Sales Framing Techniques

I will describe to you some of the techniques used by sales professionals to fool you into buying. Theses different rules are explained in detail in The Power of Persuasion: How We're Bought and Sold:

1) The first rule is based on receiving separate benefits when buying a product or service. For example, people will generally be attracted to buy a product that offers a distinctive free gift to be collected separately. This is known as the 'separate gains' principle.


2) Next is the 'silver lining' rule. The put it simply, this rule indicates that we can hide the fact that cost is high by separately offering some type of benefit to the consumer on a later date, a rebate coupon, a percentage refund etc.


3) This rule is similar to the above mentioned ones except that it is done my making a loss as painless as possible. For example, instead of informing the customer that they will have to pay additional for some mandatory types of products or services, you can basically bundle it together and ask them to pay just once.


4) The next rule, to explain simply is to package small loss (or deductions) together with the big gain or profit. For example, in certain types of investment there are no up front sales fee when you buy. But when the time comes when you decide to cash it in after making capital gains, 'exiting' fees may be charged.


5) This rule states states that we feel more bad in losing something than we find pleasure in gaining something. As humans we are programmed to avoid danger and pain.

This is how insurance companies get you to buy insurance, by showing to you the large amount of pain you will suffer if you do not spend a little to insure yourself. BUT, the 'risk principle' states that as humans we tend to gamble on losses, or risk the chance of suffering a loss (that is why there are still so many individuals who are still uninsured.

So instead of the 'scare tactic', we should phrase messages in such a way as to show how wonderful a benefit may be if we can continue to enjoy that benefit. For example, an auto insurance company may show a customer how wonderful it is to get endless miles on his/her car without having to worry about the costs of a break-down. Or even, how great it would be to spend your money accessorizing your car instead of using that money on repairs.


6) The next rule you will be familiar with. It is the technique of 'buy now, pay later'. You have received offers asking you to take or try a particular product first before you open your wallet.

You've seen those 'try for 30 days and if you don't like it just return it with no obligations' ads. Of course during the trial period the marketer will try their very best to show you that you have made the best decision to try the product because you are such an intelligent person. Most often than not, after you have tried the product for a month, the reciprocity rule kicks in and you'd feel obligated to just buy the darn thing.


7) This rule can be considered the 'credit card rule' simply because it is exactly what happens when someone uses a credit card to buy something he/she cannot afford. Simply this rules shows us that we will be more willing to accept future losses, or part with money we don't have instead of losing what we currently have, or pay cash.


8) This is the best rule to describe stock traders who 'sell their winners, and keep their losses', which happens quite regularly. This rule again shows how the human mind tend to avoid the notion of suffering a loss.

You can always see how people tend to get in the denial and avoidance state when they have lost a person they care for. The human brain is programmed to forget pain we have felt in the past. That is why sometimes drivers who have been injured in a car accident before continue to test the speeding limits again after some time. This problem is termed as the 'sunk-cost trap'.


9) Here's a technique used by retailers to make a product seem value for money. This is the rule of 'list high, sell low', meaning you state a high list price, or the recommended/suggested retail price; and show a low price to entice and make it very attractive to the potential buyer. This rule takes the contrast effect into account.

Care should be taken though not to make the list price seem too high or unrealistic, especially when customers are able to compare the price of the same product elsewhere. This rule also involves when we show products of different prices to consumers.

It is known that when we offer customers higher priced versions of a product first, the customers will be more willing to buy the cheaper version shown later; but if we were to show customers the cheaper version of a product first and than show more expensive versions, customers will be more inclined to purchase the more expensive versions.

Retailers use this technique in a 'top-down' approach of displaying products, where the more expensive products are displayed at eye level, and similar item with a sales discount just below it.


10) The last rule is about 'exceed reference price'. This rule basically tell us not to frighten the customer at the point of purchase with information like extra charges, or any additional or hidden fees. In The Power of Persuasion: How We're Bought and Sold, there are 2 hypothetical questions:

Which would you choose:

A. A petrol station that advertises $1.39 per gallon of gasoline, but says that you can get a discount of 10 cents if you pay by cash; or
B. A petrol station that advertises $1.29 per gallon of gasoline, but also says that there is a 10 cents surcharge if you use credit card.

Most people will chose Option A, because it creates an illusion of an opportunity for savings. Option B just makes the customer get agitated for no reason because of the notion of having to pay more.

So don't unnecessarily scare the customer after you have painstakingly convinced him/her to buy your products. I'll leave you with 2 advice from Dr. Levine when you have a dilemma in deciding to buy something:

Ask yourself,

1. Is it a good value NOW? Do not compare the price it was in the past, or compare how much your friend bought it for. Ask yourself whether the item you are buying is worth it's current price?
2. Is it worth the cost to YOU? Levine mentions 'too-small-a-bill' index. Basically what this is is how worthwhile it is for you to buy something at that price there and than, and whether it is viable to go elsewhere to find the same product at a cheaper price. But by going elsewhere you will lose something which you can't get back - time. What about transportation costs? The extra effort and energy? What other opportunity costs are involved?
   

Psychology Pricing

There's a term in psychophysics call the 'Just Noticeable Differences' (JND) to indicate how much of manipulation we can use, for example to increase prices, before customers take notice.

For instance, research have found that price variations of 5% will make customers take notice. For example, pricing a $99.95 will be noticeable instead of $99.94, or $99.96. Do take note, the higher the base price , the more absolute change required to make a difference, as pointed out by Levine.

Here are some facts developed by researchers:

• We are more price sensitive to price differences when shopping for necessities than for luxuries
• It takes a smaller price increase to deter poor shoppers than rich ones
• Price drops are weighted more heavily for name brands than for generic store brands. Branded products require smaller discount to be perceived as a bargain than a generic brand
• Women are more discriminating of price differences than are men

Researchers have also found the following to be true in psychology pricing:

• Odd number prices is perceived to look lower than even, round number prices. The same goes for lowering prices from an odd to even number. So the 99 cents strategy works better then the a 98 cents strategy.
• Two prices ending with odd number have an impression of greater difference than comparing two even numbers. For example, the range between $1.99 and $3.99 looks greater than $2.00 and $4.00
• Consumers do not usually look past the second digit in a price, so something selling for $1.51 may look the same as something that cost $1.59

Here are some psychological pricing tips from Dr Robert Levine to increase the spending of your customers:

1. If you have the information, sell to the customer (direct mailer) the highest price he/she has paid in the past
2. Now comes the JND and contrast challenge. State a higher odd number price to increase. Care should be taken in the JND process that the customer do not feel any pinching sensation when they look at the price. Another way to show customers price increase is to break it down into a minuscule amount such as how much it will cost them per day. For example, you have increased your monthly subscription from $4o to $48.99, a little over 15% increase in price (take note, you should have a fixed increase/decrease percentage if you allow your customers to choose) . Therefore you can sell your new subscription price at $1.61 a day ($48.99 x 12 = $587.88, and divide by 365 days)

Anchor point and anchor trap

Anchor manipulation is one of my favorite topics under the Contrast Principle to discuss. We shall see how easily it is to manipulation someone based on their anchor points.

In The Power of Persuasion: How We're Bought and Sold, Dr. Levine explains the different ways we are manipulated; they are:

The base rate fallacy. The base rate fallacy suggest that sometimes we use the wrong anchor point, or base rate. We may for example base our decisions on stereo type believes, or past conditioned influences and habits. And even due to plain ignorance and laziness to understand a product better than to just accept marketing messages and sales pitches as facts.

An example put forth by Levine is Bayer, the aspirin maker. Bayer's advertisement boast on how their product contain '100% pure aspirin'. The average consumer may be attracted to this point and feel that Bayer aspirin is superior than other brands. Little known to aspirin consumers is that ALL aspirin contains 100% of the drug.

Another example quoted by Levine is Anacin. Anacin added caffeine to their aspirin, and instead of promoting their brand of aspirin they made a statement that 'Anacin contains the pain reliever doctors recommend most'.

With a little clever twisting of words your contrast may have just gotten more intricate.


The decoy. The decoy ploy is initiated by showing customers a variety of optional similar products in the product range that he/she will not buy for a number of reasons like high price or an unattractive feature. As a result another product that the marketer ultimately intents to sell will look more attractive to the customer.

Another explanation will be:

The decoy item is placed together with other items. And by down selling that item (usually a higher price item), it makes the other item seem more value for your dough and reduces buyer's dissonance.

An interesting experiment done by Itamar Simonson and Amos Tversky illustrates an example with an oven:

One set of customers were given a choice between a $179 Panasonic oven, or a $109 Emerson oven; both with a 35% discount offer. Another set of customers were given a third choice of a $199 Panasonic oven with only a 10% discount.

The results of the experiment showed that when the second Panasonic oven was not offered, 57% of the customers chose the cheaper Emerson model, and 47% bought the Panasonic. But when the $199 Panasonic oven was 1 of the 3 options given, 60% of the customers chose to buy the cheaper $179 Panasonic oven, and only 27% bought the Emerson model. 13% of the of customers bought the more expensive Panasonic oven.

What this experiment reveal is that when a more expensive version of the same brand is offered, the cheaper model of that brand is likely to be more attractive and sold.

Another great example is masking a decoy with a decoy, described by Levine is that of a sweater store:

Customers lured by a sales promotion comes into the store and sees a messy table (on the right-hand side of course) with leftover cashmere sweaters at 40% off (this is the decoy of the decoy). Then walking further down in the same direction the customer sees another similar table selling cotton sweaters that were priced 20% to 30% higher than the cashmere the customer saw earlier (this is the decoy). Now further down the customer sees a neatly arranged colorful table with similar cashmere sweaters at prices lower than the 40% off cashmere and much lower than the decoy sweaters.

So you can guess what the result was - yes, customers rushed to grab what was laid out on the last table.


Anchor Trap

I would like to end this section by warning you of the anchor trap. An anchor trap is usually used to make a high priced appear lower. I will leave you with the following example by Dr. Robert Levine of a cable provider in Kentucky:

Storer Cable Communications wanted to raise subscriber rates, mailed out a notice saying:

"It's not often you get good news instead of a bill, but we've got some for you. If you've heard all those rumors about your basic cable rate going up $10 or more a month, you can relax: it's not going to happen! The great news is... the rate for basic cable is increasing only $2 a month."

What happened? Storer managed to secure an extra $2 per month from their customer's monthly cable bill by letting the customer think that they were saving on $8 per month. How? Because rates were expected to go up by $10 (or more) a month.

Adjust your contrast

This section we will discuss an advertising strategy that is not often talked about - Contrast Advertising.

What is Contrast Advertising? It is a strategy where you compare your products directly to a competitors product. Comparing 'Apples to Apples' you can say.

How do they use this? Well, let's say you have invented a MP3 player that does everything the iPod does, and yet your player was lighter, smaller, has more storage space, etc etc etc. So your advertisement will have a picture of a gadget similar to the iPod, and next to it you have your patented player with all the extra functions and benefits etc... get the picture?

Levine explains his his book, The Power of Persuasion: How We're Bought and Sold that there 2 reasons how contrast in used in persuasion:

1. To convince you that what a company is selling is a better deal than what the competition has to offer
2. To alter your expectations, or what's know as your "anchor point"

Levine illustrates this scenario to describe the above points: 'Perhaps you're shopping for a certain camera. Your friend tells you he just bought one for $200. You see the same one in a discount store at $175. Good deal, right? But say, instead, the friend had told you that he thought the camera should cost $150. That $175 price isn't so attractive anymore.'

To use contrast as persuasion, you either alter a person's anchor point, or the features of the product itself.

How do you alter a person's anchor point? Well, you do it incrementally so that the person adjusts to the changing situation.

For example, suppose you meet an insurance agent for the first time because you feel that you do not have the basic hospitalization coverage everyone requires. What often happens is that, after you've purchased your medical insurance, the agent will tell you that you don't have, lets say disability coverage. So perhaps your next meeting with the agent you buy that disability coverage. Then the agent request that you meet again because he/she has told you that heart disease is on the rise in your area and you do not have critical illness coverage. So what happens, you buy critical illness insurance. This will continue as the agent tries to sell you different types of insurance starting from health, life, to home and travel insurance and so forth.

The problem here is you feel that you have only paid for a single policy, whereas the reality of the situation is you've probably bought as many policies as the agent wanted you to buy.

The Rule of Reciprocity

The feeling of reciprocity. Have you ever been given something by someone that is of value to you? What about a deed done by someone you have never met? How do you feel? Is it fair to say that you feel a sense of obligation?

Levine mentioned in his book,The Power of Persuasion: How We're Bought and Sold that we may feel several feelings, such as gratitude, a sense of decency and social responsibility, or simple feeling of guilt.

This feeling of having to pay back is term the 'reciprocity rule'. Or the obligation, or Giri as its' termed in Japanese.

It is known that if you need someone to do something for you, or buy something from you for that matter, you must show that there's something in it for them. Why don't you quench this need before you ask a favor from someone? This is an excellent way of 'breaking the ice', and sets a great first impression.

What companies do to 'make friends' is to give free gifts. Not because it is a reward for buying something, but a reward simply for 'being there'. The higher the perceived value of the gift, the more gratitude is exchanged, and eventually these people will end up being customers, and also provide referrals.

Have you ever been told by a friend on where to get a free t-shirt, or movie ticket, or even a free holiday?

Take a look at timeshare companies who gives people free watches and holidays stays just for coming down and listening to their presentation.

Religious and non-profit organizations can easily bring in the buck through donations. For example people on the streets are given free, artistic crafts made by young orphans in a third world country. This type of offerings will most certainly get an obligatory respond through an exchange for money.

But the rule of reciprocity does not last long, as pointed out by Levine. For example, giving a raise to an employee to get them to be more loyal and work harder will only last for a short while before the employee rationalize that they deserved the raise to begin with. The term use for this rationalization as stated in The Power of Persuasion: How We're Bought and Sold is called "justification leak". The problem may result in the expectation that this raise (or any type of offering) will be a future norm.

That is why sometimes when something is offered for free is often considered dangerous. "Despise the free lunch", and "pay your own way to stay clear of gratitude, guilt, and deceit", is quoted by Robert Greene in his book, The 48 Laws of Power.


Exchange for time

An obligation to pay back someone for the time spent is also another form of the reciprocity rule. Imagine if a salesman spent an entire hour explaining to you about a product, how would you feel? Would you at least consider to buy from that person because of the time and effort that was put in to explain the benefits of his/her product to you?

Often than not, a sales professional like a real estate or insurance agent will use this reciprocity for time to their advantage by making you think that they are in demand and that their time is very precious. 'Time is money', have you heard of that saying? And have you had the experience where a sales professional (usually the commission based ones) phones you up to make an appointment to explain to you the latest investment product, but also explains to you how their time is fully booked for the next 6 month? Then they go on to say that they will slot some time for you in between appointments, because they think you will benefit from this product and that they think you are special and deserves this attention? Sound familiar?


An act of kindness may not be what it seems

At this time I want to point out how much people abuse kindness, and use the act of kindness as a fishing hook to bait so many vulnerable people to get them to hand over their money.

There are so many con man out there that exploits reciprocity on unaware or timid individuals. You often read news of the elderly being con of all their money from someone who come across as kind and generous. A few decades ago we can see countless so call religious cults asking people to donate all their money to the organization for an exchange of peace and a ticket to heaven. You have also seen on the news many years go where cult leaders were easily able to influence people to take their own lives. These cult leaders do not coerced individuals, but act as a father figure, a role model, a mentor. They are seen as a symbol of goodness, honesty and is considered to be 'the perfect' human being.

I'll finish this section by a quote written by Robert Levine, 'there's nothing inherently manipulative about giving or receiving. The challenge is to separate the manipulators from those with good intentions, the enemy tribes from your allies'.

3 Pillars of Persuasion: Perceived Authority, Honesty, and Likability

Let's go back to the question who would you most likely buy from? The aggressive sales dog, or the gentle 'product adviser'? The answer is simple - the likable of the 2.

Research have shown that people will likely be influenced by those with characteristics of honesty, likability, and perceived to be a figure of authority.


Perceived Authority

In the US, studies have found that the symbols of authority are: title, clothing, and luxury cars.

Levine states in his best selling book,The Power of Persuasion: How We're Bought and Sold that people with "Dr." before their names are usually seen as an expert. Advertisements and promotional campaigns that have their sales messages conveyed by someone who is perceived to be an expert will definitely increase sales. To show you how complexly bizarre our brains can be; actors who play a role of a medical doctor on screen when promoting a product for an advertisement will almost always increase sales, depending on how authoritative that actor is on screen.

Another way pointed out by Levine, is the importance of technical jargon used by experts, or perceived experts. Research have shown that the more jargon used by an expert, the more knowledgeable his/she is seen to be, and ultimately will be more persuasive.

From a mock jury trial conducted by researchers Joel Cooper, Elizebeth Bennet, and Holly Sukel as quoted from The Power of Persuasion: How We're Bought and Sold, 'The researchers concluded that when the witness spoke simply the jurors could evaluate his argument on its merits. But when he was unintelligible, they had to resort to the mental shortcut of accepting his title and reputation in liew of comprehensible facts.'

The point to note is, as long as a person have credentials, people will generally treat them with respect, and will likely acknowledge their argument fairly.

Now if you were to combine credentials with confidence, you will likely to always get your way. In The Power of Persuasion: How We're Bought and Sold, there was a experiment done. Phone calls were made to nurses to get them to administer a drug on a patient. 95% of the nurses eventually did as they were told by an unfamiliar voice over the phone who was perceived to be a doctor and who spoke in a authoritative manner to the nurses.


Honesty

Moral trustworthiness can be said as the virtue that makes or, more often than not, breaks a person. We all know how difficult it is to gain back trust.

The following are ways stated by Levine to earn trust from your customers, and to acquire new customers:

• Testimonials and Endorsements
• Presenting Propaganda as Education (disguising your sales process as education)
• Presenting Propaganda as News (eg Infomercials. Info=News + Commercial=Sales)
• Coloring the Choices (communicate both sides of the argument, for and against the agenda, the pros and cons of your product)
• The Norman Mailer Technique (Power of prepersuasion. Address objections before they occur. Tell people about your earlier mistakes before your competitors does)
• Presentation Style (Verbal skills, Body language etc)
  
• The Peer (Recommendations from peers, Word-Of-Mouth marketing)
  
• The Maven (Using Opinion leaders)

Likability

Often than not we buy products advertised on TV not because of how good the ad was, but because of the movie, sports, or rock star who appeared in the ad.

How much likability depends on how passionate your fans are. If you find your fans tattooing your company logo on the back of their head, and ready to defend you brand name at any cause, you've got it made.

I love to see how passionate Mac fans are. Never in the history of branding can you ever see such a cult-like following. You can say Apple will be around for a long while.

Companies are spending a lot of money improving their image, and always finding new ways for people to identify with them. They use celebrities and advertising aim at 'making friends' with you and I. It's all about being liked, and being trusted.

Positioning your products

Retailers have carefully been designing and laying out products to get customers to buy for years. Retail marketers uses terms such as 'capture rate' to detect how much of what is displayed is seen by the customers, and subsequently uses 'conversion rate' to identify how many walk-in customers turn out to become buyers.

Retail anthropology is a big topic in retail marketing. Paco Underhill, the author of Why We Buy: The Science Of Shopping tells us that shoppers usually take about 5 to 15 paces before getting ready to do the shopping after entering a store.

Underhill also describes important areas of the retail floor. For example, the area in front of the entrance is called the "decompression" or "transition" zone. A person in a rush will never take notice of anything in this zone.

Underhill also mentions that most people will naturally veer to the right when walking in a retail shop, therefore products that you eagerly intent to sell should be placed on the right-hand side.

The aim of most retailers is to get customers to browse every part of their store, especially right at the back. So a strategy that is used is to place necessity items right at the back of the store so that customers will ultimately be exposed to the whole store when they stroll past.