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My Holiday Selling Advice: Keep It Clean

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As the holiday shopping season kicks into high gear, retail professionals will be busier than ever. Whether you sell motorcycles, jewelry or consumer electronics, your job is to persuade holiday shoppers to buy what you’re selling.

My advice during this critically important but potentially lucrative and exciting time? Don’t be one of those brands, companies or individuals that skate the fine line between ethical and manipulative persuasion.

Whenever I talk about persuasion — on my website, at speaking engagements and even when out with friends (hey, it’s what I do!) — I define “persuasion” as “ethically winning the heart and mind of your customer.”

“Ethically” means simply doing something honestly and without trickery or deceit. “Winning” means making the sale. “Heart” refers to gaining emotional buy-in, “mind” refers to logical buy-in and “customer” is the specific person you are attempting to persuade.

Turning to manipulative methods is tempting — especially when there are sales quota to meet, and consumers have many other purchasing options.

To keep sales professionals from engaging in questionable tactics when they hear “no,” I suggest following my “ART of Persuasion” model. Even though you may be familiar with this, it’s worth a reminder during the holiday shopping season.

1. ACKNOWLEDGE the objection.

Doing so psychologically prepares the buyer to hear what you have to say: “I understand and can see what you’re saying, but may I share with you some information that might change your mind?”

2. RESPOND in a substantive and compelling manner.

Do so by using three key pieces of information: “If you’re looking for a lower price, you’ll find it somewhere else. But if you’re looking for great buying experience, you’re in the right place.”

And then give three reasons why the customer should buy from you and your store — not from someone else and not online.

3. TRANSITION to the next step.

Remember to remain respectful of the buyer’s objections:

“What else would you like to know?”

“Another thing to consider is …”

“Do you have other questions I can answer?”

“What do you think?”

If the response is still negative, you have more work to do. Communication and objection handling are true art forms, and you’ll be like Picasso when you master the ART of this form of rebuttal.

Like any useful model, the ART of persuasive communication can be applied to just about any situation.

You won’t hear “yes” every time, but you’ll be shocked at how often you do.

Enjoy the holiday selling season!

Persuasion Power: Know How Much You Need to Sell

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In previous posts, I began explaining how to build your business case to achieve skyrocketing persuasion results. It all begins with doing due diligence and then measuring return on investment.

Another step with which you should be familiar when building a persuasive business case is the break-even calculation, which answers the question: “How many units do we need to sell to recoup our investment?” It is primarily used for product sales and can be determined in two easy steps.

Step 1:

Calculate the gross profit margin for selling one unit by taking the revenue derived from selling one unit at full retail price and subtracting the cost of goods sold for one unit. That equals the gross margin per unit.

Step 2:

Calculate the break-even number by dividing the net initiative by the gross margin.

For example, let’s say you’re a manufacturer partnering with a software design company to develop a point-of-sale software program for your retail distribution channel. The software company is charging you $15,000 per copy for the software, and you’re going to sell it to your retailers for $20,000. Your gross profit here is $5,000 per copy. The software company requires a minimum purchase of 100 copies in order to complete the customization required. Your initial investment is $15,000 x 100 = $1.5 million

Now, divide that $1.5 million by the $5,000 gross profit, and your break-even for this product is 300 units.

Break-even calculations are valuable because they help keep an organization headed toward a recognizable goal. The problem here (at least in terms of making a financial decision) is that break-even calculations don’t take into consideration time dedicated to the project. For that, you’ll need to do more calculations.

Master the break-even calculation and other fundamental business measures and calculations that often arise in meetings and discussions, and you’ll be well on your way to becoming a professional persuader.

Persuasion Power: The Role Return on Investment Plays

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In a previous post, I began explaining how to build your business case to achieve skyrocketing persuasion results. It all begins with doing due diligence.

The most fundamental financial measure is return on investment. Companies use this measure to determine if they should take action — or if the action they took was worth it.

The classic ROI Calculation is this: ROI = Net Benefit/Total Cost.

You want a positive number here, which is why some companies even have ROI minimums before they take on a project. If your ROI number is negative, your persuasion priority is no good for your organization, and you should reconsider — even if your persuasion priority works to your own advantage.

ROI can be expressed in dollars, as a percentage or as a ratio.

How much did you invest, and how much did you receive in return? Let’s say you invested $100,000 in a marketing campaign, which in turn reaped $1 million dollars in sales.

ROI in Dollars

To find your ROI in dollars, use this calculation:

  1. Begin with the total dollars garnered from your initiative: $1 million
  2. Subtract the cost of your initiative: $100,000
  3. That leaves you with the dollars returned: $1,000,000 – $100,000 = $900,000

Not including the cost of the initiative would be a gross overstatement. Some financial experts might even consider this entire example a gross overstatement, because it doesn’t account for the cost of goods sold.

Let’s say the cost of goods sold in our example is $500,000. Now you have sold $1 million in product, but that product cost you $500,000 to produce and get to market. Our ROI dollars calculation now looks like this: $1,000,000 Gross Revenue – $500,000 COGS – $100,000 Marketing Investment = $400,000 ROI. If you want to appear reasonable, conservative, and responsible to senior management, use the gross profit number in your persuasive efforts.

ROI as a Percentage

Expressing ROI as a percentage is even more common than expressing it as dollars. Again, let’s use the same example of investing $100,000 and garnering $1 million in gross revenue — which, by the way, would be a fantastic investment! To find this:

  1. Calculate gross profit:
    Revenue – COGS = Gross Profit —> $1 million – $500,000 = $500,000 Gross Profit
  2. Subtract your investment from the gross profit:
    Gross Profit – Investment —> $500,000 – $100,000 = $400,000
  3. Divide that by your investment amount to determine a factor:
    $400,000 / $100,000 = 4
  4. Then multiple that factor by 100 to give you a percentage:
    4 x 100 = 400% ROI

ROI Ratios

A ratio demonstrates the quantitative relationship between two numbers, showing how many times one number contains the other. The most elegant way to write this is with a colon. In our example above, our initiative has a 4:1 ROI ratio.

Typically when using ROI ratios, whatever you invest is always 1. So if the marketing campaign example above cost $150,000 (instead of $100,000), you would simply divide $400,000 by $150,000 and find the product to be 2.666; now your ROI ratio (rounded up) would be to 2.7. That makes your ROI ratio 2.7:1. Not as compelling but still not bad!

The challenge with return on investment calculations is what’s included and what isn’t, on both sides of the equation. Do you include the total cost for salaried employees to work on your initiative as a cost? Do you attempt to quantify improved morale as a benefit? With ROI, like all measures, it’s valuable to consider those inclusions and exemptions. Every company has different ways of looking at the numbers.

One final note about ROI calculations: If you are using these calculations to forecast anticipated ROI, you may want to run a few different scenarios. What if sales are off by a particular percentage? What if your cost of goods sold is higher than anticipated?

As I’ve mentioned in the past: Know this kind of stuff, and you’ll be well on your way to becoming a professional persuader — because you’re proving the viability of your ideas and initiatives to your targets.

Up next: The Breakeven Calculation

What Persuasion and Anchors Have in Common

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In a previous post, I wrote about the concept of anchoring: When it comes to numbers, we “anchor” to whatever number we hear first regarding a specific topic. Click here for more details.

Another component of anchoring, and one that is much more difficult to control but still worthy of consideration, is that of unrelated anchors. This can occur when numbers with no relevance to your initiative can nevertheless influence your target’s thinking.

In one study, participants were shown a bottle of wine and asked to estimate the highest dollar amount they would pay for that particular bottle. Before they wrote down their bid, subjects were asked to jot down the last two digits of their social security numbers. Those that had the highest social security number digits also bid the highest for the wine. The participants anchored to a totally unrelated number, which influenced their response.

If you are presenting numbers for the first time in a meeting, take into consideration whether your target is being exposed to other numbers prior to your presentation. If so, those numbers could impact the perception of your request. If you can adjust the agenda to give your good idea the best chances of success, do so.

Working With Numbers and the Concept of ‘Anchoring’

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When it comes to numbers, we “anchor” to whatever number we hear first regarding a specific topic.

• The new manufacturing plant will cost $35 million.

• The marketing initiative will take $5 million of our budget.

• The new training program is going to run us $550,000.

Now, whenever we think of these initiatives, we will rightly or wrongly compare any cost figures to those. In fact, not only do we anchor, we compare and contrast, too.

Say, for example, you are quoted a price for a new training program. Next, you compare all subsequent figures you see and hear, relative to that first figure. And then, another fascinating psychological occurrence happens: The principle of contrast kicks in. If the first dollar amount you were quoted was $550,000 for a training program, and the next one is $750,000, that cost seems even higher than it actually is, because you are comparing it to your anchor of $550,000.

If you’re vying for approval on a budget, and you have numbers to share, always share a range of numbers early in your communication, and make sure those numbers are generous. That way, subsequent numbers won’t seem quite as high, because you’ve already anchored your targets to a numerical set.

Similarly, if you’re trying to dissuade someone from following a particular route, make certain early conversations use lower numbers, which will make subsequent numbers seem even higher by comparison.

Remember, though, that your numbers must always be two things: real and legitimate.

Next time: How do you control unrelated anchors?

Revisiting Cialdini’s Six Principles of Persuasion: Authority

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We defer to experts. Whether you’re a scientist, a medical doctor, a Ph.D., or a professor, if you have a level of expertise — and your target is aware of that expertise — you automatically become more persuasive.

This ties in well with Robert Cialdini’s fifth primary principle of persuasion: authority. (In other recent posts, I’ve covered Cialdini’s first four principles: reciprocity, scarcity, consistency and liking.)

If you have a title, credential or significant certification, make it known in subtle yet powerful ways. Put that distinguishing credential in your email signature or post your diploma in your office.

I know a professional who once attended a prestigious executive education program, but rather than tell everyone he attended, he simply showed up at meetings with a coffee cup from that university! Subtle … yet effective.

Revisiting Cialdini’s Six Principles of Persuasion: Liking

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We like people who like us (and state so publicly). We also like people are who are like us. Whether they share similar political views or hobbies, hail from the same part of the world or simply both smoke cigarettes, individuals with commonalities feel an affinity for one another.

In other recent posts, I’ve covered Robert Cialdini’s first three principles: reciprocity, scarcity and consistency. Now I’m going to briefly explore the fourth principle: liking.

I’ve heard the argument that respecting somebody is more important than liking somebody. Fair enough, but if you actually like that person, you’re more willing to consider his arguments more carefully, give him more time to communicate and be more receptive to his messages. Again, this is human nature; you just can’t help it.

The takeaway here? Be approachable, seek similarities and don’t be afraid to pay someone a compliment every once in awhile.

Revisiting Cialdini’s Six Principles of Persuasion: Consistency

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What do you call someone who says one thing, yet does another? Hypocrite. Liar. Flip-flopper. Politician. Teenager. Most of those terms aren’t considered glowing characteristic traits.

This is where Robert Cialdini’s third primary principle of persuasion comes in: consistency. (In other recent posts, I’ve covered Cialdini’s first two principles, reciprocity and scarcity.)

We like, trust and want to interact with people who follow through on what they say. When a co-worker tells you he’ll hand in a report by the close of business, you think highly of him when he does just that. If he doesn’t, that colleague’s credibility drops a notch. Similarly, when company management promises to make a change to a problematic tuition reimbursement policy that never comes, the culture in that organization shifts to the negative.

The good news is that these occurrences aren’t likely to happen. Why? Once most people make a decision or take a position, especially publicly, they strive to act in accordance with that publicly stated notion. This demonstrates consistency, and it has been proven time and time again.

Next time, I’ll explore what “liking” has to do with all of this.

Meanwhile, if you haven’t already done so, consider reading Cialdini’s Influence: The Psychology of Persuasion, 

Revisiting Cialdini’s Six Principles of Persuasion: Scarcity

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In a recent post, I introduced Robert Cialdini, author of Influence: The Psychology of Persuasion, who created something akin to a “Unified Field Theory of Persuasion” by categorizing almost every persuasion approach into one of six primary principles: reciprocity, scarcity, consistency, liking, authority and social proof.

Last time, I covered reciprocity. In this post, I’ll focus on the second of those principles: scarcity.

Scarcity

Call it the rule of the rare, the fact of the few or the coefficient of the insufficient. People want more of what they perceive to be a dwindling supply.

Countless examples exist of how individuals have responded to a decreasing supply of something. One of my favorite reactions is the panic caused when Hostess Brands Inc., the 82-year-old maker of Twinkies and other snacks, filed for Chapter 11 bankruptcy in 2012. Shoppers began stockpiling Twinkies, fearing they’d find no alternative for their sugar fixes. News outlets reported that at least one person tried to capitalize on the scare by offering a single Twinkie on eBay for $8,000!

To truly leverage the principle of scarcity, the scarcity must truly be real. There really needs to be “Only three days left!” or “Limited inventory!” Anything else, and lack of ethics comes into play. And if you think people are worried about what they might be missing, they’re even more concerned about losing what they already have. That’s why “loss language” (forfeit, surrender, forgo) is always preferable to “gain language” (acquire, obtain, secure) when playing the persuasion game.

Try incorporating the principle of scarcity into your persuasion efforts this week.

Revisiting Cialdini’s Six Principles of Persuasion: Reciprocity

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It’s been almost 35 years since Robert Cialdini, now regents’ professor emeritus of psychology and marketing at Arizona State University, wrote Influence: The Psychology of Persuasion, in 1984. (It later was published as a textbook under the title Influence: Science and Practice.) The original book stemmed from Cialdini’s literature review of almost 50 years of scientific research regarding persuasion, plus his own ethnographic studies.

Today, Influence is regarded as one of the most, ahem, influential books on the topic.

Cialdini is so highly respected in the field that he was a part of a “dream team” of behavioral scientists who helped create persuasive approaches for President Barack Obama’s 2012 reelection campaign. Regardless of your political leanings, you’ve got to admit that Cialdini’s additions were subtle and brilliant.

“We know you’ve voted in the past … ” was a subtle prompt known as “consistency” that convinced voters in 2008 to vote for Obama again in 2012. Cialdini also helped teach campaign volunteers to address rumors that Obama was a Muslim by reframing them: “Obama is not a Muslim” actually repeated the claim and reinforced it in the electorates’ collective mind. “Obama is a Christian,” on the other hand, reframed and refocused the discussion.

Cialdini created something akin to a “Unified Field Theory of Persuasion” by categorizing almost every persuasion approach into one of six primary principles: reciprocity, scarcity, consistency, liking, authority, and social proof.

In this post, I’ll focus on the first of those principles: reciprocity.

Reciprocity

Reciprocity involves the give and take of human exchange. People repay others in kind. Every culture in the world teaches this principle in one way or another. When you do something for someone else, it’s almost embedded in human DNA to want to return that favor in kind.

Reciprocity can range from the simple and instantaneous to something much more involved and complex. Examples can be found in day-to-day life on an individual level, such as helping a co-worker prepare for a presentation after he helped you prepare for yours.

On a departmental level, the sales team might assist the marketing staff with some unusual but critical market data, and then marketing reciprocates by providing extraordinary support for sales.

Reciprocity can even occur between companies, such as when two companies share resources, knowledge and sometimes people.

If you stop to think about it, reciprocity helps societies evolve. People inherently realize that when they do something for somebody else, they are not simply giving of their time, energy, and financial resources; they eventually will receive something in return. The best way to leverage reciprocity is to enter every situation by asking yourself, “Who here can I genuinely help?”

Next time, we’ll explore scarcity.