’t enter so we gave the $10,000,000 to somebody else! Deciding not to enter our sweepstakes is serious business.”
That’s pretty powerful stuff isn’t it?
Asking a person to engage in counterfactual thinking means you are having someone consider alternate realities that could be true had someone done some other set of actions. Counterfactual thinking generally is related to regret of course and Publishers Clearinghouse has mastered the concept of regret in marketing as you can see!
Here is your homework assignment that will help you build your powers of influence.
1. List four specific ways that you can utilize anticipated regret with your products and services.
2. List four specific ways you can keep your product/service/ideas in front of your prospects who have temporarily said “no” to you.
3. Write down how you normally frame your offers and see if there are other ways that you can frame your offer to make it more appealing.
The Science of Influence is the place to begin. What makes the Science of Influence different from every other program about persuasion? This material is fresh, potent, tested, and has nearly all of what you will discover is new! There is no rehash of past salespeople or scholars.
Science of Influence Master’s Home Study Course (12 CDs)
with Kevin Hogan, Psy.D.
This program is the culmination of years of selling synthesized with the last five years of academic research into compliance gaining, persuasion and influence. You won’t find a program like this, designed for you, anywhere else.