The title of this article is deliberately vague and way too long. But apparently you liked it enough to click. Read on, my friend.
I hate to sound like a douchy telemarketing guy, but here goes:
These five techniques will change your life! I know because they sure changed mine!
1) The Contrast Principle
“The house I got them spotted for looks really great after they’ve first looked at a couple of dumps.” – a real estate salesperson
We never make absolute judgements. We always compare to things we heard or saw earlier. If we say someone is intelligent, we mean we think he’s intelligent at this exact point in time. Maybe because we just heard him say something rather eloquent, or because a moment earlier a knucklehead Guido walked in. Either way, it’s entirely possible that tomorrow, we don’t think of this person as ‘intelligent’ at all.
A very obvious example is putting your left hand in a bowl of hot water and your right hand in a bowl of cold water. Then put both hands in a bowl of lukewarm water. Your left hand will tell you the water is cold while your right hand will tell you it’s hot.
A lot of experiments have been done regarding this principle and the result is always the same. For example: two groups of people. One group gets offered 10$ to listen to a poet reciting some poems. The other group is told they need to pay 10$ to listen to this famous poet. The second group consistently rates the performance a lot higher than the first group and they enjoy themselves more.
The strange part: even when we know we’re being gamed by the contrast principle, it still works. This happens to me all the time. I go into a negotation with – for example – a certain percentage of the shares I want to obtain in my mind. When the other party tells me how many shares they’re willing to give me – always a lot lower than what I had in mind – I always think “Hmm, maybe my percentage is crazy high, I’ll just ask for a little more than what he said”. And then I leave and I think to myself “FUCK, it happened again. Next time, I will be prepared“.
A lot of salespeople – especially those that gained their skills on the street, like in the souks in Arab countries – are extremely proficient at using this technique. You think you got a great bargain when you get 50% off, but what you don’t know is that their initial price is a tenfold of the lowest price they’re willing to sell for. You feel like these shoes are only worth 10$, but when you hear him say 100$, you immediately figure they’re worth more – unconsciously! – and you won’t dare make an offer of only 10 measly dollars.
Another example: a smooth salesguy sells you a 100000$ Aston Martin. The optional extras are only 15000$, which is nothing compared to the original price of the car, right? So you take the extras. Of course you do. Contrast principle.
Your Advantage: Use this every fucking time you’re negotiating. Be fully aware of the lowball offers of the other party, think of the fair price you deserve and just have the guts to make an outrageous counteroffer. Then you can really start negotiating like you’re supposed to. It’s not rude to make a ridiculous offer, it’s called bargaining. Grow some balls. Avoid being the first to name a price, but if you really, really have to, go wild, over the top, completely ridiculous. Because chances are, it’s not as ridiculous as you think.
Find the price they’re comparing with in their mind, and replace it with your own price. They won’t even notice.
When setting pricing for a product, use three prices: a low one, a medium one and a (ridiculously) high one. Each price corresponds with the same product, maybe slightly altered (different packaging, some extra features, …). The bulk of the people will choose the medium priced product. The low price scares people away because it is perceived as low value, low quality. The extremely expensive product will make people feel like the medium priced one is a good offer. And of course, there are always rich-asses who want the best of the best, and they will buy your expensive product no matter what’s inside. Win-win-win.
2) Financial Versus Emotional/Moral Triggers
There are different types of incentives to do something. There’s extrinsic ones like getting paid, receiving gifts or benefits or getting a raise. There are also intrinsic rewards, for example that joyful feeling you get when you’ve done something truly good for the world.
The overjustification effect occurs when an expected external incentive such as money or prizes decreases a person’s intrinsic motivation to perform a task.
This is of course a huge problem. How do you motivate your coworkers or employees to get shit done? We all know about the time wasting procedures we employ when bored at work while being paid by the hour. Checking Facebook, 9gag, Twitter, Instagram, Reddit, Fmylife, xkcd, hilarious nonsensical Youtube movies, etc.
For some, money is a good reward. But most people need a sense of gratification, teamwork, accomplishment and purpose in order to fully go for it and deliver amazing work. When the only incentive is money, the result will usually be mediocre at best.
It’s easy to instill a sense of purpose in people. Give them responsibilities. Make them feel like their contributions are invaluable. Praise them for every good move. Don’t reprimand easily.
When I’m forced to sit through boring meetings about decisions I have no control over neither care about, I will lose all interest in the wellbeing of the company I’m working for. When I’m being paid by the hour while my opinion is completely ignored, I will not give a shit about the end result. On the other hand, when you engage me and you make me THINK about solutions to interesting problems, when you let me participate in the decision process, I will make mountains move for you. Even when you pay me jack shit.
Something different: there’s an interesting case study about a kindergarten where a lot of parents were always late in getting their children. The head of the kindergarten decided to do something about it, so they started charging money for every 15 minutes the parents were late. They thought this would surely help, but funnily enough, more parents were always late. The reason? The moral incentive to be on time was replaced by a weak financial incentive. The small fine they had to pay actually removed their moral objections to being late.
Your advantage: When you need your friends to help you move, don’t offer them 5$. They’ll think “5 frickin dollars for 4 hours of hard labour? My ass I’ll help”. Instead, play the “We’re best friends” card. Tell them you need their help because you can’t do it alone. Tell them you’d do the same for them. A good moral incentive will always triumph over a bad financial incentive.
3) The “Expensive Is Good” Mindset
This is why you always need a really expensive product in your product line. This is also why you need to set your prices high enough. Don’t compete on price. Ever. When you offer a cheap service, people expect bad service.
In people’s minds, high cost means high value. They’re usually right. A lot of people offer quality work for cheap though. The problem is that people cannot know in advance if cheap work will be worth it, so if you take this risk into account, it is usually better to go for a more expensive product.
I love to pay some extra money if I know deadlines will be met.
Your advantage: Raise your prices and profit. Of course, testing is key here. You can raise your prices only so much before the drop in customers compensates for the increase in profit per customer. Just remember: most self-employed people don’t charge nearly enough for their services because they’re scared they will be seen as money-hungry sharks. Which is bullshit, of course, if your service or product is valuable, it’s your god damn right to make some good money 🙂
4) Reciprocity Or “The Free Sample”
This is the most important principle in this series.
You find a job because of reciprocity. You earn money because of reciprocity. And you are successful in life because of reciprocity.
And once and for all: I am NOT only talking about physical, material things. Reciprocity can be a SMILE, some kind words, or just being a fucking good friend (mind the word order here)!
The best business deals usually come from strong friendships built over years. Hanging out, drinking, partying and talking about random non-business subjects (read: girls) together til late at night. These things are important.
When you smile and you’re friendly, you get shit done. There are people that get pretty much everything for free in life. They are waiting in line at Starbucks. One second later, they’re suddenly at the front of the line without anyone caring. They chat for 3 minutes with the barista and they get their drink for free. How the fuck does that happen? I’m guessing they’re just really friendly, yet slightly manipulative people. They know exactly what they have to say to get the barista to think “Wow this guy is amazing, he’s so friendly, I have to do something for him because he’s so nice to me. You know what, I’ll just give him this one drink for free”.
There are buttons to be pushed, you just need to know where they are located. And if you think this is shady and unethical: think again. Everyone tries to be friendly, everyone tries to get shit done in their lifes. Some people are naturally gifted, some need to think a little bit about what they’re gonna say because they’re shy and awkward as fuck. Don’t judge us 😉
You might think it’s unethical because you’re “gaming” the system, because you’re being friendly for egotistical reasons. Well, think about it: everything everyone ever does is for egotistical reasons. Hanging out with your friends? Makes you feel good. And you never know when you need them some day. Giving money to strangers? Makes you feel like you’re a “good” person and makes you look good to your peers. Saving someone’s life? Hope they’ll do the same for you one day. Oh, and you’d have become a social outcast if you didn’t.
There’s one big problem with this principle: there doesn’t need to be actual reciprocity:
“Perhaps the most legitimately dispiriting thing about reciprocal altruism is that it is a misnomer. Whereas with kin selection the “goal” of our genes is to actually help another organism, with reciprocal altruism the goal is that the organism be left under the impression that we’ve helped; the impression alone is enough to bring the reciprocation.”
― Robert Wright
This, as everything in life, can be used to your advantage.
Your advantage: You know all these free samples you get – shampoo, Red Bull, Coke, the latest Chanel perfume? You think their main goal is for you to get to know their product, right? Wrong. At least, that’s not the whole reason. What they didn’t tell you is that they count on our subconscious feeling of reciprocity. When we get something for free, we want to give something back. So we buy the product. Think about it: whenever they’re handing out free food samples in the supermarket, you ALWAYS get this little guilty feeling when you take a piece without buying the product. I know I do. If it even works for a fucking piece of strawberry, imagine how powerful this mechanism is, and how deeply it is engrained in our being!
As a company, you can use this trick to increase sales. For example, when you sell frozen yogurt, hire some students to hand out free little empty cups on the streets. People can then come to your store to get the cup filled with a free sample of your frozen yogurt. This way they get to know your location, they taste how good it actually is AND their reciprocity system is activated. Win-win-win!
As an individual, you can win big by using this simple technique. It’s not so much a technique as just being a good, friendly person 🙂 Just be friendly to everyone you meet, go all out to help people and you will be treated extremely well. You know what they say:
“You can have everything in life you want, if you will just help other people get what they want.” – Zig Ziglar
People will do everything for you if you’re a good friend. Being a good businessman is being a good friend. It’s an unreasonably powerful, automatic response: when someone gives me something for free – even something stupid like a pen or a coke – I get the irresistible urge to do something back for them.
Of course, this can also be abused. A lot of street scammers insist very agressively on giving you free stuff. They then proceed to talk to you in a very friendly way. Then they leave you alone, but not before they ask you nicely for a little bit of money. This amazingly works extremely well because we don’t want to “get something for free from someone who is poor” so we’ll either try to give back the gift – which, of course, they refuse – or we give them some money.
5) Concession Reciprocity / Rejection, then Retreat
This principle is basically a subset of the reciprocity principle. Instead of recipocrating in material things, you can also recipocrate concessions. A simple scenario to illustrate things:
Marc: “I want 10000$ or the deal is off”.
Polo: “No fucking way, that’s too much”.
Marc: “Okay, let’s say 5000$, deal?”
Polo: “No man, still too much”.
Marc: “Dude, this is already a really, really good offer. Final offer is 3000$, I can’t go any lower”.
Polo: “Nope, can’t do it.”
This scenario is possible, but more likely it will go something like this:
Marc: “I want 10000$ or the deal is off”.
Polo: “No fucking way, that’s too much”.
Marc: “Okay, let’s say 5000$, deal?”
Polo: “Hmm, sounds reasonable, deal!”.
The more we decline the offer, the more we will start to feel the urge to accept (or at least make a good counteroffer). Every time the other party makes a concession, we feel the need to also make a concession. This is concession reciprocity.
Making a concession is in essence doing something nice towards the other person. We will, again, feel an uncontrollable need to do something nice for them.
Your advantage: And again, this technique is used a LOT by salesmen. They know that, the more concessions they make, the more you will be tempted to say yes. Of course, it’s important for them to start with a high asking price, because otherwise there’s no more money left after a few concessions.
If you want to try out this technique, go sell something and start with double the price you want to sell for. And then slowly subtract a few dollars every time. Your potential buyer will feel obligated to make a concession: he will raise his buying price. If you do it right – make a lot of small concessions, each time a few dollars or dollarcents – you will definitely make a lot of profit. The only thing you need for this to work is confidence and patience. Moral gray zone? Yes. Effective? Yes.
Some other examples (use at your own risk):
Craig: “Do you want to go back to my place?”
Hot Girl: “Umm, no, I don’t really feel like it”
Craig: “Ok, let’s just make out then.”
Hot Girl: “Yes please!”
Random guy on the street: “Can you give me 50 cents for my busride?”
Random guy on the street: “Can you give me 5 dollars for my busride?”
Random guy on the street: “Okay what about 50 cents?”
You: “Okay, let me check if I have some spare change”
Stay tuned for the next 5 psychological social techniques, and please share this article, it helps me a great deal 🙂 Thanks!