Categories
Sales Start Up

Using psychology in sales

Many of us grossly underestimate the effort, skill and persistence it takes to sell something. The theory of “Build it and they will come” applies to a small percentage of products and is usually serendipitous.

A sale is an exchange of value. It is also a persuasion. You are influencing someone to make a decision to buy your product. Since it involves people and emotions, psychology is therefore involved. Understanding the psychology of compliance (someone is complying by buying your product) should provide a distinct advantage in your sales process.

Recently, I read this book “Influence – The Psychology of Persuasion by Dr. Robert Cialdini” He is both a Distinguished Professor of Marketing and Regent’s Professor of Psychology in Arizona State University.

He lays down the “Weapons of Influence” as the following

1. Reciprocation
2. Commitment and Consistency
3. Social Proof
4. Liking
5. Authority
6. Scarcity

In reciprocation, there is a give and take. A small give is offered by the influencer as a strategy to take from the buyer. The author cites the now defunct practice of Hare Krishna devotees “giving away” flowers to strangers at public places to incentivize them to donate to their cause. The author states that the impressive aspect of the rule for reciprocation and the sense of obligation that goes with it is its pervasiveness in human culture.

In today’s digital and social world, influencers actively build a following by actively liking pages, tweets, and blogs of other people. In the physical world, a dinner, a golf outing etc. create opportunities for using reciprocation.

Another variation of reciprocation is reciprocal concessions. This is when the influencer steps back from an initial request that gets rejected to a backup request that has a higher chance of compliance. An example would be when your push for an Enterprise or Premium Edition of a product gets rejected and you come back to sell the Pro Version of the product. This needs to be structured well to be successful.

In Commitment and Consistency, the psychology being used is that Human beings want to stay true to their commitments. Psychologists see that consistency as a powerful principle, according to the author. So, if you are able get an early commitment from someone, it is a wonderful thing. The odds are that they are going to keep that commitment. In a public setting, it is even more powerful. When fund raising, CEOs should try to get commitments really quickly from individuals, however soft.

Social Proof is a powerful tool used by influencers to get people to comply. The laugh track in TV sitcoms is cited repeatedly as a tactic to get audience to comply. It seems highly effective. The principle applied here is that we determine what is correct by finding out what other people think is correct. Modern media has used this effectively by publicly displaying product reviews, likes, shares, comments and much more. There are some really astounding case studies of influence of one’s behavior based on observation of other people’s in similar settings.

It has been proven time and again that people tend to comply with requests from people they like. The Liking principle is used by Sales Professionals to enhance their likability factor with customers. Acting on referrals from friends is one classic example. Endorsements and recommendations from people that you like influence you to repeat their actions.

Authority or “directed deference” is a powerful tool used by advertisers. Companies spend a ton of money on celebrity endorsements, because it has been proven to work. We have all at various points of time complied easily with authority. As a sales professional, it would help a great deal if you can identify and get endorsements from specific authorities or entities.

As the final weapon, scarcity relies on the psychological principle that if something is thought to be scarce, it is deemed very valuable to possess. There is lots of case studies for this.

As a sales professional, it is very important to understand the psychology of your buyer. Some of these techniques can be abused, so one has got to use them ethically. It should be realized that the other person may be aware of the persuasion principles and is actively resisting you by saying no.

Overall, I found this book to be a very good read, chock full of case studies and real life examples. It can be a fast read as some of the many studies can be skipped.

Happy Selling!

Featured Image Credit: study.com

Categories
Entrepreneurship Sales Start Up

Wisdom from a startup veteran

Samir Bodas is the CEO of iCertis a Bellevue WA based company providing SaaS based contract management software.  Recently, he gave a talk at a TiE event on Scaling a Startup. The interactive questions took us to areas other than scaling.  Few of my observations:-

  1. If you want to do a startup, just do it. 9/10 people don’t even start despite having an idea. 9/10 people who start something don’t succeed. Don’t be in the former camp. You will learn a lot by doing, even if you fail.
  1. Try to create a wave or ride one. Creating a wave is tough and requires the likes of Bill Gates, Steve Jobs, and Mark Zuckerberg. If you are riding a wave, get onto it early. Have a reasonably good idea that it will be a big wave. iCertis bet early on the cloud in 2009. Betting on Azure was pivotal in getting into the Microsoft ecosystem.
  1. Serendipity plays a crucial part in startup success. Many talented folks have not succeeded in building a successful company and many hardworking folks have failed too. Going back to #1, you will not know until you start something.
  1. Focus your startup by going deep in an area. In the original theme of “ERP Surround Software”, his company tried other areas such as transportation logistics but decided to focus on contract management. Once they did that, it was easy to raise money from VCs.
  1. In enterprise sales, respond to RFPs. Common wisdom is that this is cumbersome and costly process for startups, but could be an extremely valuable opportunity.
  1. It’s not necessary to have a full product before starting sales. Project confidence in your abilities and do the demo. The customer has likely not checked your competitor’s full capabilities.
  1. During early stages, have the Engineering team work extremely close with the customer. They were able to have 6 week turnaround time from customer ask to delivery.
  1. A sign of scale is when you can sign deals without seeing the customer. Their last 2 deals in Europe was signed, all via remote interactions.
  1. Getting your early customers into a customer advisory council is powerful. They are usually your strongest advocates and want to see you succeed.
  1. A company’s culture is captured in its values. Values need to be written down and adhered to across the board and consistently for true scaling of the company. Don’t get surprised if your customer asks you about your company’s values.
  1. Keep sales folks hungry. Compensate them enough to survive, but not enough to give them luxury of waiting for next year. Be maniacal about targets and don’t be wimpy about firing people that don’t meet it.
  1. Samir gets invited to all sales calls. His calendar is full of sales calls. Important thing is to listen for tone from the customers. As CEO, don’t be afraid to engage at the level of each sales call.
  1. With SaaS, it is not necessary to build a large remote sales force or have Satellite offices, unless situation demands it. Due to lack of skilled sales people in Seattle, iCertis has offices in Dallas, Philadelphia and Bellevue.
  1. If you can pull it off, having relationships with Industry Analysts is invaluable. Usually, analysts will look for you to have at least 20 customers, unless you are doing something completely differentiated in the space. They are a great source of leads.

These stood out for me. Overall, great stuff from Samir and thanks to TiE for organizing the Startup on TAP event.

Categories
Code Software Projects Start Up

Technical Debt

Addressing Technical Debt

Agile is the modern methodology of developing software. The Agile methodology is more popular in startups and small companies than large organizations, although that trend is changing. A sprint represents a time period where a collection of features, taken from a backlog are planned for development. Sprints can be 2 weeks to 30 days. Each company’s mileage may vary.

Speed to market is critical when developing software in a startup. Keeping users engaged with new features and improving existing features quickly is a good recipe for successful retention. You have a need to build your product quickly to gain traction to attract investors. Unless you are a successful serial entrepreneur with just an idea. I find that many startups use outsourced development teams to build their MVPs or their first customer facing projects, because they don’t have enough money yet for an in-house engineering team.
Categories
Business Start Up

How about those podcasts?

I am a regular podcast listener. Commutes, walks, waiting, long drives happen often and with the smartphone in one’s pocket, it’s easy to tap into a variety of interests instead of just interacting with a bunch of apps.

The quality and variety of podcasts has enhanced over the years. Here is what’s on my podcast shelf.

podcasts

​For news, my go to podcast is the BBC. No one covers global events like BBC does. It provides a unique perspective into lives of people everywhere.

Serial was initially a must-have, but after 4 episodes, it turned out too long and I realized there was no actual end in sight. It is dormant now, but not yet gone.

Pitch is a recent addition. Every week or so, a startup pitches. A investor panel evaluates and votes on a follow-on meeting. I like the format, as it is not all drama like Shark Tank.

TED Radio Hour is just brilliant. With a disarming nature, Guy Ross does a wonderful job. I have sounded so wise since I started listening to this.

Economist is better on the written side than the podcast. Time for it to go, soon!

podcasts

I enjoy Tim Ferriss’s podcast. He is a great interviewer and is able to attract an eclectic mix of guests. Sometimes he turns the podcast entirely over to a guest, who answers questions submitted to a Google sheet by listeners of the show.

The Dog podcast is a nod to needing to devote both mind and body to the duty of dog walking. I did get some useful tips on how to deal with July 4 fireworks.

I like RadioLabs long form podcasts. Frontline is a perennial classic, although their frequency of podcasts is not too good.

podcasts

HBR ideacast is definitively awesome. Their recent series on what it means for digital transformation of businesses shows their ability to go deep, analyze an important trend and provide useful insights for the listener.

So many things are happening in the IoT space. This weekly podcast is a good way to keep abreast.

NPR Planet money is a delight. They do short 10-15 segments on finance, economy, business, companies. I have always taken something useful out of every episode.

I like startups for the rest of us. They deal with some useful topics on sales and marketing that one can refresh upon and attempt implementing in one’s own startup.

I haven’t played much of Golf recently and this podcast is to remind me of good old days, where even snow could not stop a round.

podcasts

Kara Swisher is a dynamite. Her ability to skewer Silicon Valley while in the midst of the action is refreshing. She is great to listen to more than her writing.

Freakonomics should be in everyone’s shelf. I wish I can say they are great. I’ve had more misses than hits.

Happy listening!

Categories
Start Up Uncategorized

Is hard work irrelevant?

In a recent NPR Planet Money podcast, they ask the question – “Is hard work irrelevant”? I have stolen the title directly from them.

They take the example of Netflix as a company that evolved into the culture of only focusing on the results. It did not matter how hard someone worked at their job at Netflix. If your role was no longer needed because the business had changed, Netflix was keen to let you go. The irony is that the key person in Netflix that engineered this culture had to be let go, as she did not possess the skills in dealing with Hollywood Studios and the change of focus to streaming. We are not going to focus on the “being let go” aspect of one’s job in this post.