5 Psychology strategies used to increase sales

5 Psychology strategies used to increase sales

Success in sales is not just about getting the other person to like you, and trust you, although that helps.

It is about how you employ human psychology.

Robert Cialdini articulated 6 rules in his seminal work ‘Influence‘ in 1993, Reciprocity, Social proof, Commitment and Consistency, Liking, Authority, and Scarcity.

Imagine you gave someone $30 for completing a task, and then because it was completed satisfactorily, you gave them another $20. Compare that to someone to whom you offered $70 to complete a task with an impossible deadline, and then took $20 away because they missed the deadline, although completing the task satisfactorily in all other aspects.

Which of the two would be happier? In this case, you have framed the situation to ensure that one saw the outcome in a positive light, rather than a negative one.

This sort of basic psychology is at work every time you negotiate in any way, it just happens. Thinking about the process with a little sensitivity the basic psychology can make you considerably more successful.

Some simple examples.

Part of a group.

Humans are herd animals. We tend to do what those around us do, to follow the lead of the group. Suggesting that others with whom they relate are doing ‘A’ will increase the likelihood that they will do the same, as demonstrated in Cialdini’s research in 2008 articulating his 7th principal of influence, the Unity principal. This leads us to be influenced by others the more we relate to them. This was the subject of his famous towels in a hotel project, where he demonstrated that guests could be significantly influenced simply by the persuasive power of telling them what others were doing.

Foot in the door.

This is not the old fashioned door to door technique of not stopping until you call the police, it is far less intimidating, and is a widely used tactic in digital marketing. The offer to try a product free for a month before paying for it is a foot in the door, as is the one that offers a free book, you just pay for the freight, or the one-time .97 cent offer, to get to the first level of a normally more expensive course, or club. The psychology is that once your hand has gone in your pocket once, you have made the purchase decision the first time, the second time is way easier.

Create a decoy

Potential customers seek value, defined in all sorts of ways, but when making a choice, they always look at the options available and ascribe a value to each, then make the choice. By making your preferred item look great compared to the alternatives you offer, you can significantly influence the outcome, Again this is used extensively in digital sales. On almost every sales page for a software product, there will be lists of comparative tools you are given for different amounts per month. Usually it will be three options, as option overload leads to confusion, and potential customers walking away, choosing to buy none, but when there are three, there will be the first with a few tools available, for free, or a small price, then there will be the $29/month with an extensive list of options, and a third with the same extensive list and a few more that might be important to a few, for $59/month. The vast majority will look at the value delivered by the $29 option, and opt there, as it offers the best value, the few who opt for the expensive one, well, they are the cream, and those that take the freebie or very cheap version are ripe to be upsold at a later time.

Sell time.

We all understand the old adage, ‘Time is money’ so saving time with a purchase, time that can be used in other ways that will benefit the purchaser, is a powerful motivator. This technique is used extensively when selling services. Most of the so called ‘Business coaches’ out there use this technique, weaving pictures of how great it would be for small business owners to have the time to play golf every day, or run their businesses from the beach between diving expeditions on the reef.

It is also used in reverse, putting a time limit on the availability of a product. ‘Available only at this price until 5 pm tomorrow’ often accompanied by a clock running in reverse is similarly a strong motivator.

Quality = Price

In a market where the knowledge of many buyers is limited, like wine, consumers have over time recognised that price is a fair indicator of quality. When you understand the perception levels of a category in a consumers mind, they can be significantly influenced in a purchase decision by the ticket price.

The foundation of all this is of course that you have a very clear picture of your ideal customer, so can anticipate which of the techniques, and they are often used in tandem, will work, in your set of circumstances.

It also remains true that people love to buy, but hate to be sold to, so selling is really the wrong word, it is more about persuasion, and we all understand that psychology plays a huge role in persuasion.

PS this post was put up yesterday with a different headline, and redefined the dead cat bounce. I thought it was better than that, so polished it up a bit, to see what happens.



Does ‘Know, Like, & Trust’ still hold?

Does ‘Know, Like, & Trust’ still hold?

The only way businesses survive is to generate revenue in excess of their costs, consistently.

Common sense.

One of the oldest adages in revenue generation is that people do business with those they know like and trust.

It was correct, and to an extent it still is, but with a huge, game-changing wrinkle.

Most of us by now have done some sort of transaction electronically.

You have most likely moved to that transaction without ever meeting the person on the other side, so you certainly do not know them, and have no idea if you would like them, but you trust them to complete their side of the transaction.

One out of three now seems to be good enough?

Not really when you think about it.

In most cases there has been some interaction that you as the purchaser have undertaken that the seller knows nothing about.

You have looked at their website for technical specifications, prices, service promises, you may have downloaded some of the free stuff from their site, often to a junk email address so you do not get bothered with the following auto-marketing.  Depending on the product you may also have checked out the various product forums, and review sites, and you have compared all this to the competitive offerings.

The summary of all this is that when you get to the point of initiating a transaction, you have come to value and trust those you do not know, sufficiently to decide to do business with them.

Value and trust. Key words.

Trust is mutual and earned by performance over time, value is delivered.

The challenge now in revenue generation is therefore to reach out to those who do not know you, but who may have some problem you can solve, some irritation you can remove, and demonstrate your value to the point where they trust you sufficiently to do business with you.

A complete turnaround from the days where you did business with people you got to know like and trust while walking the golf course.

How do you calculate a Cost Per Lead?

How do you calculate a Cost Per Lead?

The smoke and mirrors crowd of “Digital marketing made easy” will tell you that Cost Per Lead (CPL)  is a key measure. This is half right, but the half that gets missed most of the time is the half that really counts.

First, how do you define a lead?

Is it a webform download, attendee at a webinar or seminar, business cards collected at a tradeshow or network breakfast, someone who calls up ,looking for information, or just a random conversation about the product you sell with someone at the tennis club in a weekend.

It can be all of these, and none.

All so called leads are not created equally, and until there is some sort of qualification that there is a problem to be solved or some circumstances that can be leveraged, it is not a lead, it is just a name you happen to have.

The task is to qualify the name in some way that indicates its potential to result in a transaction, and therefore attract the resources necessary to convert.

Most businesses have some sort of prioritisation process in place, even an ad hoc one, that recognises the difference in value between a business card from that exhibition, a referral from a trusted contact, to a request from existing customer for advice on a problem they face.

It is not however an easy process, nor is it one that is aided by the simple metrics found in most CRM and marketing automation packages.

The most expensive resource an organisation has is often its salesforce.

It is not the absolute cost of them that counts, but the business that their face to face time delivers.

Lets assume that your total cost of employment of a sales rep is 100k.

They work 42 weeks, 8 hours per day, so the nominal cost per hour is $260.

Let’s further assume that they have a lot of internal meetings, order follow up, report writing and  emails that takes 2 hours per day (a conservative estimate in my experience) travel time of another 2 hours/day to get to 3 meetings with customers taking 30 minutes each.

All that means that the face to face selling time, the key to revenue generation in most B2B businesses is  just  1.5 hours a day, so the real cost of the sales representatives time, doing the real work of selling is $1,387/hour.

Puts a different light on the common task of sales reps of following up the business cards collected at that sales conference, or cold calling door to door in the local industrial park, doesn’t it?

The only real way to measure the CPL is to have a process in place that is sufficiently complete, and agile enough to recognise differences in the nature of the so called leads. This really requires the knowledge of people to be applied. Leaving it to the algorithms in the CRM is no way to go, although at the rate of development of machine learning, that will be possible in the very near future.

Scary thought that for sales and marketing people.

However, currently a robust process looks something like:

  • A strategy for creating and leveraging demand
  • Articulation of the value proposition of the business
  • Identification of  the ideal customer on the basis to whom the value proposition will be of most value
  • Detailed customer  journey analysis
  • Automated systems to do the ‘grunt’ work
  • Face to face sales time & conversion rates
  • KPI’s and dashboards to collect and monitor key sales pipeline data
  • Continuous improvement of all the above.

When all that is done, measure the CPL in a way that is meaningful to your business.





When the cheapest quote is not the best price.

When the cheapest quote is not the best price.

A quote carries the implication of a low price, only price, little room for the value that may be delivered, and that your ‘nose’ is only just out of the water.

What would happen if you  called it an offer for service?

Perhaps it is just a semantic difference, but it may also bring into better focus the value being offered irrespective of price.

Many companies I work with operate on the basis of quoting for jobs, and those seeking quotes are often doing so in the expectation of taking the lowest price.

This is good if you are buying paper, or some basic commodity, but buying something of value, that is mixed up with some expected level of expertise and service, is an absolute shocker.

One of my clients provides a specialised engineering service that has stringent regulatory requirements covering safety and engineering integrity. One of their biggest long term customers, the local arm of a multinational,  has recently moved their procurement function away from the domestic business unit to  a centralised offshore global procurement system based almost entirely on price.

The choice facing them was to compete on an uneven global playing field on price, and have their existing thin margins further eroded, or walk away and utilise the capacity and skills elsewhere.

A difficult choice, particularly against a background of uneven and difficult to forecast cash inflow was made, but after 6 months, they are  way better off, and their former customer is struggling with trying to manage a complicated plant with offshore contractors who quoted the lowest price to get the jobs and are intent on doing as little as possible to get the money.

The lowest quote is rarely the best total  price, and it is easy to drown when there is no room for error.


Are we coming to the end of the great Australian FMCG Duopoly?

Are we coming to the end of the great Australian FMCG Duopoly?

Supermarkets in Australia have had it good for some years, having the protection of a duopoly, which is almost a licence to print money in most circumstances. Woolworths certainly did for quite a while, and the fact that Coles did not is a reflection of poor management rather than a competitive market.

Perhaps I am being overly conspiratorial, but why you should ask, did Woolworths not at least, stick a toe into the burgeoning markets to our immediate north when they were so awash with cash a few years ago? They left it to the European retailers, so presumably they did the numbers and determined that  the margins were not up to their standards, the competitive nature of those markets was beyond their ability to survive. Interestingly and perhaps tellingly, the 4 major Australian banks, now a very comfortable oligopoly have made forays into foreign markets, with a stunning 100% failure rate, and are now hunkering back down to squeeze more margin from the domestic mulch cow.  Perhaps Woolies came to the same conclusion, so opted instead for a skirmish into domestic hardware.

Look how well that worked.

Business models evolve, sometimes quickly and we appear to be in a period of extreme evolution. It may not be obvious on a day to day basis,  but I bet you will be able to look back in 5 years, and see that the changes will have been significant.  I predict that general wholesalers will be almost a museum piece, as business is done directly, enabled by digital technology. The choke hold they have held on the supply chains for the last 75 years is about to end.

Added competition has further complicated the happy duopoly. Aldi has taken a big chunk of share, and in the process changed the dominating retail model, increasing the focus on price to the detriment of proprietary brands and margin extraction by the ‘rental’ of  retail shelf space to suppliers. By another means, Cosco has also made a dent, although nowhere as marked as Aldi, and there are pointers that Aldi’s German rival Lidl, owned by Kaufland is eying an entry to the Australian market. In addition, AFN,  reporting on the Woolworths AGM is highlighting the rumoured entry of Amazon Fresh into the Australian market.

Changing consumer habits. The trip into the supermarket is just one point in the process of urban dwellers feeding themselves.  Not only are there many alternate sources of products they can cook themselves now available, but eating food prepared for you is increasing, from a high priced restaurant to the lunch van that turns up in the area at 12.30 every day and sells you a sandwich.

Fragmenting consumer lives. Eating together as families has been a part of the human DNA since we came out of the trees. It plays a social role as well as one that delivers safety and acts as a medium to pass on the knowledge and experience  gathered that day, and from a lifetime, but that habit is fragmenting rapidly, along with all other aspects of our work and social lives.

Technology is the enabler and often cause of all that is going on above, and the one thing we know for sure about tech, is that the pace of development is always  accelerating, and that if for no other reason is the reason that the FMCG landscape will be very different in 5 years. For evidence, look no further than the Amazon Go  test in Seattle, just one store, accessible by Amazon staff only at this stage, but perhaps the way of the future.

My conclusion to the opening question therefore is ‘Yes’ we are coming to  the end of the duopoly, and not just in FMCG.


How do you build a truly successful sales foundation

How do you build a truly successful sales foundation

Selling is a tough gig, but it is one that every business has to master or fail.

The days of waiting for the next customer to walk through the door and place an order are over. These days you have to be out there hunting for new customers at the same time you are building relationships with existing customers to optimise your repeat purchase and share of wallet metrics.

So how do you go about this?

There are a few common practises of truly successful sales people that I have seen over my long career. These practises form what I call a ‘foundation’ for successful sales activity.

Always be positive.

When was the last time you bought anything from someone who clearly did not care if you bought or not, who had a take it or leave it attitude?

People like to buy from enthusiastic and helpful people, so being ‘up’ all day, every day, is vital. The sales leadership plays a huge role in the development of this sort of positive and proactive culture.

See yourself through the customers eyes.

When the sales effort is just all about the numbers, sales people tend to focus on making the sale now in order to make those numbers. Customers do not really care if you make your numbers or not, they care only about the value they can derive from buying something from you. Seeing yourself in this way is an unfortunately rare skill, but those who have it sell multiples of those who do not. However, luckily it is a skill that can be learnt.

Manage time proactively.

It is so easy to waste time, not to maximise the productivity of that most precious of resources. In selling, this approach demands that you plan your day and sales approaches, anticipate the needs of customers, and plan the conversations to focus on the value your solution delivers to them.

Treat your prospects and customers time as  being more important than yours, as to them, that is the way it is.

Balance your activities such that there is a flow of leads that are in various stages of conversion so you have a steady flow, which is always more productive than a flood/drought situation.

You only get one chance to make a first impression. When you meet someone, they generally make their minds up in the first few seconds about whether you are someone they would like to engage with, or would rather move on. Making that good first impression is absolutely vital to having any chance of building a relationship.

Listen, then listen some more.

As the old saying goes, ‘god gave us two ears and one mouth for a reason’. The best sales people I have met are always great listeners, they keep conversation going, steering it by asking key questions at key times based on the feedback they are getting from the other person.

Follow up regularly but sympathetically.  Continuous follow up is a key skill, but there is a line between following up in a friendly and sympathetic and stalking.

Model your behaviour on the masters.

Joe Girard is seen as one of the best, if not the best salesman ever. Taking lessons from the masters is always a good idea, those who both practise what they preach and have profited from the practise. The best sales book I have ever seen is now decades old, “Spin Selling’ by Neil Rackham, but the same rules still apply.

As a final point, from my own experience running sales and marketing in FMCG, one of the most common mistakes I have seen is businesses treating sales as a training ground for other functions. Every trainee, particularly marketing and management trainees have to ‘do their time in sales‘. This is a huge mistake, when sales success is so important to survival, it makes sense to only have the best representing you and your products, and if they become the highest paid people in the organisation, great!

Cartoon credit www.tedgoff.com