The Psychology of Selling

THE PSYCHOLOGY OF SELLING - PART 1

This material provides useful information to sales people and can be used in addition to any sales training courses attended or independently of any training. This sales training material has been developed involving years of research into human psychology and considers how it can be implemented in sales situations.

The Spearhead Training psychology of selling free material should help anyone in sales understand what motivates their customers. Understanding the ten key psychological principles, which are the core of this material should help the professional salesperson to structure sell more effectively.

Spearhead Training has delivered sales training courses for 27 years and throughout this time has invested heavily in research and development in order to help sales people achieve sales success.

INTRODUCTION

The laws of psychology and their implementation in selling

Everyone deals with psychology in their everyday lives – we all observe other people’s behaviour, react to this and our observation conditions our own behaviour in response.

Many people, however, are not aware of the use of psychology in their everyday lives. They behave in a certain way:

1. Because that is how they have always behaved.
2. Because that is how they have been conditioned.
3. Because that is how everyone else behaves.

And

4. Not least because their behaviour has been proved by practise.

People often only become aware of psychology when they are confronted with problems they cannot solve themselves. It is then that they seek the advice of an expert.

Behavioural Laws

However, the science of psychology deals with far more than the problem cases of human behaviour. As a modern science, psychology has set itself the task of exploring the general laws of human behaviour. This comprises a large range of areas from the analysis of childish behaviour to sales behaviour, from behaviour in organisations to questions concerning the causes of war and peace. Psychology explores almost all areas of human interaction.

The laws of human behaviour are not often evident. The question as to why someone behaves in such a manner and not in another opens up a wide range of different assumptions every day. Psychologists can devote themselves to answering these questions using the methods of modern science.

Experiments and questionnaires are two such methods. These methods arise partly from natural science, but they have also proved useful in the accumulation of knowledge about human beings and are particularly liked by social psychologists.

The Ten Laws

Ten laws of psychology are presented in this study of the psychology of selling. It was a question of choosing those relevant from a whole range of laws governing psychology – ones which are of particular significance to the area of sales application.

The sections are structured according to the following pattern: a brief introduction is followed by psychological experiments, observations, studies or questionnaires. Most of the examples and case studies are derived from social psychology, but there are also interesting experiments and case studies taken from consumer research, the psychology of perception, development psychology and clinical psychology.

The quintessence is then drawn from the reported case studies or experiments and presented as the underpinning psychological law on a more abstract level.

The next step sees the implementation of the law in sales negotiation. This means that the practicability of the law is clarified with examples from sales practise, in order to develop further ideas.

FIRST LAW: THE LAW OF RECIPROCITY – THE NEED TO RETURN A FAVOUR

Recognising reciprocity

This section is about a need everyone has experienced before – the need to
recognise and return a favour. You have been invited to something and begin to think of a suitable time to return the invitation. You receive a present from a neighbour and you wonder what you can give in return. Psychologists
have investigated this need and discovered the rule of “reciprocity”.

A BEHAVIOURAL RESEARCH REPORT

A surprising reaction

A behavioural scientist carried out a small experiment: he sent Christmas cards to several total strangers. The professor did reckon on some sort of reaction from those he wrote to, but he was surprised by the extent of the reaction – he received a whole pile of cards from people who did not know him at all.

Why did these people write back to a total stranger? They wanted to return the favour.

Another experiment demonstrated the exact extent of this need: in this experiment art students had to judge the quality of several portraits. They were given an assistant to help them, who was in fact the experiment leader’s assistant. This assistant did some of the students a favour quite voluntarily, in that he bought them a can of coke during the break.

When the portrait judging was over, the assistant asked all the students to do him a favour; he asked them to buy a raffle ticket from him. He said that he was selling raffle tickets in order to buy himself a new car.

It turned out that the students for whom the assistant had previously done a favour bought twice as many raffle tickets as those who had received nothing.

The first group felt indebted to the assistant in some way.

This experiment should answer another question, i.e. how does someone’s liking for another person affect the trend of conceding to a request?

The experiment leader distributed questionnaires to the students, in which they were to detail their liking for the assistant. As expected, it turned out that the more raffle tickets brought, the greater the liking for the assistant.

For those who had been given a can of coke, however, it wasn’t a question of whether they liked the assistant or not – they felt obliged to recognise the favour shown to them and hence bought the assistant’s raffle tickets.

THE WORKS OF RECIPROCITY

Conforming

The psychologist Robert Cialdini describes the need to return a favour, “The law reciprocity”. It is a fundamental law of human society. Social psychologists speak of “social norm”, which determines the process of exchange between human beings. Cultural anthropologists describe this “feeling of obligation” as an excellent conforming mechanism in human beings, which enables the existence of humansocieties to be based on a series of reciprocal dependencies.

Faith in the future

The orientation of human beings to the future is of particular significance to this feeling of obligation. An individual can give away part of their person possessions without suffering personal loss thereby. They can rely on the fact that the person to whom they have given some of their possessions will at some point in the future give them assistance and support.

Giving and taking

Human society draws enormous benefit from this rule of reciprocal dependencies.
Through the upbringing of its children, human society ensures that human beings become acquainted with this rule from an early age and that they adhere to and believe in it.

Everyone is aware of the social sanctions imposed on those who violate this rule. Those who do not adhere to the rule of giving and taking are branded “scroungers”, “ingrates” and “crooks”. This rule works as a strong, emotional bond which binds human being together.

The particular power of the law “reciprocity” lies in the fact that not only friends, by even people who are not liked, who have done someone a favour in the past increases their chances of having a request granted. Even unwanted gifts trigger the feeling in human beings that they must return the gesture.

IMPLEMENTATION IN SALES NEGOTIATIONS

Testing stands

An observation made in a supermarket demonstrates how effective the workings of “reciprocity” are. Many people form a large circle round a testing stand, which is offering a free glass of wine or piece of cheese as part of a promotional offer. They are afraid of having to buy something. In fact many people who do not taste the product on offer do actually end up buying a bottle of wine or 100 grams of cheese. Only a small number of those who sample free products end up just walking away.

Stores offering free coffee

Stores offering free coffee are a striking example of reciprocity. The participants pay nothing for the coffee and also get a gift. Out of gratitude they buy so many things during their visit that the coffee and free gift costs are also covered.

The examples demonstrate how one can make use of the rule of reciprocity in sales: small gifts in the form of samples and free trials, postcards from abroad, reading samples of new technical journals, invitations to trade fairs and events, details of artistic and social events are all things which trigger a feeling in the client that they should return the favour

Gifts

The gift offered by the sales representative need not be anything exceptional:

· He/she can, for example, draw up in the presence of the client an
estimation of economic efficiency or a sales promotion plan and give this to the client.

· He/she can say he/she’s prepared to personally help in the stock-taking or pricing.

The sales representative should:

· Make additional offers if they accept the client’s division of the main offer and has done the client a “favour” in so doing.

· Make smaller offers if the larger order falls through.

· Suggest the sale of software if the client does not accept the offer of hardware.

SECOND LAW: ATTRACTIVENESS THROUGH SCARCITY – THE VALUE OF A PRODUCT INCREASES IF IT IS, OR DEEMED TO BE, OF NLIMITED SUPPLY

“.......that we cling to good all the more strongly and attach our very souls to it, the more uncertain we are of its ownership and the more we find that it could be stolen away from us.”

Products of limited supply are perceived as particularly valuable and attractive. The following chapter shows why this should be the case and how one can make use of this mechanism in sales.

THE EFFECTS OF SCARCITY
The principles of scarcity

An experiment carried out by a student of the social psychologist Cialdini, elucidates the mechanism of the scarcity principle.

The first client group of a beef importing company were offered products as usual. The second client group was told that beef imports over the coming months would be scarce. The third client group was told the same as the second with the additional information, that not everyone was aware of the pending scarcity.

The result: The clients in the second group bought more than double that of the first group. The third group exceeded all expectations by ordering six times the amount ordered by the first.

A second experiment reported by Cialdini demonstrates yet another additional effect of the mechanism of scarcity. The test participants received biscuits and were to taste them and judge their quality. One group got a whole barrel of biscuits. Each person in a second group got only two. As was expected according to the principle of scarcity, the small amount of biscuits received a better judgement than the large amount.

In a second running of the experiment the test was slightly changed. Some participants were first of all given a full barrel of biscuits, which was then replaced with a barrel containing only two biscuits. By doing this the scientists wanted to clarify another important question concerning the principle of scarcity, i.e. things considered more valuable if they have only recently become scare or if they have always been scarce?

The result was clear. The biscuits which only became scarce second time around received a better judgement than those which had been scarce from the very beginning.

Outdoing others

Another interesting feature is the reaction to the reasons given for the scarce supply. Some participants were told that they had to give some of their biscuits to other participants while others were told that they had got fewer biscuits because they had been given the wrong barrel. The first group, whose supply of biscuits became scarce through “social” demand, gave a higher evaluation to their biscuits than the other experiment participants.

This demonstrates another important component part of the scarcity principle – the social desire to outdo others.

THE MOBILISATION OF MOTIVES

Reactance

Why does this law of scarcity wield so much power over human beings? It is not only at play in buying and selling, but is also a prevalent feature known to collectors – the rarer a collector’s item, the more valuable it is.

The psychological theory of reactance provides an explanation for this. If the freedom of choice appears impaired or threatened, the motive to cling on to freedom is mobilised.

The social psychologist Irle formulated this as follows: the threat to an individual’s scope of freedom or the impairment of freedom triggers a motive of defence and the re-establishment of freedom. This motive of reactance becomes all the more intensive the more importance an individual attaches to their concrete scope of freedom.

Intensified feelings

The experience of coveting something which is difficult to obtain makes one physically excited. Direct competition increases blood pressure and intensifies emotions. Common sense and rationale become suppressed. The emotional reaction means that one’s cognitive thought processes are focused on the scarcity factor. One only thinks of the final sale.

Example

At sales people swarm to the tables with the particularly cheap offers. The combination of “cheap” and “of limited supply” often makes people completely forget themselves. They find themselves in open competition with others who are striving to acquire the same scarce and appealing products. The fear of having their freedom of choice curtailed mobilises the motive of reactance, which results in the purchase of a great deal of products.

Purchasing Motives

Human behaviour is underpinned by motive. Psychologists have discovered, labelled and classified a whole range of motives. Sales advisor Jan Wage has listed the most important purchasing motives:

· Self-preservation and sexual instincts are not so apparent. Purchasing motives are often understood in the sense of economic self-preservation. There are exceptions e.g. clothes, cars and sports equipment.

· The need for enjoyment and pleasure can be particularly striking in some clients, in which case a line of argument stressing pleasure is recommended.

· The power of ownership and collecting overlaps with profit.

· The need for security and protection sometimes leads to static thought and is based on age old principles.

· The need for comfort is used alongside the need for security. The urge for contact or liking is widespread. Therefore, many people adhere to groups or communities.

· The urge for defence emerges in new clients who mistrust and reject the sales representative.

· The urge for independence and freedom appears to be related to the need for recognition and superiority. This need is particularly noticeable in clients occupying elevated positions.

· The need to be curious and discover new things is similar to the urge to play and be active.

Many advertising gifts appeal to the child within the purchaser and some sales representatives, who allow their clients to participate in the demonstration, turn this childish urge to their benefit. The hunting, sporty and domineering urge is explained by the motto “Conquer according to the conqueror’s wishes.”

Many people have retained the copying and identification urge from their childhood. The need for rationalisation means that people tend to cover up their true motives. Finally, there still remains, thank goodness, the need to do one’s duty.

Many of these motives overlap and not every motive is apparent to sales representatives. A fundamental knowledge of human beings and their behavioural patterns is needed to strike the client’s “right” nerve.

IMPLEMENTATION IN SALES NEGOTIATIONS

An estate agent who wants to sell an interested party a flat calls the latter up and mentions that another buyer is interested in the flat concerned. The second interested party is often portrayed as particularly wealthy, so that the thought of being inferior to the competition consolidates the decision to buy.

Time limit

Another well-liked method is that of a “time limit”. A time limit is stipulated within which a client can buy. Hard direct sales representatives say that they are only contactable that day. They want to make the client believe that there will be no opportunity to buy the products desired at a later date. Time limits also encourage the need to make a decision and many closing techniques taught in sales training a linked to this fact.

Appeal allergy

Direct appeals to the client to finally buy the product can trigger an “appeal allergy” (phenomenon described by Schulz von Thun): he now doesn’t want to buy at all. He feels that the appeal is an invasion of his personal freedom of choice.

It is far cleverer to not impose a deadline but rather motivate the client into buying by mentioning the limited supply of the product.

THIRD LAW: CONSISTENCY – THE NEED TO BE CONSISTENT

Consistency

“In this world every person is worth what he makes of himself.” Adolph von Knigge, on the topic of dealing with human beings.

Everyone is familiar with small everyday inconsistencies, such as lightly given and unkept promises. Everyone strives, however, to be consistent, for consistent behaviour is admirable – it is a culmination of positive characteristics such as logic, common sense and decency.

People often succumb to the need of wanting to appear consistent at all times. They have bought a bad car and now stoutly maintain that it was a good buy. They want to avoid unpleasant thoughts and stick tenaciously to the decision they have made.

EXAMPLES OF CONSISTENT BEHAVIOUR

Striving for consistency

Knox and Inkster, two Canadian psychologists, have discovered that people are usually far more confident about the chances of their horse winning after the bet has been placed than before. As soon as a choice has been made, every attempt is made to justify the decision.

American toy manufacturers were confronted with a problem, their turnover always fell in the period after Christmas.

Then they had an idea. They stepped up the promotional advertising campaigns of several products in the period running up to Christmas, but supplied only a limited number of these to the shops.

Children then wanted these products for Christmas and their parents had promised them but, of course, could not purchase them. Instead, the parents bought other toys to make up for this. After Christmas a sufficient number of the advertised products appeared in the shops and the parents bought these on top of the other toys they had bought as Christmas presents, in order to not to disappoint their children, as well as not to appear inconsistent themselves.

The resourceful toy manufacturer took advantage of people’s striving for consistency in a somewhat dubious manner.

THE ELIMINATION OF TENSIONS

Cognitive discord

Psychologist Leon Festinger bases his theory on the premise that all human beings try to create common ground between different attitudes and ideas. He describes these attitudes and ideas as “cognitive elements”. There are consonant dissonant relations between the elements, in which various different elements contradict each other. Dissonance induces the individual to instinctively eliminate the dissonant elements.

Festinger carried out a classical experiment: experimental subjects had to perform a boring task for one hour. Afterwards they were asked to tell other experimental subjects that the task they had to perform was extremely exciting. The experimental subjects were therefore asked to lie. Some of them received a small payment for this deception, whilst others received a large payment.

Common sense assumes that those experimental subjects who were to receive the small payment would turn down the experiment, since it is poor payment for having to lie. The results, however, were different. Those experimental subjects who were paid less found the experiment interesting, whilst those who were paid more judged the experiment to be boring.

The Reason

Dissonance

The less well paid experiment subjects had a greater cognitive dissonance. Lying for one dollar appears to be mean. In order to reduce the dissonance, those who were only paid one dollar believed the lie. In retrospect the boring experiment appeared interesting.

Consistency

Festinger’s experience verifies exactly how important establishing and maintaining consistency, i.e. harmony with oneself, is for individuals. Inner tensions, which arise as a result of contradictory information, are thereby eliminated.

IMPLEMENTATION IN SALES NEGOTIATIONS

The need for consistency can be used in sales in several different ways:

Activating the client

Firms who complained about high cancellation rates instructed their representatives to no longer complete orders and contracts themselves, but to leave these tasks to the clients. As a result cancellations were reduced because the clients perceived the filling out of forms as a personal obligation.

Since the client wants to be at harmony with themselves, they stick to the order they themselves have filled out.

Written intentions

In diet clinics, intentions, intended weight loss, are set out in writing and the group is informed of this. Whoever does not want to appear inconsistent must stick to these.

The writing down of intentions imposes added moral pressure – the patient can no longer distance him/herself from these good intentions with excuses or saying he/she simply “forgot”.

It is advisable to keep a note of comments made by the client and discuss these with them at a later date. If at the beginning of a sales negotiation the client has casually remarked, “I always demand top quality”, they have thereby given you their main line of argument. They can no longer introduce price objections into the negotiation.

THE SIGNIFICANCE OF ACTIVATION AND CO-OPERATION

Community Spirit

Sherif’s experiment demonstrates that a common goal is important in overcoming group conflicts. The experience of group activities plays an equally large role. Co-operation generates community spirit and sympathy. The goals of people co-operating together need in no way be the same, but they should comprise the means of satisfying everyone’s needs.

Competitive situations

Many psychological investigations compare co-operative behaviour with competitive behaviour. The so-called “zero” and “non-zero sum games” are often used in this context.

“Zero sum games” are games in which one person wins what others lose and thus encourage the competitive spirit.

In “non-zero sum games” co-operation between the players leads to both winning, whereas competitive behaviour leads to both losing.

Experiments revealed that players did not always co-operate. Trusting players were often more co-operative than mistrustful players.

It is important for salespeople to activate the clients, appeal to latent motives and at the same time offer co-operation, in order to generate a sense of liking.

The search for common ground with the client results in the latter not perceiving the situation as a competitive one, but as an opportunity to gain an advantage. In a situation like this they view the sales representative not as an opponent but as a friend.

IMPLEMENTATION IN SALES NEGOTIATONS

Activation and Co-operation

It is important to look on your client as a co-operating partner rather than as an opponent. Your attempt at activating the client and offering them co-operation will arouse their sympathy:

Don’t just give your client test products – test them with them.

Give your client the opportunity of participating in product development and models.

Let them elaborate outlines of desired behavioural patterns during the presentation.

Let them fill in questionnaires, check lists and contracts.

Carry out requirement, rationalisation and modernisation experiments, as well as valuation analyses with the client.

Discuss with them suggestions concerning product performance, product use, direct mail, quality control and cost reduction.

TYPES OF ATTITUDINAL CHANGE

Labels

Psychologists work with the “labelling theory”. “Labels” are our judgements of other people and we stick the labels on accordingly. In doing so we influence the behaviour of our fellow human beings.

Both the experimental results verify the different ways labelling can affect human behaviour.

Positive labelling in the first case triggered a strengthening of behaviour, whereas it produced in the second case the totally opposite behaviour of the positive expectation.

The negative labelling produced similar results: In the first experiment, it showed no effect, whereas it demonstrated unexpectedly positive effects in the second.

Labelling thus effects our behaviour. It is certainly not always a clear cut case which direction the attitudinal change will take. In order to avoid unpleasant surprises, it is important to know about the psychological mechanisms.

The psychologist Kelman distinguishes three types of influence over human behaviour:

Compliance

Compliance means that an individual allows themselves to be influenced, because they can achieve positive results by changing their behaviour, and thus avoid negative sanctions. For example, public praise makes one look good in the eyes of others.

Compliance is the superficial conceding of a point – i.e. the individual is not necessarily convinced of the new view they have adopted.

Identification

The second type of influencing is called “Identification”. This comes into play when someone assumes the attitude of another who is close to one’s own ideal image. In taking on the attitude of the other, one comes closer to one’s own ideal image.

Values

The third form of influencing is called “Internalisation”. One changes one’s mind, because one must follow the demands of one’s own system of values.

Conditions for each of these attitudinal changes are the motivation of the person to be influenced, the power of the person who is exerting the influence and the way in which the influence is exerted.

Compliance can be formulated as follows: “You are our most loyal client, so I would like to give you a small present.”

The effect of models

Identification can be created in that you have a model effect for your client. You can achieve this, for example, by having a smart appearance and a sensitive approach to the client’s personality.

You must take more time to influence your client’s value system. Firstly, it is important to find out your client’s value system. If the client believes in a traditional system of values, you could begin the discussion as follows: “In today’s fast-moving world nobody is interested in solid hand-fashioned work.”

If, on the other hand, your client has a more modern value system, you could begin with “We have to keep up with the times. Flexibility and mobility are important preconditions for staying ahead in the rat race.”

IMPLEMENTATION IN SALES NEGOTIATIONS

Motivation

When dealing with sales it is particularly important to adopt appropriate labelling. The sales representative should, however, first of all be clear as to the client’s motives.

If, for example, you are dealing with a client who has a strong need to exert their worth and superiority, a positive labelling of the client and a negative labelling of the non-client should be successful.

Positive labelling should be:

This offer is especially aimed at people like you, who are able to invest at least £70,000.

I am making you this offer because you deal with your own clientele in an original way.

Negative labelling could be:

Of course we cannot enthuse people who have to think twice about how much money they spend.

This display is made for you. I don’t even bother offering it to client’s who don’t have a sense of humour.

Controls

The possibility of controls is important in the compliance situations. The more positive experiences can be transmitted, i.e. the more power the person exerting influence has, the stronger their influence is. In identification situations, however, personal characteristics play a more important role, since it is only through these that the person exerting influence can become the role model of the other.

Powers of persuasion

Internalisation demands powers of persuasion, in order to change the value system of the person to be influenced.

If one only wants to exert a small, rather superficial amount of pressure in the sense of compliance, it is important to work with lots of positive reinforcements such as, for example, giving presents or praising the other. A more long term influence can be achieved, in that one actually becomes the other’s role model (identification) or exerts continuous influence over the other’s system of values.

Please see part 2 of the Psychology of Selling for laws 6 – 10. You can also view our range of sales training courses by clicking on this link.