Whenever a person acts foolishly, they do so with the noblest of intentions.
O. Wilde
A person differs from animals in their ability to mentally manipulate objects, predicting the outcomes of such manipulations. Animals can do this too: a dog has enough sense to understand where a stick will fall. Chimpanzees, juggling two entities in their minds, can solve simple puzzles. But only humans can hold three or more entities in their heads. This allows us, quite literally, to see the future. However, we build it from the building blocks of the present. We believe we can predict how happy we will be from eating smoked sprats that we impulsively bought when we entered the supermarket hungry.
Artists of the 19th century painted visions of the future where ladies in crinolines and gentlemen in tailcoats sliced through the air on personal dirigibles powered by bicycles. The ability of people to envision the future, the feeling that they are imagining it correctly, and the actual inability to see it in the right light are significant obstacles faced by salespeople. Relying on the rational side of decision-making, salespeople are actually standing on shaky ground of irrationality, stereotypes, and templates. We are unable to foresee our future, but we can assess the likelihood of our satisfaction with it by consulting people who have already “been there.” This is how we go to the movies—on someone else’s recommendation. This is how we choose a dentist or a hairdresser—based on referrals. An important reason why White sales are primarily conducted through recommendations is the ability to help the client understand how satisfied they will be in the future. Of course, this method does not provide 100% certainty. However, it is even used in serious research. For example, when determining how a new medication will help or harm a specific patient, researchers typically rely on statistics from clinical trials involving other people.
This chapter will focus on the irrational. You will learn about the motives that drive people to make certain actions and decisions. A proponent of White Selling will not use this material for overt manipulation of the client. Relationships and customer satisfaction after the deal are more important than a quick sale. However, this knowledge can be used to help the client make the right decision—one that will satisfy them both now and in the future. After all, a White Seller sees their client’s future much more clearly than the client does themselves. A White Seller is familiar with and maintains relationships with people who are already in that future—satisfied customers.
Table of Contents
Side by side
There’s a tale about how undertakers offer their services to customers:
— What a tragedy, I’ve already been told!
— Yes, that’s why we’re here. We need a coffin.
— Oh right, I have an exclusive option for you — gold-plated handles, mahogany, velvet… $10,000.
— Do you have anything cheaper?
— Yes, of course, this model: cardboard covered with fabric, plywood inserts to prevent breakage — is the perfect model for cremation. Only 20 dollars.
— Well, that’s kind of…
— Alright, here’s a coffin for $2000. Oak, satin, wrought iron fittings, and a lid with a door. A solid piece.
— Yes, I think we’ll take this one.
At the same time, the undertaker “overlooks” a bunch of coffin options ranging from $1900 to $100 and ends up selling the most expensive one after the “exclusive” model. The client’s reasoning was something like this: “Well, we’re not buying the most exclusive coffin, but we can’t go for a cardboard box either, really! We don’t want to be embarrassed in front of people.”
Retailers make full use of this tactic. The best way to boost sales of expensive items is to place even pricier items nearby. This strategy is not only present in the sale of coffins but applies across all areas of human activity. A bottle of V.S.O.P. cognac may not seem so expensive when compared to the X.O. sitting right next to it on the shelf. Similarly, a Porsche Cayenne might look like a “poor man’s car” when you know about the existence of Bentley and Bugatti.
Anyone who has used the services of real estate agents has encountered their tactic of showing a bunch of “dumps” before presenting a mediocre apartment for viewing. You would hardly want to consider it if it were the first and only place they took you to. However, after potential tenants are scared off by comparisons with the other apartments, this one starts to seem quite decent: “Look, even the wallpaper isn’t peeling.” In other words, the buyer is essentially being misled, basing their choice not on the objective characteristics of the property, but on comparative ones. Businesspeople should keep this aspect of the human brain in mind when shaping their product offerings.
During one study, doctors were provided with information about a certain drug X that helps with a specific illness. After reviewing the information about the medication, they were asked whether they would prescribe it to their patients. Most doctors agreed to prescribe it, with only 28% refusing. However, when another group of doctors was given information about two similar drugs, X and Y, 48% of the participants in the experiment decided not to prescribe anything at all.
It’s obvious that an expanded list of options makes it harder to choose. Surely, each of you can recall a time when you stood in front of a restaurant menu displayed outside, stared at it for a long time, and then decided not to go into the place at all.
The more equivalent options you provide for comparison, the more a person starts to think about “the same thing, but with mother-of-pearl buttons.” In other words, a fantastic option begins to form in their mind, incorporating all the advantages and excluding all the disadvantages of the existing choices. When scheduling a meeting over the phone, try not to offer alternative times. If a different time works better for your client, they will let you know.
The comparison “side by side” has one very insidious property. It draws our attention to every attribute that distinguishes the items being compared. It’s common to see shoppers in a supermarket, stuck in front of the tea display, completely frustrated because they simply can’t decide what they need. If the display only featured plain black or plain green tea, shoppers would spend less time and be happier. Isn’t that why the standard children’s menu at McDonald’s is called “Happy Meal”?
The frequency of requests on photography websites like “Recommend a camera” confirms the existence of a comparison problem. One can spend hours and days of their life choosing cameras, comparing their detailed technical specifications. Sony has built-in vibration compensation in its sensor, while Canon offers a hot shoe on its compact camera. One camera allows for faster continuous shooting, while another produces less noise at high ISO values. One has a wide angle, and that’s it. The other has a less wide angle than desired, but it comes with a multitude of additional features.
When looking at cameras and their specifications, it’s nearly impossible to decide which one you need in just five minutes. There are certain factors you would consider regardless, such as weight and size if you’re looking for a compact camera. However, there are many features you might not have thought about, and you find yourself paying attention to them because you’ve entered the game of “Side-by-Side Comparison.” It’s these previously unimportant parameters that set one camera apart from another.
What characteristics would concern you if you were buying, for example, a new dictionary? In one study, people were given the opportunity to set a price for a dictionary. It was a new edition in excellent condition, containing 10,000 words. On average, people offered $24 for it. Another group was asked to set a price for a dictionary with a torn cover that contained 12,000 words. On average, they were willing to pay $20. However, when a third group was allowed to compare the two dictionaries side by side, they offered $19 for the whole but shorter one and $27 for the torn but larger one. It’s clear that people care about the condition of the cover. They only start paying attention to the number of words when that characteristic becomes a point of comparison.
In other words, the value of a purchase is determined by how it looks in comparison to another item, rather than its objective usefulness. Moreover, people tend to perceive different values in things when they compare them under different conditions. So, to understand how beneficial a particular choice is for us…futureWe should use the type of comparison that will be important to us in…future, not inin the presentТекст для перевода: ..
How often have we made choices in the supermarket after entering with an empty stomach? It seemed to us that this aromatic, fatty, caviar-filled smoked sprat would bring us much more pleasure than the bag of carrots we had on our shopping list. In reality, the carrots were eaten right away, while the sprat waited for its moment. You can’t eat it for breakfast, lunch is at work, and dinner is on a regular schedule. Are we waiting for the weekend? But for that, we’ve already bought a no less beautiful herring…
Once, volunteers were given the opportunity to describe in advance the pleasure they would derive from a bag of chips. The participants were divided into two groups. The first group predicted their enjoyment while looking at a chocolate bar, and the second group while looking at a can of sardines. Those who saw the sardines anticipated a strong pleasure from the chips, while those who saw the chocolate expected much less. This makes sense: chips are certainly tasty, but chocolate is better. However, both groups were mistaken! What do sardines and chocolate have to do with it when your mouth is full of crunchy chips? What will you reach for in the end: another piece of crispy potato or will you start opening sardines or chocolate? In other words, the comparisons that the volunteers made while imagining eating chips did not align at all with the thoughts they would have if they were actually eating chips.
A typical situation: while traveling abroad, you meet people who seem familiar and close to you simply because you compare them to the locals. You understand each other, share common goals and values. However, upon returning home and continuing the communication, you realize that they are not really your kind of people at all.
The same motivation drives us when we buy new clothes, shoes, hats, and underwear. We compare them to the items we already have, which are a bit worn but not old. However, after two or three weeks, those new items also become worn, and all the pleasure disappears. We simply have less space in our closet. That’s when the sacramental phrase is uttered (especially by girls): “I have nothing to wear!”
An interesting effect of side-by-side comparison arises when we want to sell something of our own, like an apartment or a car. It has long been known that gains bring people less joy than losses bring sadness. We would feel more unhappy losing $100 than we would feel happy finding the same amount. Numerous experiments and studies with volunteers show that the anticipation of potential loss prevents people from taking risks with the same expected reward.
Imagine this: you are offered a deal. A random number generator is set to produce any number from 1 to 100, and if the number is greater than 25, your financial situation will double. You would get a house twice as big, a car twice as expensive, a doubled salary, and so on. However, if the number is less than 25, you lose everything and are sent out onto the street in your underwear. If you belong to the category of prudent people, you would not take this deal. Yet, from an economist’s perspective, it is rational.
Now let’s move on to selling, say, your car. How much is your car worth? It’s hard to answer. Check your insurance policy; it states the insured amount. That’s exactly the amount of money someone would pay for your vehicle right now. Would you sell it for that amount? Sure! I imagine that if a buyer seriously offered you that amount for the car, you would first try to break their ribs. Now, take a look at the buyer. What do they see? A well-worn car with some scratches and dents. It’s unclear how it was used, why the tires are half bald, and why the suspension needs repairs. On top of that, the exhaust pipe is all rusty. How much does it say in the policy? Oh, of course! For that kind of money, the car should come with a driver too.
Where does such a difference in valuation come from? The thing is, when you were assessing your car, you viewed the deal as a loss of the vehicle. Meanwhile, the buyer saw it as a find. Both you and the buyer compared your current situation side by side with how happy you would be after the deal. As mentioned earlier, a gain that is equivalent to a loss is subjectively valued less.
But if the buyer were to put themselves in your shoes, truly feeling like the owner of that car, they would realize that every penny spent on it is worth it. Just like you, stepping out of the role of a car owner and living without it, would agree with the buyer’s perspective. However, we are generally not good at comparing such things. When comparing options for our future state, we build that future from the bricks of the present, completely unaware of the substitution.
The buyer and seller do not reach an agreement and may even doubt each other’s integrity simply because they make decisions based on comparisons typical of buyers and sellers, rather than those that an owner and a non-owner would use. Do you want your buyer to agree to the price you set? Put them in the owner’s shoes. Make them articulate the benefits they would gain from having this product. What would they allow themselves? Who else would find it interesting? Immerse them in the future.
Now try to use your new knowledge to understand what the client feels when you offer them something “revolutionarily new and stunningly magnificent.” Let’s say they are full and can’t clearly answer the question of whether they need it. However, when they really need it, when they “get hungry,” you may not be around.
Let’s conduct a thought experiment. Please assess which is longer for a lion—its hind leg or its tail? Have you considered it? Are you ready to give an answer? No need. What’s interesting is what you imagined. You first “drew” a lion in your mind, then focused on its rear, the extended leg, and the tail, which clearly seemed longer. In your head, you compared the tail and the leg of an imaginary lion, not a real one. Yet your assessment was quite adequate.
Second experiment: imagine a situation where drunk teenagers in a car overtake you on the road, aggressively cut you off, and drive away while whooping. What is your reaction? Did you feel it? You probably felt a slight sweat on your forehead, your heart rate increased, and an inappropriate word almost slipped out. The same principle applies here: to understand our own reaction, we visualize this scene in a way that prompts a response, and then we evaluate our feelings.realWe react to an imagined scene and provide a response. Our understanding of our reaction is a fairly reliable tool for assessment.
Let’s return to the supermarket and ask a hungry shopper the question: “Imagine that you are completely full. Would you want to eat this smoked sprat that you just put in your cart?” The shopper’s reaction will be quick. They will immediately put the fish back in the fridge becauserepresentedHaving filled himself up, he “fitted” the smoked sprat to his sense of satiety and made a decision. You will never be able to sell smoked sprat by demonstrating it to someone who has just returned from his mother-in-law’s, who fed him to the brim. However, you can sell him the sprat by asking him to imagine that he is very hungry and then asking if the smoked sprat is tasty.
In large sales, this approach doesn’t work. Decisions are made by more than one person and are usually based on rational choices. However, even here, to help someone understand why they need your product, you should ask them to describe a situation in which that product would be necessary. It’s worth asking how they would navigate that situation without your product and with it. What benefits would they gain from using your offering? How would your product assist them?
Inevitable
How would you feel about a person who constantly passes gas or picks their nose and then eats what they’ve found? Would you continue your relationship with them? Would you invite them over? Would you communicate with them? And what if this person were your brother or your boss?
More examples? How would you feel about a presidential candidate who restricted the freedom of assembly or used traffic inspectors to undermine an opponent? Or how would Americans react to a presidential candidate who was involved in oral sex with a secretary, something the press found out about immediately? How will we respond to a sitting president who is “tightening the screws”?
In these examples, at first, we would look for reasons to condemn. But once we realized the inevitability of interacting with this person or living in a country with such a president, we would quickly find reasons to justify or even support them.
Why are we not willing to forgive a job candidate for being late, while we turn a blind eye to the lax discipline of our subordinates or employees?
It seems that we are comparing similar things, yet our reactions are completely different. Why is that? Is it because the nation should unite around the president? Or is it because relatives are closely connected by blood? Or is it because first impressions are everything?
Or perhaps it’s because we are willing to seek more positivity in the things we cannot change. Our first reaction to unpleasant realities is to try to change them. However, if we are unable to do so, we must change our attitude towards them; otherwise, we won’t be happy. A built-in defense mechanism against negativity kicks in, which has developed in a person throughout the process of evolution.
“The salary is small, but good,” is what they say in large companies with low pay. However, if you ask people to work for you for 3,000 hryvnias a month or, quite reasonably, for 100 hryvnias a day without a break, they immediately refuse. Why? Because they compare the opportunity they want to avoid with the one they can’t escape. Our assessments of the correctness of our choices are also influenced by how inevitable they are. We tend to view inevitable things more positively, even if it’s the gallows.
“When is it absolutely necessary?” — one of the most important questions that the White Seller must answer. We don’t really know what the products we buy in the supermarket are made of. Moreover, we suspect that manufacturers tend to cut corners on quality: vegetables may contain pesticides and nitrates, sausage might have soy, and cheese could be made with palm oil. But for us, all of this is secondary, as we simply need to eat to live. Those who don’t grow their own food have no choice — they have to buy it. Therefore, people, fully aware of the quality of that sausage, tend to approach their purchase with a certain calmness.
The value of achievements
Interestingly, our preferences often depend not only on real side-by-side comparisons but also on imagined ones. We tend to place greater value on things that we obtained with great effort. This is where the “internal self-defense” mechanism comes into play, making us perceive what we desire as reality and justifying our past actions. This effect can explain many phenomena—from the consequences of courting someone of the opposite sex and the tactics involved in such courtship to the evaluation of war outcomes. The more difficult something is to obtain, the more it is valued.
For example, during a study where students volunteered, participants were invited to join an elite university club. The initiation ceremony involved three electric shocks. Naturally, the students were divided into two groups. One group received very strong, almost shocking electric shocks, while the other group received much milder ones, more for formality’s sake. As a result, those students who experienced the stronger shocks ended up liking the student club more than those who received the milder shocks. Moreover, a separate test showed that the awareness of the purpose behind the students’ trials led to a reduced physical sensation of pain. It seems that a defensive mechanism kicks in within a person, prompting them to seek and find a positive interpretation of what happened: “At least now I’m a member of an elite club!” The weaker shocks, however, were not strong enough to activate this “internal defense” mechanism. Therefore, for such a mechanism to be triggered, the experience must be quite intense.
Do you still not understand what allows totalitarian regimes and cults to persist? Why can a tyrannical boss be loved by their subordinates? Or how can one love an object, like a car, simply because it was hard-earned?
Sellers and marketers take advantage of the fact that people place greater value on what they have obtained with effort, which is why they send promotional flyers in envelopes rather than just tossing them out. When we take a flyer out of an envelope, we assign it more value, and it will likely end up in the trash a bit later than an advertisement that came without an envelope.
This is exactly why clients treat salespeople who reach out to them through cold calls with such disdain. It’s also why clients highly value those salespeople they find themselves through recommendations. White sellers are not focused on finding clients; they are concerned with ensuring that when a client asks a partner, colleague, or friend, they receive the right recommendation. When a client has made an effort to find a seller, that seller is held in higher regard. Therefore, the goal of the White seller is to ensure that the client, who is searching, finds this supplier before discovering their competitors.
Presence and absence
Once, experimenters taught a pigeon to receive food after pressing a key. They set up two keys in the cage and occasionally illuminated one of them. When the light came on, the pigeon could peck the illuminated key and receive a reward. An interesting result of the experiment was that the pigeon didn’t even consider pecking the second key, since it wasn’t lit up. Although a tasty grain would have been waiting for it there as well.
In reality, people are not far removed from this pigeon and are generally unable to assess the absence of something rationally. Perhaps dolphins don’t actually save sailors at all; they might just be playing with them, nudging them like a ball. Those sailors who happen to be nudged to shore claim that they were saved by dolphins. Other sailors, however, don’t tell any stories at all. We are unable to evaluate the results of a dolphin’s actions solely based on the rescued sailors, leading us to a false conclusion.
The client cannot appreciate the problems that arise from not having what you sell if you don’t help them understand it. This phenomenon is heavily exploited by religious figures and politicians: “He prayed hard and God rewarded him!” or “He didn’t eat meat and got better!” or “He got circumcised and found a wallet full of money!” “Politician XXX built a road! Hooray!” Excuse me, but what about the fact that he…didn’t build, but stole?.
How many Muslims do you think there are?did not commitTerrorist attacks? No one really thinks about this. It’s just commonly believed that terrorist attacks are the work of Islamists. However, the dry… statistics The number of terrorist attacks in the U.S. shows that 94% of all terrorist acts in the country were committed by non-Muslims.
A long time ago, American subjects were asked which of two pairs of countries were more similar to each other: (Ceylon and Nepal) or (East Germany and West Germany). The majority chose the second pair. Surprisingly, the choice did not change when another group of subjects was asked, “Which countries are the least similar to each other?” How can two countries be both similar and dissimilar at the same time? Here, the mechanism of the impossibility of assessing absence came into play. Americans knew less about Ceylon or Nepal than they did about Germany, so they provided an answer that was influenced by the question. They subconsciously began to recall the common features of the two Germanys.ignoring the absencedifferences), if the question was about commonality, and various traits (ignoring the absencecommon features), if the question was about differences.
When people buy a huge SUV, they tend to choose it for its ability to go places where a regular sedan can’t. However, they often don’t consider where a large SUV will fit.it won’t workIn reality, you only have to “muck around” once a year, while parking in tight spaces is a daily occurrence.
Payment in advance.
Earlier in this book, it was mentioned that the seller should ensure a comparison of the financial outcome for the client in two situations: when the product is purchased and when the client walks away without making a purchase. When we talk about buying and selling, it is always an investment. We pay now and a lot, while we receive benefits gradually and later. All the advantages that the client gains from the transaction are deferred in time, while all the costs must occur here and now.
At the same time, people’s attitude towards the future is always equivalent to their attitude towards something distant. The farther away the object is, the smaller it seems. Simple psychological experiments that offer participants 1 dollar now or 2 dollars in a year show that the overwhelming majority choose the dollar now. Although, from a financial perspective, this choice makes no sense. The inflation rate of the dollar is not 100% per year, and 2 dollars later will always be more advantageous than 1 dollar now. It’s just that 2 dollars seem distant to us and therefore insignificant.
There is good news for sellers as well. The classic psychologist Walter Mischel, a professor at Columbia University, became famous for the “marshmallow experiment.” A four-year-old child was given a piece of marshmallow and then told that the researcher had urgent matters to attend to and would be gone for a few minutes. The child was given a choice: wait 20 minutes and receive not one, but two marshmallows, or eat the marshmallow immediately and forgo the second one. On average, four-year-olds could resist the temptation for about 3 minutes. However, around 30% managed to hold out for the full time and earn the second treat. Later, Mischel studied how these children differed at the age of 18. Those who were able to wait were much more successful in their studies and more reliable in life. On average, they scored 210 points higher on a standardized test.
During the years of the Industrial Revolution, the “patient classes”—merchants and craftsmen, whose life plan involved long periods of study followed by many years of work for the sake of prosperity in old age—replaced landowners as the elite, whose material wealth developed along a linear trajectory. This theory was presented by Matthias Depke and Fabrizio Zilibotti in their work titled “ Patience as capital, choosing a profession, and the spirit of capitalism. It seems that there is no text provided for translation. Please provide the text you would like me to translate.
Success in this world is achieved by those who are capable of patience, who are willing to sacrifice a little today for the promise of greater wealth in the future. These individuals become successful entrepreneurs. The happiness of a salesperson lies in the fact that it is precisely these people who can appreciate the difference between “spending now and earning more later” and “not spending now and not earning in the future.” It is these individuals to whom the full financial attractiveness of a proposed deal should be presented. This is always of interest to business owners, top managers, and capitalists. However, it is completely uninteresting to the executors. Moreover, the latter often cannot think in terms of “worse now, but better later.” They project their way of thinking onto what they assume will be the management’s reaction to the solution proposed by the salesperson. As a result, “no” is most often heard from those who have no decision-making power in the company, from those who would have eaten the marshmallow right away as children. This is why white sales are focused on addressing the needs of business owners and managers who are truly responsible for the results. They are aimed at those who are willing to wait but are ready to take two pieces of marshmallow. The slogan of the Guinness advertising campaign is an English proverb: “Good things come to those who wait.”
Can be allowed.
Strangely, people often find satisfaction not from actually achieving something, but merely from the intention to do so. A person who has decided to lose weight might immediately allow themselves a pastry. After all, they are already “on a diet,” so tomorrow they will start eating healthily. Those who choose to eat healthy and monitor their calorie intake will order a cheeseburger and a salad at McDonald’s, rather than just a cheeseburger. It’s as if the salad “cleanses” the cheeseburger of calories and unhealthy ingredients. Restaurant owners take advantage of this. By adding salads to their menus, they boost the sales of fries and bacon.
In an effort to save money and buy discounted items, people end up spending more because they allow themselves to splurge on other purchases. An analytical review of insurance companies from 2010 states that hybrid car owners were more likely to get into accidents, received 65% more fines, and drove 25% more kilometers than other drivers. So, does the awareness of making the right choice—buying an expensive but eco-friendly car—justify careless driving? People who give gifts to others also feel “good” about themselves and therefore “allow” themselves things they wouldn’t normally indulge in. Research shows that during the holiday season, the highest sales volumes are for women’s clothing and shoes. These are items that people buy for themselves, rather than as gifts.
The source of this paradox lies in the dopamine stimulation mechanism mentioned earlier, which has developed over the course of evolution. The thing is, when a buyer decides to take an important and responsible step, they already receive a dopamine reward and may allow themselves to spend money before they even pay for your product or service. They feel “good” already. And if they suddenly run out of money, it’s okay; tomorrow they’ll definitely have enough for your product. However, this could lead to a new vicious cycle. A person who wanted to spend money on an important purchase for their future but couldn’t resist the temptation and spent it on something trivial will end up blaming themselves, feeling anxious, and seeking comfort in new temptations. In other words, they will never have enough money for truly important things. They will live for today and will constantly suffer because of it. And due to that suffering, they will continue to live for today.
Another trap lies in the fact that people tend to idealize tomorrow more than today. People buy exercise bikes, hoping that they will start working out. In the future, everyone thinks, we will have more time and energy for healthy activities. But it often turns out that the bike ends up serving only as a bulky coat rack. Sports and fitness clubs are well aware of this mindset trap, which is why they try to sell long-term memberships. Still, at least half of the people won’t use their membership for the entire duration.
Thus, the task of the White Seller is not to sell people something just because owning it makes them “good,” while not buying it makes them “bad.” The White Seller addresses more important issues—he helps the buyer achieve their goals. Therefore, the intention or act of purchasing should not be seen as something “good.” It’s simply another step toward the goal. If we are planning a hike and know that to successfully complete the event we need to cover 20 kilometers a day, we won’t allow ourselves to be “praised” for a job well done yesterday and “permit” ourselves to walk less today. That would be absurd.
Let dopamine work in stimulating the drive towards goals, rather than the urge to make a purchase, which is merely a step on the path to achieving those goals. However, to guide people towards their goals, one must understand what they are striving for. To do this, it is necessary to know their aspirations, to read their souls, and to be a guide and leader for them. White sales can be called leadership sales: while ordinary sellers behave like lampreys or pilot fish, using their clients—larger fish—to achieve their own goals, White sellers, on the contrary, lead their clients to success.
Sticking
Nikolai Pyduk, in his article “The Economic Effect of Sunk Costs,” describes an interesting phenomenon very well. A young man wins a free ticket to a football match of his favorite team in a lottery. He doesn’t want to go to the match alone and persuades a friend to buy a similar ticket. Just as they are about to head to the stadium, a terrible storm breaks out. The lottery winner looks out the window and says, “In this weather, I could just get washed away from the stands. Forget about the match. It’s better if we stay home.” Or maybe he says (especially if he has an economics background): “The costs I will incur due to the storm far exceed the enjoyment I expect from the match. Forget about the match. It’s better if we stay home.” In any case, the lottery winner refuses the prize he has received. But what about his friend? He’s furious! He insists they go to the match immediately: “I don’t want to lose the 100 hryvnias I paid for the ticket.”
From the perspective of rational economic behavior, the friend is acting somewhat strangely. After all, if the costs of attending the match exceed the benefits, it would be in his best interest to refrain from attending the event. However, from the friend’s point of view, he is in a tough spot after having paid 100 hryvnias.
Examples of sunk costs can be found in abundance across various fields. Take the story of the Soviet BAM (Baikal-Amur Mainline) for instance. Just a few years after construction began, it became clear that it would have been more beneficial to abandon the project rather than continue. Nevertheless, the construction was not halted, and it remains unfinished to this day. A similar situation occurred with Boeing, which, after losing a tender to supply fighter jets to the U.S. Department of Defense under the JSF program, still completed its prototype X-32. This was despite the fact that the competing X-35 from another company… Lockheed Martin was better in a number of ways. After that, Boeing described its unnecessary expenses as a “strategic investment.”
In 1879, in Paris under the chairmanship of the construction manager Suez Canal Ferdinand de Lesseps was created “ Universal Interoceanic Canal Company The text does not contain any translatable parts. stocks which was acquired by more than 800,000 people. The company purchased from engineer Wise the concession to build the Panama Canal for 10 million francs, which he had obtained from the government. Colombia In 1878, an international congress convened before the formation of the Panama Canal Company advocated for a sea-level canal; the cost of the work was estimated at 658 million francs, and the anticipated volume of earthworks was 157 million cubic meters. yards. . V. in 1887 To reduce the scope of work, it was necessary to abandon the idea of a lock-free canal: the company’s funds (1.5 billion francs) were mainly spent on bribing newspapers and members of parliament; only a third was used for actual construction. As a result, on December 14, 1888, the company ceased payments, and soon the work was halted.
К. in 1888 The construction of the canal cost 300 million dollars (almost twice as much as originally planned), and only a third of the work was completed. The reason for this was also the flawed design. Ferdinand de Lesseps insisted that the channel be dug at sea level), and the poor quality of work organization, and the underestimation of its cost, as well as the inability to cope with diseases — malaria и. yellow fever There are reports that due to the lack of anti-epidemic measures, at least 20,000 people died. The construction site gained a notorious reputation, and newspapers of that time wrote that some groups of workers brought their own coffins from France.
In 1889, the company was decided to be dissolved, and a famous scandal surrounding its activities erupted in France in 1892-1893. The case was brought to court.
It was only in 1904 that the U.S. War Department resumed work on the canal. The chief engineer of the canal became John Frank Stevens This time, the right project was chosen: gates. and lakes. The construction took 10 years, $400 million, and 70,000 workers, of whom, according to American data, about 5,600 people lost their lives.
However, scientific research began as early as 1877. Darién и. Panama Isthmus The results of which were projects proposing to build a canal through Lake Nicaragua.
Although the isthmus of the Nicaraguan Canal is much wider than that of the Panama Canal, it has no steep mountains, and additionally, there is a large lake and navigable rivers available. Despite the fact that the Panama Canal is only 65.2 km long (overland), while the Nicaraguan Canal would be four times that length, the latter would have cost four times less than the price of completing the Panama Canal at that time. It would only require excavation over a length of 45 km, and the materials removed could be used for building dams and giant reservoirs. However, in 1904, no one could have imagined that the “buried” 300 million dollars and 20,000 people would simply need to be “thrown away” to start constructing a new canal elsewhere. The Nicaraguan Canal Company was never able to raise the necessary capital of 100 million dollars for the canal’s construction or convince the United States government to take over its construction.
Many bad movies are watched to the end simply because a person, realizing how terrible the film is, feels compelled to stick it out due to the time and money already spent. Those minutes and dollars keep them waiting for the end, hoping it will be better than the beginning. Many military conflicts continue for the same reason: one side refuses to negotiate and insists on continuing the fighting until complete victory is achieved. The need for total victory is justified by the fact that too many sacrifices have already been made for it. It’s a curious logic.
Scientific and technological progress is accelerating year by year. Computer systems are already becoming obsolete by the time their delivery is finalized. A new scientific and technological revolution is underway, and technologies and work methods are changing rapidly. In this environment, it becomes increasingly difficult for people to make decisions under the pressure of the sunk cost effect. It’s hard to imagine that a system purchased three years ago for a hefty sum could be profitably replaced by a new, more powerful one, especially when the new system costs less than the accumulated depreciation on the old one. Sellers need to understand the irrational desire people have to assign value to resources that have already been spent, as if they can still be utilized. Only proper consultation with a focus on the company’s business goals can help clients overcome their regrets and choose the right path. Ethical sellers must be able to provide value to their clients by looking toward their future.
Types
When a client is driven by irrational feelings, they need to be given what they want. At the same time, we understand that they desire this now, but they will evaluate it later. The seller must be confident that the client will be well off in the future. The client should be guided to a decision today, based on current values. After all, if they are unhappy in the future, there will be no hope for positive recommendations. Moreover, in this transparent world, the angry cries of a dissatisfied client will be heard much further than the contented murmurs of a satisfied one. And tomorrow, new customers, aware of the issues with your product, will choose not to purchase it.
We are prone to stereotypical thinking. This isn’t necessarily a bad thing, as it helps us optimize our lives. We can almost never make a rational purchasing decision because we don’t have complete information. Even when it comes to simple things like a bottle of milk, to make the right choice, we would have to compare the price of that milk with other milk on nearby shelves, check the price at neighboring supermarkets, assess our time and resource costs for traveling to other stores, and find out the exact composition of the product while comparing the production processes of all manufacturers. Only after all that can we make a decision. It’s clear that the time and money we spend gathering the necessary information aren’t worth that infamous bottle of milk. So, we end up buying the milk with the cute cat on the label, because cats love milk, right?
If we were robots making only rational decisions, we would stand frozen in front of a milk display forever, unable to make the right choice. Such “programming errors” exist in nature among primitive organisms. Caterpillars or ants can get “stuck” and walk in a chain behind one another. Moths fly toward the light of a lamp, mistaking it for the moon and trying to maintain the same angle to its rays. But the moon is far away, allowing them to keep their direction by orienting themselves toward it. The lamp, however, is close, and if you try to keep the lamp, say, always to your right while flying, you’ll end up going in circles. Over time, evolution has weeded out those living beings that were incapable of irrational actions. Finally, humans emerged, often achieving success when they act differently from everyone else, behaving in ways that seem irrational.
However, behind the irrationality of behavior lies a deep wisdom of nature. If all people rationally wanted the same thing, there would never be enough for anyone. Some love yellow fruits, others prefer red, and some even favor root vegetables, while yet another “weirdo” has learned to catch and eat that disgusting slippery fish and now doesn’t compete for plant-based food. Why do people have different preferences? This cannot be explained within the rational framework of each individual. However, within this framework, we can explain the necessity of preferences for different individuals of the same species. Even rats manage to sustain their population simply because there are some who find the bait laced with poison unappealing. The motto “ “Differentiate or Die!” is the title of a book by Jack. а. The trout was not invented by him. It is taken from nature and applied to marketing.
In 1928, psychologist and inventor William Marston published the book “Emotions of Normal People,” in which he identified four types of individuals based on their preferred behavioral strategies in favorable or unfavorable environments.
1. Those who actively engage in an aggressive environment belong to the “dominant” type — they are authoritative, self-centered, and ambitious individuals.
2. Those who are active in a favorable environment are the “influencer” type; these people are sociable, charming, and popular.
3. Those who prefer to exhibit passivity in a favorable environment belong to the “stable” type, characterized by consistency, calmness, and predictability.
4. Those who prefer to remain passive even in an unfavorable environment are the “norm conformists”; they are diplomatic, gentle, and tactful individuals.
Each of us carries these stereotypes within us. There is no such thing as “pure” behavior that belongs solely to a specific type; just as there are no pure cholerics or melancholics. Yet, when we make decisions in our lives, we are guided by these stereotypes that we are born with. We explain our choices in terms of these stereotypes. Dominant individuals seek benefits and fear being deceived. Influential people seek prestige and fear rejection. Those desiring stability seek comfort and fear change. And people striving to conform to norms seek safety and fear criticism and mistakes.
Try to explain to yourself right now why you choose to buy groceries at the market or in a store. Some might say that it’s more cost-effective at the market. But there will always be someone who argues that it’s cheaper in the store. Even if the prices suggest otherwise, a person will come up with a dozen reasons supporting the idea that shopping at the supermarket is indeed more advantageous. There will also be those who say that it’s more convenient for them to shop at the supermarket (or at the market). Some will justify their choice with safety concerns. They will assert, without any basis, that “everything is fresher at the market,” or if they prefer the supermarket, they will claim that “there’s better control in the store.” Among those surveyed, there will be individuals who appreciate the “personal touch” at the market or the “prestige” of the supermarket. It doesn’t really matter where they actually do their shopping. None of these people will have strict evidence for their preferences. They believe they are making the right choice and rationalize it based on stereotypes.
Fortunately for the seller, personality types and their choice stereotypes can often be determined just by looking at a person, without even engaging them in conversation. This helps experienced sellers choose the right words when offering their products. A good car salesperson will always ask you what car you drove before and, more importantly, why you chose it. After all, any car can be selected for being economical, safe (with plenty of airbags and having passed tests), prestigious (with the caveat “in its class”), or comfortable and spacious (again, within its category).
If a person seeking value is told that the Golf is not the cheapest car in its class, they will immediately respond that it has a longer lifespan for parts and they need to be replaced less often. Insurance for this car is cheaper, it has a new engine with reduced fuel consumption, and there are a dozen other arguments justifying the high price. Meanwhile, a person who values safety will reinterpret the same arguments: the Golf breaks down less often, and the owner can rely on this car; the low insurance cost indicates low accident rates; they might not even mention the new engine but will highlight the reinforced suspension. The low fuel consumption will give them confidence that they won’t get stranded with an empty tank between gas stations. A prestige-oriented person in the same situation will recall the new engine and note that it is a cutting-edge development. They will also mention that insurers offer special conditions for the Golf. Those who prioritize comfort will think about maintenance but will say that they appreciate not having to look under the hood for years. Moreover, the cheaper insurance is not just advantageous but also convenient.
A person’s stereotypes are reflected in the environment they create around themselves and their characteristic behavior. A dominant person will not adhere to dress codes. In contrast, an influential person will dress in a way that ensures they look better than their conversation partner: cufflinks, pins, pocket squares, expensive suits. This person will surround their workspace with framed diplomas, photos of their achievements, or memorable moments in life (such as a handshake with the president). A comfort-loving person will make everything around them comfortable. They may also have photos on their desk, but these will feature their loved ones. A standard person will keep everything in perfect order.
Knowing all these characteristics of people, it is easy to build a conversation based on the things that are most important to them. A prestige-oriented person will be willing to pay the highest price for uniqueness and for an irrational confidence in the quality of expensive items. If an item turns out to be of poor quality, they will conclude, “Wow, then what terrible cheap items there must be.” Such a person will be very loyal to you if you offer them personalized conditions. When offering a discount, justify it by highlighting the uniqueness of the deal for both you and them. This type of person, if they do give recommendations, will only do so if they understand how it will enhance their authority in the eyes of others. However, they will likely prefer to be satisfied with the knowledge that they have a unique supplier with an equally unique offer.
A person motivated by profit will be interested in the price. They will dominate the conversation, trying to quickly figure out everything they need to know and make a decision. Such individuals need to be presented with two or three clear alternatives without overwhelming them with information. They are the type of people who believe they can understand what they need by looking at a description the size of a single A4 page. If something is unclear to them, they will delegate the problem to others, but they will make the final decision based on the information provided by someone who has grasped the issue. Since their main concern is profit, they need to see the benefits for themselves, for the company, for others, and finally, for the seller. They will never risk taking “free cheese,” believing that everyone in the world is driven by the pursuit of profit. It is important for them to clearly understand what the benefit is for you from their recommendations.
A person who values comfort is extremely difficult to motivate for any changes. The new is seen as dangerous and unpredictable. This person always stays within their “comfort zone” and is least inclined to step out of it. The best you can offer them is an experiment, a test drive, or a pilot project. Unlike the previous two types, these individuals pay close attention to others’ recommendations and will easily recommend you. However, selling to them can be challenging because they are good conversationalists. Despite their love for discussions and a calm attitude towards the seller’s inquiries, they may delay closing the deal simply out of fear of losing connection with you. It’s important to manage the time spent in meetings with such people and to guide the client towards progress during the conversation. When presenting your product, don’t forget to mention how its purchase will benefit the people around the client. After all, if the purchase only sparks envy among others, the comfort-seeking individual is likely to decline the acquisition.
The fear-driven person is the most complex buyer. They believe they are the epitome of rationality and are foreign to stereotypes. They won’t listen to a salesperson simply out of fear of manipulation. Instead, they will take two huge specifications and create a table of pros and cons. They will develop a solution that, in their view, no one will ever criticize. They are hesitant to give recommendations because they cannot quickly analyze the consequences of their advice. “What if?” is their favorite argument. If you want this type of person to buy a product, refer to the experiences of others. Provide them with all the information and don’t try to convince them of anything. Just help them compare all possible options. Since they don’t believe in the sincerity of those around them, you need to have solid explanations for your assistance. Speak to them in terms of numbers and business models; they will appreciate it. After all, there are plenty of people around, three-quarters of whom don’t understand anything at all—these are people of other personality types who are far from perfectionism, procedurality, and adherence to norms.
To understand how easy it is to classify people by personality types and driving stereotypes, one can recall any good dramatic film. For example, “Moscow Does Not Believe in Tears,” which excellently portrays the types of the main characters and their motives. The typical dominant character is Gosha (also known as Goga). The typical procedural character is the main heroine Katya Tikhomirova. Lyuda Sviridova (played by Irina Muravyova) and Rodion (Rudolph) Rachkov are typical prestige-seeking individuals. And the modest Tonya Buyanova, who was the first to get married and is happy in her marriage to her beloved husband Nikolai, is a typical comfort-seeking person who values stability.
Now it’s clear what distinguishes good cinema from bad. Can you categorize the personalities of the characters in the series “Transformers” or the movie “Spider-Man” if you try to move away from the black-and-white labels of “villain-hero”? After all, the serious part of social intelligence is responsible for the “resolving capacity” regarding people’s motives. Both the two (villain-hero) and the four (benefit, comfort, prestige, security) personality types are very rough classifications. In reality, everything is much more nuanced and interesting. Therefore, the worst thing a salesperson can do is start labeling people.
Chapter Summary
Main ideas
A person cannot make a choice without comparison. However, comparison also yields a subjective result. Often, the very possibility of making a choice leaves the customer feeling stuck or disappointed after the transaction.
To ensure that a person can make the right choice and not regret it, they need support.
People tend to rationalize the inevitable. If a customer can’t help but buy a product, they will find their own reasons for making the purchase. If they have already bought it, they will explain to the seller why they did so. This is useful for getting recommendations and maintaining a positive attitude towards the sale.
The client should appreciate that they found you. Therefore, don’t push yourself on them and avoid making “cold” calls.
People are unable to appreciate what they don’t know. Customers are not aware of all the benefits of your product and won’t figure them out before making a purchase unless you point them out. Let them buy the product for the reasons they have decided on. The rest will be a pleasant surprise for them. Let’s give more than the customer expects.
Decision-makers differ from other employees in companies in that they are willing to invest today to reap benefits tomorrow. It is with them that sales conversations should take place. Moreover, these discussions should be framed in terms of investment: spend today to gain tomorrow.
Clients can “relax” just from the fact that they have made a decision to purchase, and as a result… not buy. Guide the client towards their goals. They don’t buy because they are so good; they buy because they need it.
To convince a client to replace something old and expensive with something new and cheaper, you need to show them specific numbers, as they tend to value the money they have already spent and are reluctant to admit that it was wasted.
There are four basic types of irrational choice: benefit, prestige, comfort, and security. It is possible to distinguish which type a person belongs to and communicate with them in a language they understand.
Exercises
– Take any good movie: “Office Romance,” “The Taming of the Shrew,” or the series “The Big Bang Theory.” Avoid spectacular films or action movies. Describe the characters by personality types. Why did you make that choice?
Pay attention to how you make decisions when purchasing items in the store that were not included on your shopping list.
· Recall a situation when you regretted a purchase because your expectations didn’t match reality. What made you buy that item? How will you behave next time?
Where to start?
– Reach out to existing customers and ask them to describe 5-10 things that have improved since they purchased your product. How else has your product helped them? Use these responses (and questions) in future communications with potential customers.
· Look at your existing clients. What motivated them to make a purchase from you? Can you now communicate with them in the same language? Meet with them.