A fascinating interview with Cialdini from ‘The Knowledge Project’ podcast. I’ve tried to capture a few of the nuggets below.
Full interview: Link
Why Charlie Munger gave Cialdini a Berkshire share worth $75,000
McDonalds using ‘reciprocation’ to increase sales by 25%
How asterisks created ‘social proof’ for Chinese restaurants
The best website star rating is 4.7 not 5
Bose – using the ‘authority’ of doctors to drive a 50% increase in sales
The best performing websites rely on ‘scarcity’
Using ‘commitment’ to drop restaurant ‘no shows’ by 67%
How to shift someone’s perspective / personal choices
A great question to ask a prospective employer or customer
The power of saying ‘we have a deal’ (before you do)
Influence on Munger & Buffett:
“I got a letter in the mail, maybe 25 years ago from his partner, Charlie Munger. I opened this envelope to find a share, an A share of Berkshire stock, which at the time was worth about $75,000.”
“And he said, “Your book has made us so much money that by the principle of reciprocation ... you are owed something in return.”
McDonalds – reciprocation driving a 25% increase in sales
“In all human societies, we are trained to live by a particular rule, the rule of reciprocation that says we are obligated to give back to others who have first given to us.”
“And I love a new study that was done in McDonald’s in Colombia and Brazil, where researchers did a study for a week every family that came into the McDonald’s locations, the children got a balloon from the McDonald’s management. Half of them got the balloon as the family was leaving, as a nice thank you for coming into McDonald’s and purchasing food. The other half each kid got the balloon as they entered … Those families bought 25% more food because they had been given something first”
“They (people) don’t recognize the power of this rule … They’re not cognizant of the fact that there’s such a strong rule in every human culture that says you must not take without giving in return.”
Chinese restaurants using the social proof of asterisks to increase purchases by 13% to 20%
“If we point to a genuine comparability that exists between us and the another individual, that person feels a greater rapport with us.”
‘There was a study done in Beijing, China that I love, it shows you the cross-cultural reach of this. So in Beijing, researchers arranged with the managers of a string of restaurants to put a little asterisk on certain items of the menu that people got when they were to order. Those items that got the asterisk then became purchased 13% to 20% more frequently. So what did the asterisk represent? It was the most popular item on the menu.’
Social proof – the nuances in star ratings
“There was a great study that looked at which star rating on a product review was most likely to produce a conversion from a prospect to a customer. It wasn’t a five-point rating, it was a range between 4.2 and 4.7.”
“People were onto the tricksters who were loading their evaluations with all of these positive things. So if it was below 4.2, people will say, “Well, maybe this isn’t such a great product. If it was above 4.7, they got suspicious.”
Bose – using authority + scarcity to drive a 50% increase in sales
“People want more of those things they can have less of.”
“What we did was to change the word ‘new’ to ‘hear what you’ve been missing’. That change produced a 45% increase in sales. The idea of loss is what people really want to avoid.”
“Further, by simply by moving the testimonial from the right of the add … to the top left … we were able to increase sales by a further 15%.”
The best performing websites rely on the ‘scarcity principal’
“There was a study of 6,700 e-commerce sites and AB tests that were done for various components inside those sites … The top six were all principles of social influence, and the top one was scarcity of supply … Second was social proof … we had 1,000 customers last week … this week we have 1,500. And number three was scarcity of time … that is … limited time offers.”
Commitment bias – dropping restaurant ‘no shows’ by 67%
“She would say, “Thank you for calling Gordon’s. Please call if you have to change or cancel your reservation.” He asked her to change two words, “Will you please call if you have to change or cancel your reservation?” And then he asked her to pause and have people fill that moment, and they all said, “Of course, sure, glad to.” And that was their commitment. And ‘no shows’ dropped by 67% immediately and never went up because he had gotten them to make an active, public voluntary commitment to something and now they were going to live up to it to a greater degree.”
Commitment bias – getting staff to do what they say they would
“For anybody like a manager, anytime you’re running a meeting and you’ve giving members of your team tasks to perform and complete before the next meeting, don’t let anybody out of that room until you ask the question, will you be able to complete this by our next meeting, and pause. If the answer is no, that’s actually good for a manager to know.”
How to get someone over their commitment
“At the time you made that decision, you did so by evaluating the information you had. However, there is now some new information that has come to light, which I know, as a curious person, you would like to consider. Given this new information, do you still think your original choice is a valid one?”
The best way to win a job or customer
“I’m very happy to be here today … could you please answer a question before we begin … why did you invite me here today? What was it about my resume that spurred you to make me a candidate?”
This would then cause the employer to state back to the candidate the things they found most important … giving the candidate an insight into what attributes they should focus on.
The power of saying ‘we have a deal’ when negotiating
By stating to the other party … ‘We have a deal … we just need to resolve a few matters’ … the words ‘we have a deal’ creates loss aversion.
And we know from Daniel Kahneman - you’re twice as likely to jump at an opportunity because you don’t want to lose it.