12 practical business lessons

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Lessons learned from psychology for business

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12 practical business lessons

  1. 1. 12 Practical Business Lessons from Social Psychology It’s been said many times that business is all about people. That being the case, perhaps we should stop reading management books for advice and start looking at Social Psychology. Very simply, social psychologists study how people interact with others – their families, friends, and yes, business partners. Smart marketers and executives have been using the findings of this growing field for decades to close sales, hold effective meetings and get their way in negotiations. But rather than putting you through an academic psychology lesson, we condensed the most useful concepts into one article. The Foot in the Door Phenomenon                                                                                                                                                                                                                                                                                                              The Concept: If you’re wondering how to convince superiors, employees or customers to do what you ask, try using the foot in the door phenomenon. This refers to the tendency of people to do something huge if they have already agreed to something much smaller. Your friend should be much more open to helping you decorate your entire house for a dinner party if, for example, he already helped you pick out decorations. How You Can Use It: This handy principle has countless applications in the business world. Hand lotion and beauty supply kiosks at the mall use it all the time. If you can get a person to talk to you for a couple of minutes and rub some lotion on their hands, you’ve got your foot in the door, and they are much more likely to buy from you than if you had just screamed a sales pitch at them.
  2. 2. The Door in the Face Phenomenon                                                                                                                                                                                                                                                                                                                                                   The Concept: Another classic persuasion tactic is known as the “Door in the Face Phenomenon.” Using this approach, you make your actual request look reasonable by first making an outrageous request that the person will unquestionably turn down. When they turn you down, you then ask for what you really want, which now looks trivial in light of what you asked for a moment earlier. How You Can Use It: Let’s say you want your company to approve funding for a team of five marketers to research a new advertising campaign. Rather than simply asking for this funding and risking being shot down, use the door in the face principle. Ask your company for twice the amount of funding for a team twice as big as what you need. This will almost certainly be disapproved, but don’t fret; you didn’t need that amount in the first place. Act like you’re really going to work hard on cutting the funding down to the bone and reworking your proposal. In a few days, come back and propose the funding request you wanted all along. It will look as though you found a way to accomplish the same tasks for half the price with half the personnel. Social psychology research states that you are much more likely to get what you want by doing this.
  3. 3. The Serial Position Effect                                                                                                                                                                                                                                                                                                                                                    The Concept: A truly sharp marketer should understand how our brains process information. The “Serial Position Effect” (developed by Hermann Ebbinghaus) assists by explaining how we remember items we see or hear in lists. Ebbunghaus discovered that things shown at the beginning of a list and at the end of a list are remembered best. This was later titled the “Primacy Effect,” and the “Recency Effect.” How You Can Use It: This powerful concept can affect what the millions of people seeing your advertisements, listening to your radio promotion, or reading your sales letter, remember about your product. If you have five benefits that your product provides over the competition, think long and hard about which ones you want to stick deep into your audience’s memory. Place those items at the beginning and end of your pitch. This way, prospects will remember these benefits when they see your product on a shelf or think about the commercial they just saw.
  4. 4. Attitudes Follow Behavior: Resolving Cognitive Dissonance                                                                                                                                                                                                                                                                                                              The Concept: Cognitive dissonance is a fancy term for when people have opinions, behave contrary to them, and change their opinion to fit how they acted. For example, if you normally despise handguns, but join your buddy at the shooting range one day, you might leave thinking about how “guns aren’t really that bad if you use them safely.” Simply by holding and shooting one yourself, your brain begins thinking positive thoughts about it. Similarly, a “boring” task might later be remembered as “not being all that bad” or even being “fun” because, after all, you did it. How You Can Use It: What this means to you is that if you can get your customer to perform a small task, such as a little game or survey online, the customer may begin making some positive assumptions about what you sell. This especially works for businesses operating in controversial markets, such as gambling, tobacco or other vice-related products. If you can find a harmless and fun way for potential customers to get involved with your products and services they will be more likely to become loyal buyers down the line.
  5. 5. Two Routes to Persuasion                                                                                                                                                                                                                                                                                                                                                   The Concept: Not everyone processes information (including product demos and advertisements) the same way. Generally speaking, there are two types of audiences, depending on your product/service. Your audience is either attentively thinking about your message, or they are distracted. These two audiences take two different routes to understanding your message. The involved group takes what is known as the “Central Route,” meaning that they focus on what you are saying closely, develop counterarguments and respond based on what they eventually decide your product is all about. If your ad or pitch was strong and convincing, these people will probably buy. If it was weak or not convincing enough, there’s little hope of them buying. How You Can Use It: The distracted audience takes a very different route to understanding your pitch known as the “Peripheral Route.” These people focus on irrelevant parts of the pitch that randomly interest them. The speaker’s good looks, for example might interest them more than the information in the pitch. Simple language is also important for this kind of audience. For example, if you’re selling a market research service, classic adages such as “look before you leap” will probably work better than “perform proper market research before investing.”
  6. 6. Perceived Expertise                                                                                                                                                                                                                                                                                                               The Concept: Let’s face it – most of us give more weight to what “experts” say than average Joes off the street. Most people would sooner listen to a warning about the health hazards of eating fast food, for instance, if it came from a renowned nutritionist than from a self-righteous teenager. How You Can Use It: What makes someone appear to be an expert? One tactic that has been used by marketers (and politicians) is to begin your pitch with something the audience already agrees with. This makes the speaker seem intelligent and makes the audience eager to believe more of what he or she has to say. Of course, being introduced as an expert never hurt either. A comment about an approaching asteroid from “Dr. Robert Kimmel, Chair of Astrophysics at Harvard University” will surely be taken more seriously than, “Robbie Kimmel, local guitarist and college student.” Finally, social scientists find that speaking confidently greatly improves believability. A study performed by Bonnie Erikson in 1978 proved this by having college students rate the credibility of two supposed “witnesses” to an accident. One spoke very clearly and confidently and the other one hesitated and stumbled over his words a bit. One by one, each student said the confident speaker was much more credible. Perhaps it’s time to buy yourself a course in effective speaking!
  7. 7. Perceived Trustworthiness                                                                                                                                                                                                                                                                                                               The Concept: Trustworthiness of the speaker is another factor critical to any kind of visual marketing. No trust, no sale. Fortunately, how trustworthy you look can be controlled almost entirely by you. How You Can Use It: Our outward behaviors have a lot to do with whether trust us or not. One behavior that seems to carry a lot of weight is eye contact. Researchers have found that if video-taped witnesses in court looked their questioner straight in the eye rather than down or around, they were seen as more trustworthy. You can also appear more trustworthy by seeming like you’re not trying to influence an audience. “Hidden camera” TV commercials utilize this tactic all the time. Social psychology experiments have found that people who don’t think they’re being watched are comfortable being completely honest. People also find others trustworthy when they argue against their own interest. Thus, a message about risks of cigarette smoking seems much more sincere coming from the tobacco companies than it would if were given by an anti-smoking politician up for re-election. People might link the politician’s anti-smoking speeches to his political agenda, whereas they cannot do this with the tobacco companies and are much more likely to absorb the message as true.
  8. 8. The Mere-Exposure Effect                                                                                                                                                                                                                                                                                                                                                    The Concept: Sometimes repetition alone can make a message more believable. Social research has found that people tend to eventually believe things they’ve been told many times, simply because they’ve repeatedly heard it. Studies show that people rate false statements such as “Mercury has a higher boiling point than copper” as true if they were made to read them a week before. How You Can Use It: This concept is why companies run the same advertisement three times during a one-hour television show. The first time the audience sees the ad they might just ignore it. However, a week later they may have seen the ad 20 times, and by that point they have begun to accept its message and view favorably the product it advertises.
  9. 9. Distraction Disarms Counter-arguing                                                                                                                                                                                                                                                                                                                                                   The Concept: Audio and visual messages are much more effective when the audience can be somewhat distracted by background clutter just long enough to inhibit counter-arguing. Mild distraction often preoccupies the brain just long enough to stop it from inventing a reason to say “no.” How You Can Use It: Many radio commercials utilize this tactic. The words promote the product being sold while background music or intermittent comedy distracts us from thinking too deeply about the words. Be careful not to distract so much that ad is not processed, however. Extremely violent or incredibly sexual advertisements are often ineffective because the audience is simply too distracted by what they’re viewing to pay attention to the message. They key is to strike a balance such that your message is understood, but not deeply analyzed or argued by the audience.
  10. 10. The Self- Reference Effect                                                                                                                                                                                                                                                                                                               The Concept: Remember – a marketer’s job is making sure the audience understands and remembers the sales pitch. One handy way to achieve this is known as the “Self-Reference Effect.” The Self Reference Effect refers to the tendency of people to effectively recall information about themselves. Most people are primary concerned with themselves. Thus, memories pertaining to what we think about the most, (ourselves), are held longer and recalled easier. Studies have shown that, when asked to compare ourselves to a short-story character, we remember that character better than if we compared them to someone else. How You Can Use It: When planning a new marketing campaign or presentation to the board, it is important to keep this principle in mind, as it can greatly influence what your audience walks away remembering. Try focusing on the basic lifestyle and personality traits of your audience. Once you have these squared away, design your new message to match these traits. This makes your message personally meaningful to them and boosts their chance of remembering what you said.
  11. 11. Priming                                                                                                                                                                                                                                                                                                              The Concept: Priming is when various stimuli (sights, tastes, smells) automatically trigger thoughts of similar stimuli. The smell of crisp fall air, for example, might trigger thoughts about the holiday. As a result, simply smelling the fall air might make you crave pumpkin pie or apple cider, even though no food is in front of you. How You Can Use It: Priming is a classic sales tactic that has been used for decades, and you can put it to use for your business immediately. The key is to find some kind of neutral stimulus that is clearly related to your product. A perfect example of this can be found at any movie theater. As soon as you walk through the door your nostrils are overcome with the smell of buttery popcorn. Without even seeing the popcorn or being asked to buy it, you find yourself making your way to the concession stand because you suddenly feel like the movie wouldn’t be the same without the snacks. This is classic priming, and all five senses are susceptible to priming by intelligent marketers and businesspeople.
  12. 12. Prevent Employee Social Loafing                                                                                                                                                                                                                                                                                                               The Concept: Have you ever noticed, perhaps in college or around the office, that when groups are assembled to complete a task, it always ends up that a couple of members do most of the work while the majority of members do almost none of the work? This is a social psychological phenomenon known as “Social Loafing,” and it happens everywhere and in absolutely every profession. Social loafing is defined as the tendency for people to put less effort into a task when they are in a group than when they are alone. How You Can Use It: Social loafing can seriously drain a team’s performance. The good news is that the causes of social loafing are known and consistent. Social loafing happens when no one is personally accountable. When the group is judged as a whole no matter what its individual members do, loafing is almost sure to occur. The sure-fire way to make sure that all of your employees are contributing equally to the task at hand is to assign them to groups, but assure them that they will be personally monitored and evaluated on their contributions to the group. The more someone thinks they will be judged personally, the less social loafing you have. This allows you to make the most of the talent you have on staff and almost always produces stronger results than the vague “group evaluation” does. Source: Article printed from businesspundit.com

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