The Mindset Mentor - How To Be More Persuasive

Starting point is 00:00:00 Welcome to today's episode of the Mindset Mentor podcast, the number one mindset podcast in the entire world. I'm your host, Rob Dial. If you have not yet done so, hit that subscribe button so that you never miss another podcast episode. Today, we're going to be talking about how to be more persuasive. I'm going to talk about a powerful persuasion technique that you can use in your life that will make you more of a powerful communicator, we can say. But you must promise me that with what I'm going to teach you,

Starting point is 00:00:36 that you will use it for good and don't use it for bad. Because before we talk about how to be more persuasive, let's talk about the word persuasion because it can have a really bad connotation, but it doesn't really have to. We are always trying to persuade people. That is actually something that's very natural for a human. If you look at a four-year-old, a four-year-old is constantly trying to persuade you into something, into giving them candy before dinner or letting them go outside in play when they just took a bath or whatever it might be. It is very natural for us to try to persuade, try to get somebody else to do what we want them to do or what we want to do or to see our side of whatever our perspective is. Persuasion, what it really is more than anything else,

Starting point is 00:01:21 it is just the art of helping other people understand and hopefully embrace a new perspective in some sort of way. And so today we're going to talk about this thing that's called, it's a psychological phenomenon that is called the anchoring effect. And the anchoring effect, really what it refers to is the tendency for people to rely heavily on the first piece of information they receive. And that information they receive, the first piece, usually changes their decisions on anything else that comes after it based off of the first thing that they learn about something, which is the anchor. That's why they call it the anchoring effect. And the effect significantly influences a person's judgment and their behavior based off of the first thing that they learn. So today we're going to talk about basically the

Starting point is 00:02:10 psychological mechanisms behind the anchoring effect, the impact that it typically has on your decision making, also how it's been used against you. You're going to hear me give examples. You're going to go, oh my God, that salesperson did that. Or, oh my God, this person did that to me and I even realized it. And so you're going to understand the impact and the decision-making that usually comes from it. And then also how it can be, how you could use it if you want to, but also how it can be mitigated and you can go, oh, I see what you're doing. Right? So the anchoring effect was first identified by two psychologists in the 1970s basically what they found was that people tend to anchor to the first piece of information they receive around something and then they adjust all subsequent judgments based on that anchor rather than

Starting point is 00:03:01 considering all of the information in isolation which is is really interesting if you think about it, is you can learn something about someone and then you could, oh, this person is so bad, such a bad person. You can learn all these bad things about that person, right? And then that's what's in your head. That's the anchor. And then all of the subsequent information

Starting point is 00:03:19 that you could get almost means nothing, even if it's like, oh, they've done this and this is an amazing thing. And they've started a business that's been changing the world and they've been doing all this philanthropy. That still is gonna be judged based off of the very first thing

Starting point is 00:03:35 that you learned about them. And it's really hard to change that. This is the reason why first impressions are really, really important. It's not just a cliche of like, oh yeah, first impressions matter. No, like first impressions really do matter when you first meet somebody, but also they really matter with anything that you learn.

Starting point is 00:03:51 So this phenomenon is believed to be a result of the way the human brain tends to process information by grouping things together. And so the first question before we dive into it and how it's used and how you can use it is that always pops into my head is like, why? Why does our brain anchor to the first question before we dive into it and how it's used and how you can use it is that always pops into my head is like, why? Why does our brain anchor to the first bit of information and sometimes ignore all of the rest of the information and we just stick on the first thing? The anchoring effect is thought to occur because brains are wired. All of our brains are wired to see some sort of patterns.

Starting point is 00:04:22 And so this is how we tend to make sense of the world. And when we get new information, we instinctively compare that new information to information that we already have in order to determine, hey, is this important? Does this matter? And what's really interesting is when we get a first anchor in some sort of way, because of the fact that humans, we like to stay consistent. So if that first bit of information, like this person is bad, is what we have made our mind up about, then when we get all the information about this person being good, we're like, well, no, they're still bad. And the reason why we tend to do that is because of just the confirmation bias. We want to confirm what we originally thought at all points in time. And so

Starting point is 00:05:06 don't worry, I'm going to give you a lot of examples of this and how it works. But in the case of anchoring, the first piece of information that we receive acts basically as a reference point or a anchor for all upcoming judgments and decisions that we have. So therefore, the anchor can be the most important piece of information that someone receives when communicating effectively, which if you're trying to be a great speaker, if you're trying to be a great communicator, this is something that's really important for you to understand is the anchor that somebody is getting to make all of their judgments and all of their decisions after the anchor. And so one of the key impacts of the anchoring effect is that can lead to what they call

Starting point is 00:05:43 systematic biases in decision making. And so this is why, in case you didn't know this, I'm about to ruin a couple of things for you. A lot of clothing companies raise their prices on their tags and then they put a discounted price on the tag because it makes the clothing seem worth more. And so, you know, an example would be a thousand dollar jacket and it's crossed off and it says 600. In your mind, you're going, oh my God, what a deal, right? I'm getting $400 off the price, the original price of this jacket. That's 40% off. Amazing deal. You know, a thousand dollar jacket for 600. This is awesome. But the company was already planning thousand dollar jacket for 600 this is awesome but the company was already

Starting point is 00:06:25 planning on selling it for 600 anyways and so they're selling it for what they thought they were going to but they're changing your perception of the jacket based off of the anchor one thousand dollars original price four hundred dollars off oh my god what a great deal they're already planning on selling it for for 600 i see this all the time. Whenever I go to Europe, we go to Italy usually about once a year. And we go in a lot of the same cities. We go to Florence and Rome a lot. We kind of go in the same areas. We have restaurants that we really like. We always hit back up. And I always see the exact same stores with the same discounted signs, 50% off, limited sale, and everything is 50% off in the damn store. And it always has been for years, seven, eight years. Every year that I go back, I'm like,

Starting point is 00:07:10 it's the same thing. But people who are walking by are like, oh my God, I'm on vacation. I can get 50% off of some Italian leather jacket or whatever it might be. They get all excited about it. And that is how companies can use the anchoring effect. Another example is when looking at the price of a product and say everything is 25% off. You go into a store, the whole store, like I just gave you an example of. Let's say you're walking around in Italy and you see, oh my gosh, this store,

Starting point is 00:07:40 everything's 25% off. And you're like, oh, let me go into it. And you walk into that store and you find something that you like for 25% off. And you're like, oh, let me go into it. And you walk into that store and you find something that you like for 50% off. Once again, you're now comparing that 50% off to the 25%. You're going, oh my God, amazing deal. Because I'm getting more off than what was originally advertised. But if you looked at all the tags of all of the products you'd see that like all of them are 50% off and so you're expecting 25% off the anchor and you found 50% off oh my god amazing deal like if you walked into a store expecting 25% off and then you saw a tag that said 5% off you'd be like that's not a good deal everything else is 25% off so you think I'm getting an even better

Starting point is 00:08:22 deal than I expected that is how the anchoring effect is used. I'm about to ruin Black Friday for you as well. Black Friday, just FYI, they found that most companies usually raise prices about 23% the month before Black Friday. So the entire month before Black Friday, most places on average raise their prices 23%. So you're not really buying a discounted price a lot of times. You're buying the price they originally wanted to sell it for, but they raised the prices last month and then discounted it. So you're paying the same usually as you would if you had bought it like six months ago.

Starting point is 00:09:03 I know, right? It's pretty crazy. They're using, advertising companies use your brain against you in a lot of different ways. And this is why it's really important for you to constantly learn about psychology, neurology, neurobiology. How am I to use my brain the best that I possibly can? And then how am I to make sure that my brain is not used against me? Because a lot of companies, truthfully, they exploit you. They exploit your psychology and the way that your brain works because they understand how it works a lot better than we do. And retailers can get away with raising their

Starting point is 00:09:32 prices as long as it looks like the product that is up for sale was at a quote unquote full price for what this article I was reading, a reasonably substantial period of time. So they raise the prices 30 days before, and then they discount the prices. And you're like, oh my God, I'm getting such a great deal on this TV. When in reality, if you had bought it three months ago, you'd probably be paying around the same price, right? So in 2012, there was a presentation that was done by the CEO of JCPenney's. He gave a presentation about how the company's sales were going at the time, and he showed that customers were receiving around a discount of about 60%. So it's like, oh my God, the average customer gets about a 60% discount. And that was up 38%

Starting point is 00:10:18 from a decade earlier. So 10 years before, it was 38% lower. But here's the crazy part. The twist is that the average customer wasn't saving more money. In fact, the average price paid by customers stayed about the same over that period of time with inflation, which means that now they were getting a 60% discount, which is 38% higher than 10 years ago. But the average sale based off of inflation was around exactly the same. So the customers thought they were getting this amazing deal, but in reality, they really weren't. They were paying basically about the same. So the reason why this is important though, is for you to understand when you actually go out to buy stuff. When you go car shopping,

Starting point is 00:10:58 they will always show you the most expensive car first. So if you walk onto a dealership, you're like, hey, I'm thinking about buying a car. They're like, cool, what are you looking at? They're going to show you the most expensive car first because then the other cars that you look at after that most expensive one seem like even better deals. They are anchoring your mind to the big price. Oh, this huge price. And then when you see something that's $20,000 less, it seems a great deal you know and I knew this was happening last year we ended up buying a BMW we went on to the to the and I was like let's test this I just want to see what these guys do I'm gonna see how they've trained them right and so told him what we were interested in in the first crazy guy cool I got a few that I want to show

Starting point is 00:11:39 you I'm gonna go ahead and bring this one out he brings it out and it is the most expensive out of all of them. It was $108,000, right? And then he showed me three other cars, three other different vehicles. Every one of them, the next three were in descending order. So he didn't show me the cheapest car first and then go to the most expensive. He started the most expensive car first and then went to the least expensive out of it. I knew exactly what he was doing. And so I was like, all right, cool. I see. He's going to bring the most expensive car first with all the bells and whistles so that if I anchor my mind to that $108,000 BMW, well then if he's showing me one for 60, I'm like, oh my God, this is a great freaking deal, right? So that's $48,000 less. And I'm still getting almost

Starting point is 00:12:23 all of the exact same bells and whistles as the one that's $48,000 more. And I'm still getting almost all of the exact same bells and whistles as the one that's $48,000 more, right? So let's say that you want a new car. And then what you're going to do is you're going to go through and you're going to say, honey, you know what? Let's get a new car. I think we've been needing to get some. Once again, use this for good, everybody. Use this for good. But let's just say that you're wanting to show your husband the cars that you're interested in. You want a new SUV. You're having so many kids. You just want to make sure you can fit all those damn kids, right? You got an army. You want to make sure you got a big SUV. So what do you do? You pull up five cars, five SUVs that you like, and what are you going to do? You're

Starting point is 00:12:59 going to show him the most expensive one first. And then what you want to do is then at the end, show him the one that you really truly want. Why? Because it's going to seem like an amazing deal. Now, you're not doing anything evil in any sort of way, right? What you're doing though is you're just using the anchoring effect so you can see, oh, okay, let me go ahead and show you the most expensive one. Oh my gosh, this SUV is $90,000. And then you have one that she likes that's 50. He's gonna be like, well, I like the one at 50. And you're like, oh my God, I like the one at 52. Right? So this is something that you could just kind of make sure that you're aware of. The anchoring effect also really has a big impact on negotiations as well. And so what they found is that the initial offer can significantly influence the

Starting point is 00:13:42 outcome of a negotiation. And so researchers have actually found that when negotiators who make the very first offer have an advantage as the first offer can serve as an anchor that influences the other party's subsequent behavior in their decisions and their judgments that they make. And so this is why if you're in a negotiation, whatever that negotiation might be, make sure that you are the first one to put your offer out there. You want to try to be the first one to make an offer. And so it's important for you to understand that. As a consumer, it's important for you to understand all of this stuff. I remember there was one time I was basically kind of being pushed out of a company. There was a whole bunch of things. People

Starting point is 00:14:25 were moving and somebody was moving into my territory and pushing me out. And I was like, kind of getting screwed. And they said, hey, listen, we're going to pay for all of your expenses for you to move and what it's going to be for you to break the lease. And based off of everything that you have and all this stuff, we're going to pay for it in order for you to move to a different territory. And so I said, OK, cool. And so I talked to one of my friends who worked in the company. He's actually the number one person in the company. And I was like, hey man, here's what I'm thinking it's going to be. Should I just ask for this? And he goes, no. He goes, figure out every single penny you could possibly be, you could possibly ask for,

Starting point is 00:15:03 and ask for the most amount of money for you to move territories that could possibly be, you could possibly ask for and ask for the most amount of money for you to move territories that you possibly can, because they will not give you what you ask for. They will give you less than you ask for. So I was originally honest. I think I was, I don't remember the exact numbers, but I want to say it was going to cost me like $4,000 in order to move. And he's like, no, have you considered this? Have you considered the loss of revenue that's going to be coming in the two weeks have you considered this? Have you considered the loss of revenue that's gonna be coming in the two weeks that you're moving? Have you considered the fact that you're gonna have to hire a new receptionist

Starting point is 00:15:29 and that's gonna take you time? And when he started talking about it, he's like, you gotta ask for like at least 15,000 because look at all of these ways that you're losing money. So it's not just like breaking leases, there's a bunch of other stuff. And so I was like, oh, okay, I didn't even consider that. So I ended up going back and my proposal was like,

Starting point is 00:15:43 hey, it's gonna cost me at least $15,000. Here's all the reasons why. And I gave all of the exact reasons. And they ended up giving me like 10,000. I was originally going to ask for four. And so I ended up moving and being able to be in a better place. But it was just like, and it wasn't like I was trying to hustle the company or trying to screw anyone over. There were just things that I wasn't considering. And my friend was like, listen, always ask for more than you think that you need because they're never going to give you the first number. And this is before I knew anything about the anchoring effect. And so it's really important for us to all understand this. It's really important for you to understand this when you are a consumer somewhere. Like really, when you go in there, you might be like, oh my God, this is a great deal. Well, just check, see.

Starting point is 00:16:21 You know, see if there's maybe everything in the store is 25 or 50% off, go online, see if there's a better deal online. Like it's just important thing to think about in business. It's really important for you to think about, you know, if I'm going to go and negotiate something, um, if I'm getting hired in a place, well, I want to try to negotiate a salary much higher than the salary I actually want to land on. If I'm in some sort of negotiation for a car, if I'm in negotiation for selling my company, if I'm in a negotiation, I'm always going to want to ask for more. If you're selling your house, ask for more than you think it's worth. Because then if offers come in less, you're probably going to get exactly what you want. And then in relationships, it's also

Starting point is 00:16:57 really important to remember to keep in mind that, hey, you know what? This is the only time that this person is going to meet me for the first time. And that is really going to have an anchor of what their judgments of me are in the future. So even though I am pretty fucking tired, I'm going to try to show up as the best that I possibly can. I'm not going to show up fake, but I'm going to show up as the best version of me versus, yeah, well, hey, nice to meet you. I'm Rob, right? So it's really important for you to understand the anchoring effect, which is basically the first thing that people learn. All of their judgments, all of their decisions, all of that stuff, everything they compare to is going to be compared to the very first thing that they learn about something or

Starting point is 00:17:37 someone. So that is the anchoring effect and how to use the anchoring effect in relationships, in conversations, in relationships, in conversations, in negotiations, in business, in everything that you do. So that's what I got for you for today's episode. If you love this episode, please share it on your Instagram stories and tag me at RobDialJr, R-O-B-D-I-A-L-J-R. It really, really, really does help more than you know. Every single time you guys share this on your Instagram stories, it is the way that this podcast grows and how people who don't listen to us become aware of it and go, hey, maybe I should give it a shot. It allows us to really help change the world even more. So if you would share it on your Instagram stories,

Starting point is 00:18:12 share it wherever you can, I would greatly, greatly appreciate it. And I'm gonna leave you the same way I leave you every single episode. Make it your mission to make someone else's day better. I appreciate you and I hope that you have an amazing day.

The Mindset Mentor - How To Be More Persuasive

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