Tag Archive for: Cialdini

Acquiring Happiness

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I’ll ask for forgiveness upfront because this post isn’t about the science influence. It’s about an exploration of feelings which do influence our choices but this is based solely on a recent experience of mine. Our daughter, Abigail, got her temporary driver’s permit in early August and will get her driver’s license in December. The game plan has been to keep my 1998 Pontiac Grand Prix in good working order – despite rust – so we could give it to her when she was old enough. She’s been a very good, responsible kid and we think she’ll continue that pattern behind the wheel. This summer Jane and Abigail started looking at cars in anticipation of me giving Abigail my car. Not too long ago they came across two really nice vehicles; a 2008 Buick Lacrosse and a 2008 Pontiac Grand Prix. Both were very nice cars and after some online research I felt both were about the best deal I’d get locally. Jane’s heart was set on the Buick but I favored the Grand Prix. The dilemma was that each had attributes the other didn’t. Bottom line; if I wanted the big car luxury feel the Lacrosse was the way to go but if I was looking for a sporty, powerful car then the Grand Prix was the right choice. I settled on the Grand Prix, much to Jane’s dismay, and without going into all the details I’ll tell you two big factors were that I’d had so much good luck with my first Grand Prix and the 2008 Grand Prix had 16,000 fewer miles than the Buick. I think I’m a pretty simple guy because I really don’t want for much. I could have continued driving my old car and been content with it for quite a few more years. Jane and I have lived in the same home for more than 20 years and are very happy. Many things that were original in our home were fine by me but, like many people, once Jane made changes to the house I really liked our home even more. In a similar way, I drove a newer vehicle all of a sudden I felt myself wanting it. Getting a new car was fun but it was a tiring process. It wasn’t just the warm August day that had me tired later on, it was the decision making process, spending a good bit of money, and knowing my choice wasn’t the one Jane wanted. In her defense she was very gracious and told me multiple times she wanted me to get what I wanted because I’d be the one driving it. So why didn’t I feel more excited when I left the lot in my new car? Don’t get me wrong, I really enjoy driving the car! However, I was conscious of the fact that I wasn’t really excited, or at least wasn’t as nearly excited as I thought I’d be. I know I was more conscious of all of these feelings because I happened to be reading a book called Stumbling on Happiness by Daniel Gilbert. Happiness is a subject I wrote about a while ago in a post titled The Secret to Happiness. Here was the strange thing, the thing that really made me happy that day. We happened to be celebrating Abigail’s “Special Day” when I closed the deal on the car. Her special day is a random day once a year where I take the day off and Jane and I give Abigail breakfast in bed, some gifts and then do some of her favorite activities. It was unplanned that I’d end up getting a car on this day but because it worked out I was able to tell Abigail my old car was now her car on one of her favorite days of the year. Here’s what truly made me happy that day; Abigail’s Facebook post said, “Well, since my dad got a new car today, i get his old one! Sooo i have a car now! (: woo hoo”. It would have been easy for her to look at my new car then the one she’s getting and feel some discontentment, but she didn’t. I knew she genuinely appreciated getting the old car and for some reason, even after getting a new car my joy was because I made her happy. The Lord was right when he said, “Tis better to give than receive.” Here’s the really cool thing; we can all be a little happier if we look to give to others. I write about influence and persuasion so I must point out that giving engages reciprocity, the principle of persuasion that tells us those you give to will feel some obligation to give back to you at some point in time. But that aside, the feeling you get having made someone happy, especially someone you love, is more than enough return. There’s no “thing” my daughter could give me that I couldn’t go out and buy myself but you can’t buy happiness and even if you could, it would be more expensive than any of us can afford. Brian, CMCT

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Helping You Learn to Hear “Yes”.

Influence Tips for Running a Restaurant – Part 4

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This is the final post in what turned out to be a four-part series on ways restaurants can ethically engage customers using the principles of influence to create win-win situations. If you’re a server at a restaurant, pay close attention—what I’m about to share is something you’ll want to avoid.

Customers often ask about different dishes, saying things like, “How’s the fish?” Too often, servers respond by sharing their personal preferences, saying something like, “It’s one of my favorites” or “I love it.” While these statements may be true, they’re a mistake. Why? Because everyone has different tastes. If the customer ends up disliking the dish, the recommendation is tied back to the server, which could hurt tips.

A better approach would be to engage the principle of consensus, as people tend to look to others for validation when making decisions. Instead of giving a personal opinion, a server might say, “It’s one of our customers’ favorites” or “Several people have already had it today and said it’s delicious.” These responses rely on consensus, while also deflecting potential criticism in case the customer doesn’t enjoy the dish.

Here’s another tip for servers: The liking principle tells us that people like to do business with those they like. The more a server can get customers to like them, the better the odds of receiving a favorable tip. Beyond the standard, “I’m Sally, and I’ll be waiting on you today,” servers should consider asking customers for their names.

I’ll never forget Ryan, a bartender at Friday’s, from a trip I made to Nashville years ago. When Ryan came to take my order, he introduced himself, asked my name, and shook my hand during the quick exchange. Each time he checked on me, he used my name.

“How’s your food, Brian?”
“Would you like another beer, Brian?”
“So, what brings you to Nashville, Brian?”

After a while, I felt like a friend was waiting on me. Needless to say, Ryan earned a very nice tip.

Little things like this can go a long way. A smart server is observant and looks for similarities to connect with customers. Whether it’s a shared hometown, favorite sports team, or even a similar name, finding and raising those mutual interests engages the principle of liking. This connection increases the odds that customers will enjoy the dining experience more.

Another tactic for engaging liking is to offer genuine compliments. Abraham Lincoln was right when he said, “Everyone loves a compliment.” Servers should look for something authentic to praise—perhaps a customer’s outfit, choice of dish, or even their demeanor—and raise it to the surface. Compliments make customers feel good, and those positive feelings are often associated with the server and the restaurant, benefiting everyone.

What’s nice about this approach is that it’s reciprocal: as servers find things they admire in customers and connect over shared interests, they often begin to genuinely like the customers they’re serving. When customers sense that their server enjoys waiting on them, they feel better too, creating a positive feedback loop. Everyone wins.

While there are undoubtedly more strategies restaurants can implement, incorporating the suggestions I’ve shared throughout this series can make a meaningful difference. Customers will feel more engaged and enjoy their dining experiences even more, and the best part? As I mentioned at the start of this series, implementing these changes costs almost nothing.

Brian, CMCT

influencepeople

Helping You Learn to Hear “Yes”.

Influencers from Around the World – The Determination of the Illusionist

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This month’s Influencers from Around the World article is from Yago de Marta. If you’ve been a reader of Influence PEOPLE for any length of time then you’ve no doubt read some articles by Yago. I know you’ll find his insights on communication and influence thought provoking and challenging. You can find Yago on Facebook, Twitter and LinkedIn.

Brian, CMCT

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Helping You Learn to Hear “Yes”.

The Determination of the IllusionistHave you ever seen an illusionist? Have you wondered how he’s capable of doing so many tricks? How is he capable of influencing the entire theatre? That’s what we are going to discover together in this post. The determination of the illusionist is the most powerful tool of influence aside from his self-esteem. To be determined – to decide to do something and be convinced you’ll succeed – is the key! The tennis player “knows” the ball will be in before he hits it; the poker player “knows” he will win before the game begins; and the surgeon “knows” that everything will turn out well for the patient. The result doesn’t always matter because the most important thing is the will of the practitioner. Let’s imagine together for a moment that we want to convince 200 people to put their arms up in the air. Well, you say, that’s easy because we’ve seen “persuaders” like Norma Barretta and Tony Robbins to do that many times. When they want people to put their arms in the air, they do it first! Okay, that’s a good explanation, but not good enough. We have talked about our product to the crowd. We have explained all its attributes and advantages. We want people to approve the product by putting their arms up. There is no doubt your product is perfect. Can you feel it? Remember my article “Anti-Social Proof” where I said there are always one or more people who don’t like you? No matter what you say, no matter who you are, some people won’t like you, your opinions, or anything related to you. Why? No worries because it doesn’t matter! That’s just the way it is so, accept it right now and move on. The people who don’t like you are like a “fifth column” of the public. Like a virus that inhibits what you display in the stage, these people don’t care what you say and they are your first “wall” so to speak. They are structural, always existing…but you can deal with it! There is another group of people. These are the ones who hear what you say, like what you say, and even care about what you say, but they won’t lift a finger! You know those people? There are a lot of them around. They can’t decide anything because they are passive, always waiting for something else. And they “slow” the movement of the whole crowd. They are the “inertia” of the group that you have to break, the group you have to change. They are your second “wall.” Wow, I have been talking about problems, limitations and “walls,” but how can we “take the castle”? Well, if we do like Norma Barretta, talking about our product and when we ask for approbation, and we put our arms up in the air while we are ordering people to do that, what do you think happens? Yes, about 50% of the public puts up their arms. What about the rest? The rest don’t want to do that, or rather, they don’t know they want to do that. But, as I wrote earlier, the most powerful tool of influence is the determination. So, what can you do? Well, if you want everyone to put their arms up, be determined. Wait. You are supposed to do it and you will do it! Insist, smiling or shouting, but insist. Suddenly, you’ll see that another 30% put their arms in the air because it’s normal. They wanted to see that you really care. They needed to see you believe and that you have a high level of physical activity. Congratulations, because you’ve broken a big part of the second wall. You knew who they were and knew that they needed to be pushed a little. Now, for the rest. If you insist, some of the rest will put their arms up. The group of “convinced” people is growing because social-proof (a.k.a. consensus) is growing every second. You are growing stronger and bigger but you’re still not there. The most important thing is not to give power to the “fifth column” of people. Just reframe the group as resistant but not-yet-convinced. You see? Be calm, I know it’s not easy to resist the “failure” and you can feel it easily. But remember, determination. Determination, determination, determination! And pride. You have to start showing a kind of pride. The fact is there are still people that haven’t been moved but this is a victory. You only see the ones who are convinced. Let’s move them slowly but with energy. Make the not-yet-convinced to feel alone. Remember, you are a type of illusionist and your “trick” always succeeds because you’ve decided what it is! At the end, there are only two or three people still in their chairs. Don’t worry because it’s normal, remember? We are surrounded by modern August Landmessers but it is okay because we understood that beforehand. So, we can predict the result and we get to define success. If you have the determination you’ll move the masses, you will move the crowd. We have an impulse that makes us follow those who know, or makes us believe that they know, where they are going (authority). We have an impulse to move like the other when he moves decidedly (liking). We have an impulse to do what the others do (consensus). We have an impulse to do what the other insist to do (consistency). We have an impulse to continue doing what the other appreciate (reciprocity). And you have the map, you know the rules, and have the determination. Just do it. Just do it. Just do it. Yago de Marta

International Speech and Media training expert

www.yagodemarta.com

The Role of Influence in the Markets

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I’m willing to bet the majority of you reading this week’s post have seen the 1940s Christmas classic It’s a Wonderful Life which starred Jimmy Stewart as George Bailey. You know the story; George Bailey contemplates suicide on Christmas Eve because his building and loan business looks like it’s going to go under and he thinks the world would have been better off had he not been born. In the scene that leads to his despair there’s a run on his Building and Loan company and it nearly goes under. What’s clear in the movie was panic set in and more and more people wanted their money fearing they might not get it if they waited much longer. We saw something similar in recent weeks in the stock and bond markets in the United States so I thought it would be good to look at some of the psychology behind what happened. First there was the debt crisis. Americans and the world started getting very antsy as they watched the game of chicken played by President Obama and the democrats with House Speaker Boehner and the republicans. There was talk that an agreement might not be reached because the two sides have very different viewpoints on the role of government, the use of debt and how the economy best operates. The uncertainty lead to fear and as the old saying goes, “Perception is reality.” The fear is rooted in scarcity, the principle of influence that tells us people want something more when they believe it will be less available. When investors think the government will make moves that could hurt their investments they will take actions to minimize their potential loss and quite often that means they sell while they can. The result of the uncertainty; the market lost several hundred points that week even though a deal was ultimately reached. Unfortunately it went from bad to worse the following week! The market reacting to fears of a worldwide recession and not being too pleased the government compromise on the debt started another sell off. On Thursday, August 4, I recall looking at some news outlets during lunch and seeing the Dow Jones was down 350 points! By the end of the day it was down over 500 points which meant it had lost about 1000 points, or nearly 9% of its value, in just over a week. Not good for those of us saving for retirement and/or kid’s college! While the run might have been sparked by fear it was compounded as investors looked around, took note of what others were doing and followed suit. In other words, consensus, the principle of influence that tells us people look to others for their cues on how to act, was at work. This particular principle is magnified in times of uncertainty and we saw something similar to what George Bailey was facing with the run on his little Building and Loan business. By the end of the week, for the first time ever – including during the Great Depression – the United States bond credit rating was lowered from AAA to AA+ by Standard & Poor’s. This creates more uncertainty as investors are waiting to see how the other major credit rating bureaus will react. If they follow suit things could continue to snowball. However, if the other agencies express confidence in the U.S. government’s ability to meet its debt obligations and keep their AAA ratings things might even out some. The White House vigorously contends S&P’s measurement that led to the lower rating was an inaccurate representation of the debt and government spending. Unfortunately, given all that’s gone on government officials may not have much credibility (authority) in this “he said, she said” back and forth that’s taking place. Confidence is not something that can be measure like speed, strength or IQ. Confidence is a matter of perception and, as noted above, perception is quite often reality until something happens to change that reality. Consider this; no one thought a man could run a mile in less than four minutes. Many tried but all failed over the course of human existence. Even physicians began weighing in saying it was not humanly possible. However, all of that changed on May 6, 1954, when Roger Bannister finally broke the four minute barrier. Once he did it dozens of other runners did so in the ensuing months and years. In fact, just 46 days later, his new record was already history as John Landy set a new world record for the mile. Why all these sub four minute milers setting new records? Because all of a sudden people were confident it could be done. Their perception changed and so did reality. It may not be the government’s doing something that will restore confidence, it might be key investment houses, individual investors or some other outside organization but until it happens we’ll all be like the myriads of runners prior to May 1954, a group of people who don’t believe it can be done.P.S. The DJI fell more than 630 points as this post hit the internet! Brian, CMCT

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Helping You Learn to Hear “Yes”.

Influence Tips for Running a Restaurant – Part 3

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Welcome to the third part of this series, directed at those working in the restaurant industry. I believe that applying the principles of influence in an ethical manner can create a win-win-win scenario for restaurants, waitstaff, and customers alike.

A couple of weeks ago, I wrote about a way for servers to increase their tips. Today, I’ll share another strategy servers can use to take home more pay. Believe it or not, something as simple as a mint can encourage many people to tip more.

Now, you might be thinking, “I’d never tip more just because I got a mint.” While that may be true for you, not everyone feels the same. If some customers are inclined to tip more simply because they received a mint, isn’t it worth the effort?

In one study, researchers found that servers who gave a single mint to customers increased their tips by more than 3%. But here’s where it gets interesting: when servers gave two mints, tips more than doubled—they increased by 14%! That’s right; servers who routinely handed out two mints saw their tips rise significantly. And since handing out two mints takes no more effort than giving one, it’s a smart move.

You may be wondering, why does this happen? Researchers believe it’s due to the principle of reciprocity. This principle of persuasion tells us that people feel obligated to give back to those who’ve given something to them first. The simple act of giving mints taps into this principle, prompting patrons to open their wallets a little wider. The more mints customers received, the deeper they dug into their wallets.

But wait—there’s more!

The study tested a third approach. In this scenario, servers gave patrons a single mint and began to walk away. However, before they got too far, they would turn back, approach the table again, and say something like, “You guys have been great,” while handing out an additional mint. Believe it or not, this tactic resulted in tips that were nearly 25% higher than the control group!

Interestingly, it was still only two mints per person, but the personal touch made all the difference. The act of returning to the table, coupled with the kind words, made the gesture feel unique and special to the customers.

Of course, this tactic isn’t appropriate for every customer. Not all patrons are “great,” so it would be unethical—or even manipulative—to use this approach universally. However, for tables that are genuinely enjoyable to wait on, this personalized engagement can lead to higher tips.

The next time you’re dining out and notice mints near the door as you leave, you’ll know that the restaurant is missing a golden opportunity. By leaving mints out for self-service, they’re bungling a chance to help their waitstaff make more money while delighting customers.

Smart servers might even consider investing in their own bag of mints. With the extra cash they’d earn from larger tips, they could easily afford it—and then some!

Next week, we’ll conclude this series with a final post offering more tips for those in the restaurant industry.

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

Consistency in American Politics

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I know conventional wisdom says we should not talk about sex, religion or politics but I’m going to go against that wisdom this week to talk about something I observe in American politics that hurts all Americans. The genesis of this post is seeing yet another story about the political fight going on regarding America’s growing debt and the debate on how to handle the debt ceiling crisis.

I’m not big on politics and offer no solutions to our problems. We elect people to solve those problems just like we hire accountants to help us with taxes and lawyers to help answer legal questions. We share our goals with those professionals so they can come up with solutions that best suit us and we essentially do the same with elected representatives.

A big problem with politics stems from the principle of influence known as consistency. This principle tells us people feel internal psychological pressure to remain consistent in word and deed. Normally this is very good because it motivates people to do what they said and adhere to their word. When people don’t follow through we usually look down on them. When I lead a Principles of Persuasion workshop I usually ask participants to describe people who are not consistent and a few words I typically hear include: unreliable, flaky, wishy-washy, and inconsistent. Occasionally someone will go against the tide and say “flexible.”

Rigidly adhering to your word can come back to haunt you if it’s proven your original stance was wrong or circumstance require a change. I’m sure President George Bush Sr. wishes he never uttered, “Read my lips – no new taxes.” When it became clear taxes had to go up he lost all credibility with the American public.

Unfortunately, most American politicians pander to the faithful of their party in order to get elected and in doing so they make public statements in no uncertain terms about what they will or won’t do. They leave no room for change lest they get branded by an opponent as unreliable, flaky, wishy-washy, and inconsistent.

To be sure politicians should have convictions and share those with the public so we can make the best informed decision on who we want to represent us. However, when they dig themselves into positions so deeply that there’s no room for real dialog with the other side and potential compromise for the good of the country then we get what we have now – political gridlock.

Of course each person will tell us they’re just carrying out the wishes of their constituents back home and simply doing what they were sent to Washington to do. As far as I’m concerned that’s a meaningless bunch of drivel! Anyone can use that line to justify nearly any vote they make. It’s analogous to the defense lawyers declaring “the system works” because Casey Anthony got off. The same thing could have been uttered by prosecutors if she had been convicted. If the system works no matter what the verdict then the phrase is meaningless…or maybe the process is!

The following is my opinion only so you can take it or leave it but I still get to write it because it’s my blog. I want elected officials who have one overriding goal, the good of the country. If that means setting aside some ideology so compromise can be reached then so be it. Or perhaps they can start by telling voters what they stand for but that they’re willing to change if necessary for the good of the country.

Next week we’ll get back to the series I’m doing on influence tips for restaurant owners. Until then, thanks for faithfully reading and for allowing me to rant a little this week.

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

Influence Tips for Running a Restaurant – Part 2

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I started this series last week by mentioning all the traveling I’ve done during the first half of the year and how it has given me plenty of opportunities to observe how restaurants operate. Employing the psychology of persuasion can help customers enjoy the whole dining experience more, which, in turn, benefits the restaurant through repeat customers.

Since my interaction is primarily with the waitstaff, most of the ideas I’ll share will revolve around them.

Have you ever had your server come up and ask, “Does everything taste fine?” Of course, you have—and so have I. In fact, that’s what I hear more often than not. When I think about that phrase, it reminds me of someone who, when asked how they’re doing, typically says, “Not bad.” So, bad is the standard, and they’re just not bad?

Many of you might think you know what they mean, and I do, too, but isn’t it more uplifting to hear something like, “Doing great. Thanks for asking”? Of course, it is.

C. Britt Beemer, in The Customer Rules: The 14 Indispensable, Irrefutable, and Indisputable Qualities of the Greatest Service Companies in the World, explains this concept perfectly:

Bill Pulte, founder and chairman of Pulte Homes, explains, “At Pulte, we work on the premise that we don’t want to satisfy the customer; we want to delight the customer. Here’s what I mean. When a husband and his wife go to a restaurant for dinner and have a nice meal, they are satisfied with it. So they go home, and that’s the end of it. They forget about it. On the other hand, if they had a fabulous meal and extraordinary service, what do they do? They tell their friends about it. With this in mind, we don’t think that just being satisfied is good enough.”

Let’s return to our server. When you go to a restaurant, aren’t you expecting the food to be good, great, tasty, delicious, or something better than just “fine”? I know I am.

If I were managing a waitstaff, my instructions would be to ask customers questions like, “Does your food taste good?” or “Isn’t the chicken delicious?”—phrases that prompt customers to reflect on how good the food is, rather than settling for “fine.” When customers affirm that the food is good, tasty, or delicious, they’re likely to feel better about their dining experience. That will make them more likely to return and probably tip better.

Why do I believe they’ll enjoy the dining experience more and tip better? Because the principle of consistency dictates they will. This principle of influence tells us that people feel internal psychological pressure to be consistent in what they say and do. If you want a simple way to remember this, think word and deed—because people like their words and actions to match.

If I affirm that the food is good when asked, it would be inconsistent for me not to return at some point. The server can strengthen these odds by asking, “That’s nice to hear. Do you think you’ll be back to see us?” Most people would likely say yes to that question, and as a result, more will return.

I also think tips will increase because of this approach. People usually tip based on good service and good food. Poor service or poor food is disastrous for servers who depend on tips for a living. When customers affirm that the food was very good, it makes tipping generously feel consistent—assuming the service was good as well.

Next week, we’ll explore more ways to use the psychology of influence to run a successful restaurant.

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

Influence Tips for Running a Restaurant – Part 1

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Lots and lots of travel during the first half of the year! By the time it was over, I’d visited Baltimore, MD; Austin, TX; Nashville, TN; Chicago, IL; Greensboro, NC; Cincinnati, OH; State College, PA; Cleveland, OH; Milbank, SD; Des Moines, IA; Indianapolis, IN—and possibly a few other places I’ve forgotten. With all the travel came many nights in hotels and dining out.

I’ve blogged before about how hotels are bungling opportunities to encourage more guests to reuse towels and bed sheets to help the environment, so I’ll steer clear of that this week. If you want to learn about what those hotels could do, click here.

As you can imagine, with all the meals on the road, I’ve had ample opportunity to observe how restaurants operate. When it comes to engaging customers to help them enjoy the dining experience a little more—and ultimately improve the restaurant’s bottom line—there’s plenty of room for improvement. So, I thought I’d share some psychological tips for running a restaurant. These are ideas I’d personally implement if I owned one.

I’ll state up front that most of these ideas can be implemented without spending additional money—or very little in some cases. Restaurant owners, do I have your attention? Because there’s a lot to explore, and due to the need to explain the psychology behind my suggestions, this will be a multi-part series of short blog posts over four weeks.

Let’s start with the menu and talk specifically about wine. All too often, after grouping wines (Merlot, Chardonnay, Zinfandel, Shiraz, etc.), the listings seem haphazard—at least to the non-wine connoisseur. Unless you have a very upscale restaurant catering to wine lovers, I think this is a mistake. Much of the time, the cheapest wines are listed first, which is an even bigger mistake!

In psychology, there’s something known as the contrast phenomenon, which tells us that what people see or experience first greatly impacts how they perceive the next stimuli they encounter. For example, when buying a suit, no good salesperson would start the process by showing the client accessories. If they did, the cost of the suit would seem too expensive by comparison. Think about it: if you’re first shown a shirt-and-tie combo costing $75–$100, the suit seems even pricier.

The smart salesperson sells the suit first because, by comparison, the shirt and tie don’t seem as expensive. Even if the customer doesn’t buy the accessories, at least the big-ticket item was sold.

How does this relate to restaurants selling wine? If the average customer starts reading the menu and sees a $20 bottle first, then by the time they get to the $200 bottle, it seems exorbitantly expensive by comparison. However, if the more expensive wines are listed first, then a $75 or $50 bottle starts to seem like a bargain.

Simply rearranging the order of wines—from most expensive to least—when new menus are printed should lead to increased sales. More people are apt to buy pricier wines. They may not go for the $200 bottle, but they’re much more likely to consider some of the other higher-priced options.

The same thought process applies to other menu items. After separating entrees from sandwiches and salads from starters, the restaurant owner would do well to list food items from most expensive to least expensive.

Next week, we’ll look at some things the waitstaff can do to increase customer satisfaction and tips.

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

Decision Making and Rationality – Part 4

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This is the final installment in the series on decision making. The information I’ve been discussing was derived from a survey I conducted over a month ago with readers.

Question 8 on Survey A was: Your company is surviving in this economy but is looking for ways to save money. Inflation is 0% and the company has decided to cut wages across the board by 3%. Is this fair? Nearly two-thirds (62%) said this was not fair.

On Survey B the question was slightly different: Your company is surviving in this economy but is looking for ways to save money. Inflation is expected to be 6% this year and the company has decided to give a 3% wage increase to everyone. Is this fair? Slightly more than two-thirds (67%) said this was fair.

Here’s the point: Both questions are really the same. In each case your buying power will fall by 3% because of inflation. The first case it unpalatable because no one likes to lose (scarcity) and that’s how it feels when your pay is cut. The second scenario doesn’t seem so bad because at least you got something. However, at the end of the day both employees have the same buying power if inflation turns out as predicted. Never forget, how you position things can make all the difference.

Question 9 on Survey A: You’re playing a game and your partner was given $100 to share with you any way they see fit. The two of you get to keep the $100 but only if you think you’ve been treated fairly. What’s the least amount you would want in order to not reject the deal?

Just over two thirds of the respondents said sharing $50 would be fair. The average of fair for all responses was $41.88.

On Survey B the question was: You’re playing a game and you’re given $100 to share with the person you’re playing with. The two of you get to keep the $100 but only if the other person agrees you’ve been fair. How much will you give the other person?

Here 93 0f 100 respondents said $50 w0uld be fair and the average of fair was $50.33.

Here’s the point: Both questions put survey takers in opposite positions. You know you can lose everything in Survey A if your offer is not perceived as fair so you better consider what the other person thinks is fair. As we’ve seen, most people view fair as roughly equal portions.

In Survey B the tables are turned and you can reject the deal which means the other person loses out too if you feel they’re not being fair. However, wouldn’t it be foolish to reject any offer because accepting even $1 makes you better off than you were before the game? What’s the point in teaching the other person – who you’ll probably never see again – a lesson because you didn’t think they were being fair?

Of course, in either scenario there’s lots to be considered if you will see the other person again, especially of you have an ongoing relationship. People take being fair very seriously and you’d best get to know the other person and try to learn their value system if you expect to have a good, long-term working relationship.

Question 10 dealt with salary increases relative to others in the same department. In Survey A the question read: You got a raise from $65,000 to $80,000. You’re now the highest paid person in your department. On a scale of 1-100 (1 least, 100 most) how happy are you?

The question was very similar for Survey B except how your new pay ranks in the department: You got a raise from $65,000 to $80,000. You learn you’re only the 3rd highest paid in your department out of five people. On a scale of 1-100 (1 least, 100 most) how happy are you?

As you can imagine, people in Survey A were happier, the average score being 83.6%with men coming in at 82% and women 86%. In Survey B the average was 74.2% with men being less satisfied at 72% and women reporting happiness of 76%.

Here’s the point: Sometimes we’re better off not comparing ourselves to others. There are times when comparisons are needed to make sure we’re not taken advantage of but quite often that’s not the case as we make comparisons. I wrote a blog post, “The Secret to Happiness,” where I shared a personal philosophy, “Happy is the man who wants what he has.” I must say my thinking in this area is impacted by Biblical principles which continually tell us not to compare ourselves to others because that becomes a source of greed, lust and envy.

I hope you found the survey and resulting posts helpful in understanding how and why people make decisions. If you’re trying to influence people recognizing they don’t always make decisions in the most rational manner is helpful because you can adjust your presentation accordingly. Doing so in an ethical manner can lead you to me more persuasive and hear “Yes” more often.

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

Decision Making and Rationality – Part 3

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For the past few weeks we’ve been looking at data from a survey I conducted with Influence PEOPLE readers. My goal in doing the survey was to understand how people make decisions. If you’d like to know more about the survey background click here. This week we’ll continue to explore some interesting things about how people make decisions.

Question 6 on Survey A had to do with selling your home. I realize there’s a lot to consider when selling a home but nonetheless the question read as follows: You bought your home for $189,000. At the peak of the housing market it was appraised for $279,000, so even though you don’t have to move you decided to try to sell it. With the recent market all prices have come down. You’re offered $212,000. Will you sell?

Under these circumstances 77% declined to sell.

On Survey B the question was essentially the same except the peak value was much lower: You bought your home for $189,000. At the peak of the housing market it was appraised for $229,000, so even though you don’t have to move you decided to try to sell it. With the recent market all prices have come down. You’re offered $212,000. Will you sell?

In this economic scenario 53% of people said they would sell.

Here’s the point: If you take another look at the questions you’ll see the selling price is the same in both cases, $212,000, which means the profit is the same on each sale. The difference is what people thought their house was worth during the housing bubble. It’s a classic “compared to what” situation and loss aversion. People who thought their house was worth $279,000 at one time are very, very reluctant to sell. As I noted last week, the same thing happens with stocks when people hang on to losing stocks hoping they’ll rebound.

In the second survey with the peak price being much lower made people feel less pain thinking about what they might have gotten and as a result more than twice as many were willing to sell when compared to Survey A. Knowing the housing market was over inflated due to bad loans shouldn’t the real question be; is a $212,000 selling price a good return on an $189,000 home? Take the comparisons out and people make very different decisions.

Question 7 on Survey A went like this: You’re playing a game and you’re given $100 to share with the person you’re playing with. Between the two of you, you get to keep the $100 no matter how you choose to split it. What would you give to the other person?

On Survey B the question was: You’re playing a game and your partner was given $100 to share with you. Between the two of you, both get to keep the $100 no matter how they split it. How much would the other person have to give you to for you to consider it a fair split?

On Survey A the average response was $50.38 and on B it was $47.76. As you can imagine the vast majority of people put $50 on both surveys (87% on Survey A and 84% on Survey B) as being the fair amount.

Here’s the point: We have an ingrained idea that “fair” is an equal split when in reality, if you were given $100 and could share that amount however you wanted, anything you would give to someone else would make them better off. Just because you had the luck of the draw so to speak does that mean everyone should have such luck? Regardless, it’s apparent what people call fair usually means equal shares for all, so you’d do well to keep that in mind when sharing.

Next week we’ll conclude our look at the survey results and implications for you when it comes to understanding how people make decisions.

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