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OG NOTES (AUG-2018)
Following the Norms
Social & Market norms
*Ask audience… Would anyone here allow their employer to pay them in hugs? No, that’s fair. What about, would you pay your Mom for the Thanksgiving dinner she made? Of course not, that would be insulting.
The reason is we apply different sets of norms to different situations: social norms and market norms.
Social norms dictate how we deal with friendly requests and favors, where immediate repayment is not expected. Like your Mother cooking dinner for you.
Market norms are more cold and calculating. Resources are exchanged; work is performed for a salary (tit for tat)
In general, market norms tend to make people more selfish…
In a study with lawyers, they were asked if they would provide cheaper services to needy retirees.
Most of them said no, but when asked if they would do it for free, a majority said yes.
Why? When offered even small compensation, the request fell under market norms and the lawyers considered the proposed compensation totally inadequate.
But when asked to do it for free, social norms applied and the proposal was accepted.
*The lesson is that when you make a request, think about which norms you invoke. Do your best to make a conscious effort to keep customers within the social norm bucket.
Even the mention of money can be enough to apply the cold market norms and studies show that once invoked, it’s very difficult to get them to revert back to the warm/unselfish social norms.
You see this a lot with company slogans. “Like a good neighbor, state farm is there.” “You can do it. We can help.”
They want to make you feel like they are a friendly resource who can help do you a favor, and not trying to sell you something.
If you do invoke the market norms, which is often unavoidable in sales, remember to place a focus on the “tit for tat”. They need to know they’re paying for something that will be of benefit to them.
Just like you expect your employer pays you for doing the work, a customer needs to expect to pay for your services; it’s just your job to lay out why it’s worth it.
One of the main factors that impacts human decision making is social influences…
Social influences come in two basic categories.
The first involves information: If many people do something or think something, their actions and their thoughts convey information about what might be best for you to do or think.
The second involves peer pressure: If you care about what other people think about you, then you might go along with the crowd to avoid being an outsider or behind the curve.
WYSIATI - Kahneman coined the term, “what you see is all there is”
WYSIATI is the notion that we form impressions and judgments based on the information that is available to us.
For instance we form impressions about people within a few seconds of meeting them. In fact, it has been documented that without careful training, interviewers who are screening job applicants will come to a conclusion about the applicant within about 30 seconds of beginning the interview. And when tested, these initial notions are often wrong.
Interviewers who are trained to withhold judgment about someone do a better job at applicant screening, and the longer that judgment is delayed the better the decision.
On the consulting side of my business, I often work with HR and craft a strategy to avoid this.
In my, admittedly biased opinion, sales is one of, if not the most important departments for hiring.
If you get it right, you could be set up for consistent production for a long time. If you get it wrong… well, you know what happens when a bad salesperson is hired.
We tend to develop stories based on the information at hand; piecing the information we do have into a narrative, often without asking the question, “what information am I missing”?
When it comes to decision-making where multiple people are involved, groups fall prey to what is known as “collective conservatism”: the tendency of groups to stick to established patterns even as new needs arise.
Example: People were asked, “Which one of the following do you feel is the most important problem facing our country today?”
Five alternatives were offered: economic recession, educational facilities, subversive activities, mental health, and crime and corruption.
Asked privately, a mere 12 percent chose subversive activities. But when exposed to an apparent group consensus unanimously selecting that option, 48 percent of people made the same choice!
Knowing this information, we can use that to help, not only influencing, but improving a buying decision. Here are some ways to use the two buckets of social influence, peer pressure and information, to better position your point:
Peer Pressure: Using phrases like, “a lot of other companies in your industry/people in your situation are doing X…” can help them feel like their current solution is behind the curve to what others are doing (and what you’re offering). Using the peer pressure in a subtle way can be a powerful method for getting someone to make a change.
Information: Talk is cheap. I say it all the time but it’s important to back up what you’re saying with information and data to help give credibility to your statement and to continue breaking down the salesperson bias.
(customizable) The use of peer analysis reports and targeted case studies would be good resources to utilize.
To elaborate on the “information” and group decision making piece, it’s important to consider the opinion of the head decision makers of the company, especially if they aren’t the problem owner.
Two Hospitals Example: I’ll give you an example of two situations that happened to me last year…
Hospital 1
I was selling my employee benefit plans and was working with the director of HR for a hospital, to hopefully add voluntary insurance options to their package. Hospitals are the #1 purchaser of these benefits and since it’s 100% voluntary for EE’s, it costs nothing for the “company” to add them.
The director was on board and even excited to offer the employees additional coverage. I was feeling good thinking I was about to land a nice new sale. She just had to get the “OK” from the executive team.
After meeting with the final decision maker to get the ‘green light’, the HR director called me and said it’s a “no-go”. Apparently the CFO of the hospital personally didn’t believe in these voluntary benefits and wouldn’t buy for himself so he said no. WTF!
Hospital 2
Only about a month after, I got another opportunity to position adding voluntary benefits to a different hospital.
Still bitter about losing that last sale, I thought “how can I avoid that happening again?” I’ll spare most of the details…
This time, I prepped the HR director by explaining these benefits are really for all the non c-suite EE’s and I wouldn’t even recommend the execs buy the insurance for themselves (which was true).
I told her that sometimes executives put the kibosh on these products only because they don’t think they need them, but I stressed the importance of the plans for the other employees. I did this so she had a response ready in case a situation like the last hospital I worked with came up in her meeting with the execs. (it happens more than you’d think).
On top of highlighting the value, I explained how hospitals are the biggest buyer of these voluntary plans by showing some internal stats broken down by industry, gave her a case study, and also showed how the plans I’m recommending are specifically designed to supplement their health plan, and since the insurance is 100% voluntary, there is no additional pressure on the employees. All true.
I’ve said it before and I’ll say it again before this presentation is over… remove every reason for them to say no
Thankfully, this hospital decided to add the benefits and the HR director even proudly told me how she got initial push-back from the CEO but talked him into it.
This is similar to the example and outcomes from the Yale vaccine example.
What I did was I evoked the “social norms” by putting the focus on the value for employees. I also avoided an objection before it occurred by highlighting how these plans aren’t for the decision maker, which also switched their mind from their usual market norm focus to social norms.
To play into peer pressure, I gave stats and a case study showing how many hospitals like them already have these benefits.
Was there still an opportunity for them to say no? Of course. But since I did everything I could to avoid the objection, it gave me a significantly better chance. This is an example of something I say often… Adapt and Advance
To give another example of the power of social influence, here is an interesting study I came across…
In the context of tax compliance, a real-world experiment conducted by officials in Minnesota produced big changes in behavior. Groups of taxpayers were given four kinds of information…
Group 1: was told that their taxes went to various good works, including education, police protection, and fire protection.
Group 2: was threatened with information about the risks of punishment for noncompliance.
Group 3: was given information about how they might get help if they were confused or uncertain about how to fill out their tax forms.
Group 4: was simply told that more than 90 percent of Minnesotans already complied, in full, with their obligations under the tax law.
**Only one of these interventions had a significant effect on tax compliance… who wants to take a guess? (It was the last group.)
When informed that the actual compliance level is high, they become less likely to cheat. It follows that either desirable or undesirable behavior can be increased, at least to some extent, by drawing public attention to what others are doing.
So in conclusion, if you want to shift behavior for a buying decision. You can do it with a nudge. And you can start by simply informing people about what other people are doing.