The Game with Alex Hormozi - The Principles of Persuasion | Ep 507

Episode Date: March 7, 2023

Which principle of persuasion are you lacking? Today, Alex (@AlexHormozi) discusses the principles of persuasion and how they can be applied to businesses to sell more products and build successful companies. He also explains how the principles of authority, reciprocity, consistency, social proof, and liking can be used to increase sales and build trust with customers.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(1:08) - Reciprocity: Give what you want to receive(5:49) - Consistency: We judge people based on their actions(10:25) - Social proof: looking at others on how to behave or what to believe.(13:43) - Rapport: people like people who like them(17:06) - Authority: can be a powerful tool in persuasion(20:06) - Urgency & Scarcity: people value what is scarceFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Persuasion tool number five is authority. The reason it's so powerful is not because what an authority says is actually more persuasive in terms of the actual words they say, but because people put up fewer filters and accept more things as truth. Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning. I'm trying to build a billion dollar thing with Acquisition.com. I always wish Bezos, Musk, and Buffett had documented their journey, so I'm doing it for the

rest of us. Please share and enjoy. You can get anything you want in life if you can get other people to get it for you, which makes persuasion among the highest leveraged skills in the world. Think about it. If you just got one person to then just get everybody else to do things for you, then it means that's the only thing you'd have to learn in order to get whatever you want in life. And the good news is tons of research has been done on how to become more persuasive. And I have to give my nod to Robert Kaldini, the goat, who made most research accessible to the masses in his book

influence. What I want to do is show you the most effective ways I apply. his methods in my own business that now do over $200 million a year in combined revenue. And hopefully, they work even better for you so that you can grow your business $3 million plus a year so we can invest in it and grow it together. Tool number one is reciprocity. Give that what you want to receive. When you show kindness and generosity towards others, they're more likely to return the favor and like you as a result.

So for example, if you pay for your friend's lunch, that person now feels obligated to return the favor. They're like, hey, I'll get the next one, right? Now, fundamentally, they don't have to do that. And we already assume that it works that way because we've just been doing it for so long. We've been humaning, right? But fundamentally, if you paid for it, there would be no obligation for them to pay you back. We just almost expect it because it's that deep in our cultural DNA.

Now, Kaldini gives a really beautiful example of how to leverage this in business. And he shows an example for a waiter. So if a waiter puts a mint on the bill, they get 3% more tips, right? People get something and they're more likely to tip them a little bit more. Now, here's the second version of that. the waiter gives the person two mints. All of a sudden, the tips increased by 14%, significantly more. If you could get a 14% pay jump just by putting a second mint on every single thing,

why wouldn't you? I mean, it's worth paying $5 a month for a big bag of mints just to make sure you get paid. The thing is that in business, there are tons of these $5 mint bags that are laying around that you can immediately implement in your own business. And the third way they did the waiter example was that the person put a mint down, turn around, and put another mint on the table. and that created a 23% increase in tips. And it's the same reason that outside of a retail store,

as soon as you come in, they offer you a cold water. It's not because they're nice people. It's because they know that you'll feel indebted to them and be more likely to, A, stay longer, B, listen to them, and C, ultimately buy. So imagine how much it costs a store owner to give everybody who walks in the door a water. I don't know, $5 a day.

And if they get one person to buy extra a week off of that, which they probably get a lot more, is that worth the investment? It's probably the highest return on investment thing in his entire business. So here's how it works psychologically. Reciprocity activates the brain's reward system. And so it releases dopamine, which is a response to pleasurable experiences or stuff you like, including reciprocity.

All right. And so this helps build social bonds and creates positive feelings towards people you can reciprocate with. Right. Now, the main point is the reciprocity increases the feelings of trust and cooperation in social settings. So if you sell stuff or you want to persuade people, that's where you want to have the trust in cooperation, right? Cooperation is just another way of saying the person does what you want them to do. So here's how you can implement this in your life without being a weirdo. So years ago, I actually had this done to me and I saw the effect and it was wild.

All right. So there was this guy that I thought was a complete weirdo. Now, whenever I saw him, he would try and ask me like 100 questions. So he was local to where I was. He was in like some entrepreneur networks. And he would just like try and corner me. And I was like, dude, just get away from me. You know what I mean?

Like, there's like a hundred questions. He just wouldn't let me leave. So I started avoiding him entirely. Right? And so eventually I had to confront and be like, stop talking to me. Like, go away. Leave me alone. and be quiet. And so what happened is he was so ashamed of the whole experience, whatever,

he started sending me gifts every single month. So I'm talking about like $500,000 gifts every month, like cut co knives and like clothing, which was kind of weird, but it was expensive blue lemon stuff. Anyways, every single month he would send me this stuff. And for nine months, he sent me birthday cakes that were custom made and ice cream. Like, it was wild. And I still never responded. But after a while, I just started feeling bad because he just kept sending them and saying like, so sorry, I hope everything's awesome, blah, blah, blah, blah. And I was like, you know what? maybe I just saw him the wrong way and I was just like got him off on the wrong foot. And so even though I knew what he was doing, it still worked.

And I ended up going out to meet him again. Turns out still a weirdo. But the thing is that it actually worked even though I knew everything he was doing. And so that's to show you how powerful this stuff is. And to give you another one, me personally on the giving side, I tried to get in contact with Arnold Schwarzenegger when I was running gym once. I thought it would make a lot of sense. And I wanted him to endorse my book.

That was like my whole goal. All right. And turns out nothing worked. It also turns out Arnold doesn't really care about endorsing some kids' buck. But in order to get his attention, what Layland I did was he donated a million dollars to his charity. And then we ended up sitting down with Arnold multiple times, right? And because he used to be one of the famous people in the world, I knew I had to really step it up because he gets custom-made gifts all the time every single day. And so I knew I had to do something that was going to get his attention. And the thing is, I don't want to give him money because he doesn't need it. But I had to give a cause that he cared about money. And so that was ultimately the thing that did it for me. and out of reciprocity, he wanted to, like, meet me, et cetera. And so I'm telling you, this step works at all levels.

Now, mind you, the gift you have to do is proportional to the person they're trying to give to, right? But in the beginning, you can just start by giving people free gum when you're in class, which is the first time I learned it when I was in middle school, is that I'd turn around, open my thing, and I would hand everybody else gum. It turned out people weren't as mean to me when I gave them gum earlier that day. And so it was a tiny little thing that cost me almost nothing that made my life in middle school a little bit easier.

Tool number two is consistency. We judge people based on their actions. Consistency can be used in persuasion by asking someone to publicly commit to an idea or action. Now, publicly can be just in front of you, but it can also be widely to the world. All right, so if you encourage someone to take small steps towards the commitment that they already made and reminding them of the commitment and asking them to remain consistent with it, then people are more likely to continue down that path. And if you set the original frame and the original commitment, then you can get them to be consistent with that thing in increasing larger steps.

This is called the whole like foot in the door concept. All right. So it's the whole idea of like the salesman gets a foot in the door, like give an inch, get a mile. It's all around that. And the old saying exists because it's true. Like you are more likely. It's slowly boiling the frog. It's the same concept, right? Something that somebody would never say yes to originally would definitely be more likely to say yes to earlier. And so they did a research study where they had people post little signs that said drive safely. It was a note card like this. And they had it put them in the window for their neighborhood. And then they asked them two or three weeks later, hey, because you're somebody who's so committed to, this safety, commitment and consistency, reminding them of the thing. They said, would you be willing to put a big sign in your art? And people said, sure, and they put a big sign in the art. Now, they asked a different set of people, would you just be willing to put a big sign in your art that says this stuff? And way more people said no. And so just because they made the first ask and then the second ask in alignment and commitment and consistency, they were able to get way more yeses. So for example, a charity organization may ask someone to pledge a certain amount

of money publicly, right? And then they encourage them to take small steps towards fulfilling that pledged, like setting up automatic monthly donations, and then finally, maybe they remind them the commitment to ask them to do it even more, right? Because you're this type of person, you also want to sponsor this kid in China. Whatever. So here's how it works behind the scenes. All right? No one wants to be known as inconsistence. It's a bad character trait among humans. Like people don't like to be called flaky, a lot of people called volatile or erratic. It's sign of like craziness. So people don't like that. So they want to appear stable, consistent throughout their life. It's one of the problems that politicians have because as soon as they say something,

they have to stick with it forever even if they change their minds. But people have a natural tendency to be consistent with their past behaviors and decisions, especially when they've made a commitment publicly. That's why switching brains is so hard for some people. And the only way for commitments to work is that they have to be voluntary. You can't force someone to make a commitment. Otherwise, the persuasion doesn't work. They have to voluntarily do it, which is why you usually have to do it with questions. Get them to admit it. Get them to label themselves as a certain way or a certain type of person and then ask them to make an action in accordance to the thing they just voluntarily stated. So here's how I used it in my life, hopefully without being too much of a weirdo.

So in sales scripting, you ask lots of questions during the discovery phase. All right, so that's the early part of the sales conversation. Why are you here? What do you want? What is so important to you, et cetera? And you do that for two reasons. One, because you want to hear about the person's problem to make sure that you can actually solve it. But secondly, because you like commitment and consistency guidelines. So as soon as the person labels themselves a certain way, you then reaffirm it. So you say, hey, just to be clear, are you the type of person who X, Y, and Zs? And you want to make it a positive label. So you're the type of person who sticks with their commitments. You're the type of person who takes action. You're the type of person who cares about their family. You're the type of person who

values reinvesting in their business. You say these statements because you're laying the commitment consistency that you're going to ask them to stick with later on in the conversation. And the key point is that once they agree to the label voluntarily, you then later can make the request in a course step because if they don't decide to do the thing, they have to either make an argument for why they are still the type of person and yet still don't do the thing or they have to admit that they're not that type of person, both of which are much harder to do once you've voluntarily stated you are. So, for example, if I said, hey, you're the type of person. So, like, let me get this straight. Are you the type of person who, like, takes action and is willing to

invest in themselves? If someone says yes, then later on, if I say, hey, great, I think you should invest in yourself. Since you're the type of person who's really willing to take action and really likes to invest in themselves, then I think this would be perfect for you. Boom. And then I can make the ass because I just reminded them twice of the commitments they made earlier. And I'm asking to be consistent with those later during the close. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the words. We can out more entrepreneurs, make more money, feed their families, make better products, and have better experiences for their employees and

customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I asked you do is you can just leave a review. It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. and more importantly, it may change the world with someone else. Tool number three is social proof. People tend to confirm the actions and opinions of others in a given social group. And the reason they do that is because it's safer. If 100 people walk this way, well, they must have some idea.

And secret is they don't. But people are still wired that way, right? And so people look to other people for cues about how to behave or what to believe. And this is how we learn to be human, right? When we're little kids, we just look at other people and we say, oh, I'll do what they do. Because that's what humans do. And then you start becoming human. For example, if you see something on Amazon,

it has 5,000, five-star reviews, you're way more likely to buy it. Like, Amazon does this stuff because it knows it gets people to take action. It's a persuasive tool. And so if you've ever heard a laugh track on a show where it's like, ha, ha, ha, in the background, people then laugh more than if there is no laugh track, which is wild. But we are so conditioned to behave in accordance with how everyone else does that that laugh track persuades us. And in other words, gets us to do something they want us to do, which is laugh, better than anything. else. And so here's how I used it in my own businesses. One, I printed out every single five-star

review guy got online. So if you ever get a five-star review on Trust Pilot or your product gets a review, or if you have a brick-and-mortar location, this is where it kills, is that you look at all your Yelp reviews and you screenshot every single one of them. So I screenshot at all of them, and I framed every one of them so that floor to ceiling, my lobby, was five-star reviews. And then the other half was before and after pictures. So I'd have every single person, and this is how you can weave this into your business is that in the beginning, right when you take somebody on as a customer, et cetera, try and capture some sort of visual of their current state. And then later, when you have the opportunity, you can ask for the after. And so that you can put those

together and you can display those at the beginning of your sales cycle so that people are more likely to believe you when you say, I can help you. Because imagine a world where someone says like, hey, Alex, I don't think you can help me lose weight. And I would just like, look around the room, be like, really? And then I would say, how much proof would you need to believe? And at what point is your requirement for proof more unreasonable than the amount of proof I have? And that crushes their belief of whether or not they could do it, or at least that I was good enough to do it. If you struggle to get testimonials, there's two reasons. One is that you suck, seconds that you don't ask.

And so one of the things that I do is I also try to give an incentive to people to leave a testimonial. And so you can do that with high levels of service for a temporary period, which by the way can just give them a trial of something that's more expensive later. Great idea. Or if you're like in the digital space, you can give them access to exclusive media that like, they might not otherwise have, trainings, programs, stuff, et cetera, and you could just unlock it only for people who do the thing. Now, if someone doesn't want to freely give you a testimonial, do not push it. The way that I got over there, I said, I say, totally, like, I immediately back off. I'm like, totally understand. I didn't know we were, like, we had not done, like, I would go

totally other direction. But like, I didn't know we had done such a bad job that you wouldn't want to talk about us publicly. And they're like, well, no, no, no, no, no. I'm not saying that. It's like, either way, it's totally fine. What would I need to do in order for you to feel confident about being able to portray us public because now they have to answer the question. And if they'll give you whatever answer they will, if you can go do it, then do it and then come back. Because oftentimes it's like a tiny little thing. And it also gives you early indications if someone's not happy, which is also just great to have in business anyways. And so either you get more information or you get more testimonials, either way you win. Tool number four, liking or what

people like to call rapport. All right, so people like people who like them, right, or they perceive as friends. And the more you like someone, the more likely they are to say yes to you. Right. And so the liking principle states that people are more likely to be persuaded by those that they like and want to be like. And that's the second part's important. All right. Physical attractiveness, similarity and compliments of the three factors to get people to like you more, right? Duh. Right. But people still don't do it. And even if people know that other people are being paid, and they even did a research study to test this. They told people that they paid strangers to compliment them. And so they then got complimented by a stranger who they knew were getting paid to compliment them.

And guess what? They still like them more than strangers they didn't. And so even if you know what someone's doing, it still works. And they also found out that there's actually no cap to how much flattery someone will take, provided it's genuine. And so you can literally compliment someone endlessly over and over again, as long as it's genuine, and they will continue to take it and like you more. It's wild, but it works.

And here's how I've tried to use this in persuasion. So I always use the ACA framework, which is acknowledge what they say, compliment what they did about what they said, and then ask another question. You can get basically anybody to like you in a sales conversation or in a social situation where all you just acknowledge what they just said because it shows that you're listening and paying attention to them because the thing that people like more than anything that they pay people $100 an hour or two is just to listen to them talk. What do you think therapists are? They just sit there and they just listen to you talk because your mom or your boyfriend or whatever don't want to listen to you anymore. So you pay people to talk. That's how much people value it. They pay more.

They pay hundreds of dollars an hour just to get someone to listen to them. So, A, you listen, acknowledge what they said, C, you compliment them on what they just said, and how it ties to them being a great person in some way, some positive attribute. If you want to be a super saying, you link it to something you want them to be consistent with later, and then you ask them the next question to move them down the conversation. And so the way that I actually was able to keep my spirits high, because if you are ever front-facing in a role, whether it's customer service or it's sales or anything, If you deal with customers all day, then you get tired.

And so what I did was that I actually bought a mini trampoline and I put it next to my desk. And so I would meet with people. And I was doing 20 plus consults a day in person. And I would be bouncing on this trampoline. And they would look at me like a psychopath. But I would have this. I'd be grinning ear to ear. And I challenge you.

You cannot be in a bad mood to end on a trampoline. I've tried it. You can't do it. So you can be tired. You can't be tired because you just start jumping again and you're like, what am I doing? I'm such an idiot. And so you laugh. You don't take yourself too seriously.

And then what ends up happening is people would. clothes more because they're like, this guy's such a goof. And when I didn't have the trampoline before that, I actually used to do a cartwheel every single time before I shook someone's hand when they walk in my gym. So imagine you walk in the gym. Some guy does the cartwheel and it's like, hey, welcome United Fitness. Nice to meet you. My name's Alex. You would crack up, be like, who is this guy? But you know what you did after that? You give me money. All right? And so because you liked me automatically, even if someone was a sour puss, I could still turn their mood around. Because what they ultimately wanted to buy was the feeling that I was giving them during the conversation.

If you want to be more advanced about this, you can actually ask prospects to fill out a small questionnaire before they get on the phone with you, just so you have more information about them so you can make the call more valuable. And now you can actually use that information to build the similarity, find things that you have in common, show how you're similar, et cetera, and then ultimately compliment them on those things much faster earlier on. Best hundred bucks you can spend on your mood is $100 dribbly. I promise you it really works. Persuasion tool number five is authority. The reason it's so powerful is not because what an authority is what an authority is.

he says is actually more persuasive in terms of the actual words they say, but because people put up fewer filters and accept more things as truth. And so if a doctor says, X, Y, Z to you, you just take it as gospel. And the reason we do that is because it actually takes less mental effort. Because if you are constantly determining whether something's true or not all day, as soon as you find a trusted source, what do you do? You just listen to it, right? Which is why mentors are so valuable because it actually decreases our speed to decision making and getting action done, which is why we seek out mentors to begin with, which is maybe why you watch stuff on YouTube, right? It's like you want to learn stuff from a trusted source. And so if Warren Buffett gives

you investment advice, you can move on it faster because you just trust that he's that he's right, even if his advice is the same as a high school teacher, which means it has more persuasive ability independent of the message, which is why the messenger and the message are inextricably linked in terms of their persuasive power. So what do you have to do to do this? You establish credibility as an authority figure and expertise. You show diplomas, credentials, awards, industry, recognition, etc. And your track record, which is if you followed my channel at all, all I talk about is building your life resume and having a track record to stand on rather than puffing your chestening, having lots of charisma, instead just saying, you can believe me because of what I've done, not what I'm telling

you I'm going to do. And let me show you how powerful the authority frame is. Think about a man who can tell the president of the United States to drop his trousers and stick his finger up his ass. Well, a proctologist can do that whenever they want because they're a doctor. And in that frame, In the doctor's office, they are the authority. Wild, right? In the same degree, if you go into a gym setting, your reason personal trainers want to hang out at the gym isn't because they're fitness junkies, but because in the gym, it's the only place they have authority and status. Because everywhere else, they're just a poor trainer, but in that gym, they can get an executive of a Fortune 500 company to drop on the floor and give them burpees. It's wild, but it's true. So the way that I establish authority

is because of your track record, right? You show that you were good at this thing because of the things that you have already done. right and you can show that through the experience you have and through how you your expertise in terms of how you can explain a concept all right but on top of that if you had a third party accreditation then i printed out certifications for myself and every one of my trainers and so i was able because people would come in to be like well are your trainer certified i would say like one which ones do you want they would never have any idea and two i would say well just to put your concern at ease all my trainers are double or triple certified now mind you certifications are not accredited the united states meaning i could have 10

certifications that I certified them myself. No one knows, right? And so I'm saying this to say, I did pay for my trainers to get certified through actual ones, but I also internally certified them so that every one of my trainers was either double or triple certified. And that made them seem significantly more prestigious. So they had more authority. And so people would be far more likely to listen to me. And I could transfer that authority to my trainer so that they could run the business on my behalf. Persuasive tool number six, scarcity and urgency. urgency is a function of time, so promotion ends tomorrow. Scarcy is a function of units. I only have a hundred of them left. So that's how you can talk about it intelligently. People value what is scarce.

The reason gold is inherently valuable versus a rock is that there's just less of it. The reason De Beers has become this diamond conglomerate, even though rubies and sapphires are actually rare than diamonds is they actually control the amount of supply in the marketplace. They own all the diamonds. They keep them in vaults just so that they can keep the scarcity high enough on the diamonds to fetch a premium price. So the way that you implement this in persuasion is that you use limits, right? Limited time, limit supply, one time offers

to create the perception of scarcity and ideally actual scarcity. The other way to doing is talking about loss language. So instead of like, don't you want to get, you don't want to miss out on, right? Different way of framing the same concept. And they've actually tested this in copy.

Talking about missing out what people are not going to have, people have more loss aversion than they have desire to gain. So they'd rather save or not lose $100 then gain $100, even though economically it's the same. So you can use that in your favor when you're trying to persuade someone. So here's an example you might have heard of in the luxury good space. So if you've seen Chanel or Gucci or Prada or whatever, right, they actually don't tell the

stores how much of any item they'll send. So they'll have a new spring line and they'll send one or two or three purses and they won't tell the store how many they're going to send. And so in a real way, the salespeople have the same concept of urgency. They probably figured it out at corporate that even. even if they said, hey, say that we don't have them any purses, the salespeople like, actually we got more in the back. And so they just actually control the whole thing centrally. They only send them and they're like, I don't know when I'm going to get the next one in,

or if I'm going to get another one in at all. And so people are more likely to buy. But then they took it even further. And during COVID, if you saw it, there were lines out the door because there's like one person in, one person out. You know what stores kept out? Will everyone else let it go? The fancy stores. Why? Because they want to hold a scarce resource. They want to show that there's tons of demand. That's a little bit of social proof of people like you have to be special. exclusive in order to get in. And if people wait for it, it is scarce and therefore more valuable. Now, a more common example is like a merch drop. So if I say I have a new hat available in my store, that's one thing. But if I say that I signed a hundred of them and that's all there are and I'll never

make this specific color again, I've made them one of a kind. And if you have even the slightest desire to have one of those hats, you're now more likely to get it if you know they're limited. Because you want to do it now before you miss out forever. Now, the key to do it, this is not being fake. It's the number one thing I can say. If you have scarcity, and the thing is is that people want to have scarcity, but they don't want, they want to sell as many units as possible. I get that. I don't know how to say this to you differently besides, trust me, if you actually put true scarcity on something, you will sell more. When I had my massive sales team when we were doing turnarounds, so we had eight sales guys that were launching locations, whenever we would do

half of our sales in the last 25% of the period, sometimes even more than that, sometimes like 60 or 70% of the sales. So when I had my gym lunch business where I would turn around, this is before I did licensing, I had eight guys that fly out to location. We'd spend 21 days, three weeks on location. Here's the crazy part. Two-thirds of the sales happened in the last one-third of the time period. And the lead flow was the same. But here's the thing. The sales guys knew that their time was going to be over and they needed to leave and get the check they wanted. And the people that were coming in, the urgency of like, you have to sign up now in the beginning was like it's three weeks away. But when it was two days away, everyone signed up back to back to back because it was limited

in time. Now, some of the locations also had a limit in terms of their actual capacity. So we could only sell 80 people. And so we knew the number. And the thing is, it would be slow in the beginning and then it would speed up near the end because the scarce of the resource got, the faster it sold. So if you can handle 20 people a week in your business or you have X amount of product, right now you probably have some sort of cap in units to be sold or ability to provide service. Tell people your limits and you'll increase their desire. The reason Amazon still says 23 left in stock is because they know that more people will buy it if they see that there's limits. So if I said, hey, I can see you a thousand customers from aren't, you probably couldn't take them.

So just be explicit about how many you have left and you'll actually sell more.