The psychology of selling

A man arrived at my house with an identity card around his neck, which I neglected to properly examine. Even though I did not look at it, the fact that he was wearing the identity card gave me the impression that he was reliable and credible.

It was just a few days after the previous fire tragedy at the residence of parliament member Chandra Bhandari. So the timing could not have been more ideal.

He offered to teach us for free about home fire safety, including how to prevent it and inspect any used equipment. After that, he assessed the susceptibility of our house and provided us with some alarming but informative facts about common fire hazards.

Lastly, he gave a demonstration of the LP gas stove regulator and how it may prevent these kinds of occurrences. He mentioned that a Nepalese government department had approved it, but I did not bother to verify.

As our dialogue unfolded, he disclosed the regulator's original price at Rs. 3400. However, injecting a spark into our conversation, he introduced an alluring offer: a dramatic reduction in price to just Rs. 2000. Continuing the tale, he then presented a gas pipe, stating that it would cost 500 rupees.

And that is how I ended up purchasing both items. In under five minutes, the salesperson educated me on unfamiliar products and swiftly persuaded me to make the purchase.

Six months later, I reflect on the entire episode. It was an excellent sales technique. Now, let us dissect this.

The rule of reciprocity

This principle states that we are supposed to return favors in kind, and no human society is unaffected by it.

Recall how your mother and neighbor used to trade plates of food with each other endlessly. On social media, liking someone's post frequently appears to be reciprocal favoritism.

This is the same. We feel compelled to repay the salesman for his free equipment inspections and instructions on fire safety. Furthermore, when the salesperson asks us to buy something right away, we feel pressured to comply in some way.

Prospect theory

Kahneman won the Nobel Prize for his work with Amos Tversky on prospect theory. The basic premise is that decisions and judgments are not always rational or optimal. They are instead founded on psychological principles governing how people perceive and process information.

Even though it is the same grinder, the grinder appears to be a better deal when reduced from $500 to $300 rather than from $310 to $290. Setting a higher reference point makes the first deal appear better, despite the higher overall price.

In this instance, the product, the regulator, was overpriced despite being reasonably effective. Given that the majority of people are unlikely to be familiar with the retail price of this kind of product, the salesperson stated that, although it was previously marked at Rs. 3400, he is currently selling it for Rs. 2000. We think the product is a terrific deal, even though we are unsure of its true market value. Rather than evaluating anything in absolute terms, we do so in relation to a reference point.

Contrast principle

The contrast principle is a psychological phenomenon where the perception of something is influenced by its relation to something else presented before or after.

Imagine a customer strolling into a shoe store with an interest in both shoes and a shoebox. By initially showcasing the higher-priced shoes, a strategic setting is established for the following item: the shoebox. With the customer already committed to the more expensive shoes, the cost of the shoebox is likely to be perceived more favorably, appearing comparatively less expensive in their eyes.

In this case, we could have declined the offer of Rs. 500 for a gas pipe. However, even though a Rs. 500 gas pipe is pricey, it does not seem that way if we recently purchased a Rs. 2000 regulator.

Rejection then retreat technique

It involves starting with a deliberately large and likely-to-be-rejected demand, the door in the face. Following the initial rejection, the requester presents the actual, smaller request, leveraging reciprocity. The perceived compromise increases the likelihood of a positive response to the smaller request.

In this case, if a person declines an offer to buy a regulator at a reduced price, offering him a gas pipe is a brilliant idea because it appears to be a smaller request. Even if he is not obligated to buy it, the person will most likely feel compelled to do so.

Main takeaway

The next time you encounter a door-to-door salesman, simply accept all of the information or inspections he has to offer and show him the way out the door, or offer him a glass of water to neutralize the sense of reciprocation.

Reference: Persuasion: The Art of Influencing.