The Mindset Mentor - How To Master Persuasion

Starting point is 00:00:00 Welcome to today's episode of the Mindset Mentor Podcast. I am your host, Rob Dial. If you have not yet done so, hit that subscribe button so that you never miss another podcast episode. And if you're out there and you love this podcast, you're going to love also going to my YouTube and subscribing there. We're putting up three to five new videos every single week so you can master your mind to become a better person. Some of them are the same as this podcast and some of them are new and completely different. So if you want to join us on YouTube, go ahead and join us on YouTube. Just type my name, Rob Dial, inside of the search bar. Today, we're going to talk about a powerful persuasion technique to use in your life and to make you a more powerful communicator.

Starting point is 00:00:48 And you must promise me with what I'm going to teach you, it could be used for bad, but it can also be used for good. So if I'm going to teach you this powerful persuasion technique, you must promise me if you're going to continue to listen that you use it for good. But before we dive into it, let's talk about the word persuasion because persuasion just, it has a bad connotation, but it doesn't really have to. We are always trying to persuade. Actually, persuasion is very, very natural. If you think of, if you have a child, think of a four-year-old trying to persuade you to give them candy before dinner. Does that happen often?

Starting point is 00:01:22 It does, doesn't it? Which shows you that persuasion is actually natural in human communication. So we're going to talk about a psychological phenomenon that's called the anchoring effect. And if you can use this, it'll help you a lot in a lot of your communication with other people and your negotiating and your sales tactics, but also in just literally meeting people for the very first time. And the anchoring effect refers to a tendency for people to rely heavily on the very first piece of information that they receive when making decisions after getting that, the subsequent decisions after getting that first piece of information. And this effect has been observed in many different contexts and can

Starting point is 00:02:06 significantly influence people's judgment and also their behavior. So we're going to go into the psychological mechanisms behind the anchoring effect and how it affects your decision-making, other people's decision-making, and the ways that it could be used. So where did the anchoring effect come from? The first time that it was identified used. So where did the anchoring effect come from? The first time that it was identified, it was identified by two psychologists. I would say their name if I could pronounce it, but I can't. But it was identified in the 1970s. And what they found was that people tend to anchor to the first piece of information that they receive around something. And based on this anchor, they will then make their decisions based off of the

Starting point is 00:02:45 anchor. And so we like to think that as humans, what we do is we take all of the information we possibly can, and we make really sound decisions from bringing in all of that information. But it really doesn't work that way. And this phenomenon, just so you know, is believed to be a result of the way in which a human brain processes information. Because what we really do is we don't take in all of the information, we learn one thing, and then we start to associate other things around that. And so this is also why first impression, when you first meet somebody, really, really matters. Because first impression of you're going to see a sales technique or a negotiation technique or first time meeting somebody.

Starting point is 00:03:26 All of these things really, really matter. And so the first question is, why would our brain care about the anchoring technique? Like what is the actual reason? Why does our brain anchor to the first bit of information? Well, the anchoring effect is thought to occur because our brains are wired to seek out patterns. And so the first time it gets information, it starts to create patterns from that information. And that's why, and that's really how we as humans tend to make sense of the world as we go through and we find patterns and we start to make connections.

Starting point is 00:03:57 We kind of get puzzle pieces together and start to put a puzzle together in our minds of whatever it is. And when we encounter new information, what we do is we instinctively compare that information to information that we already have from a few minutes ago or a few seconds ago or an hour ago in order to determine its meaning and then also if it's important to us. And so all of this is gonna make a whole lot of sense

Starting point is 00:04:22 as I start putting the pieces together and start actually showing you examples of it. But in the case of anchoring, the first piece of information that we receive acts as a reference point, aka an anchor for all of the upcoming judgments and decisions that we make right after. And so therefore, the anchor is the most important piece of information that someone receives when they're effectively listening.

Starting point is 00:04:47 And so if we are trying to be really great communicators, we need to know that the anchor is the most important piece of information that we can give somebody when we're communicating with them. So let's dive in. I'll give you guys a few examples, but one of the key impacts of the anchoring effect is that it can lead to systematic biases in decision-making. So let me give you a real quick example. So psychologists a few years ago, they gave a test to people. And one of them was, one set of people, it was eight times seven

Starting point is 00:05:19 times six times five times four times three times two times one. And they had to make a guess just off the top of their head, not being able to put it into a calculator or anything, what that added up to. Another group of people, they gave them one times two times three times four times five times six times seven times eight. Now, just so you know, one of them, both of these two, just so you know, One of them, both of these two, like, just so you know, one times seven times five, four, three, three, two, one, and one, two, three, four, five, six, seven, eight, nine, all of those, like the eight to one and the one to eight. When you multiply them, they add up to the exact same number. But what's interesting is when they had people guess, which, how much do you think this adds up to and how much do you think this adds up to. People who had the eight going down to one thought that it was 2,250. That was their guess as far as how much they thought that

Starting point is 00:06:11 multiplied in two. The people who had one to eight thought it was around 512, which shows you the first number is what they anchored to. The people who had the eight first thought that it was four times more. The people who had the eight first thought that it was four times more. The people who had the one first thought that it was four times less. And so they had multiple choice answers in people with the eight guessed higher and people with the one guessed smaller. This is why it's really important to understand the very first thing, the very first bit of information somebody gets. This is also why clothing companies will raise the prices on their tags and then put a discounted price on that tag because it makes the clothing seem like it's worth more. So like if you

Starting point is 00:06:52 have a t-shirt and this company wants to sell the t-shirt for $50, they can sell the t-shirt for $50 and they can put $50 on the tag. Some people will buy it. Some people won't. Most people won't. some people will buy it. Some people won't. Most people won't. But if they put $100 on the tag and then mark it down for a special, quote unquote, special discounted price, and it's $50, more people, like four to five times more people are likely to buy that at a 50% discount than if they just put it as 50 bucks. So what the example I give is you can make a $50 shirt and just have it be $50 on the tag, or you can make the shirt, same exact shirt, $100 and make it a discount of $50, which makes it 50. Both cases, it's still a sale price of 50 bucks, but people end up buying it more when they see that it's on sale, quote unquote sale.

Starting point is 00:07:44 People end up buying it more when they see that it's on sale, quote unquote sale. You know, so that's, it gets your mind thinking, oh my God, I'm getting this great deal. I'm getting it for 50% off. It's an amazing deal. You know, they were planning on selling it for 50 bucks anyways. They just put a hundred bucks in the market down. Hey, 2023 is here and it is time to grow into the best version of yourself. And one way to do that is through books. Books have always been and will always be one of the most essential pieces to learning and growing. And that's why I think Blinkist is so amazing. Because what Blinkist

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Starting point is 00:10:25 level today. Shopify.com slash dial. So another example is if you've ever been over to Europe, they have these stores everywhere in Europe where it says like sale, everything 25% off. And you're like, damn, there must be some good deals in there. I'm going to go see what I can get for 25% off. And then you walk into the store and you find a shirt that you like and you pick it up and it says 50% off. And you're like, holy shit, the entire store is 25% off. And I picked up this one shirt that I actually like and it's 50% off.

Starting point is 00:10:56 I'm getting an even better deal. And then what happens is you look at all of the rest of the tags in the store and you realize it says that it's 25% off on the windows. And when you come in, everything in the store is 50, quote unquote, 50% off. And you think to yourself, I'm getting an even better deal than I expected. What makes you, what are you more likely to do? You're more likely to buy it because you feel like you're getting a better deal because the anchor was the 25% off. You think 25% off,

Starting point is 00:11:27 and then you see 50% off. You're like, I'm getting an even better deal. The same way that when you look at that t-shirt I was talking about, the anchor was the $100, and then they sell it for $50. And you might be thinking to yourself, is that why Black Friday is such a big thing? Is that why people love Black Friday? Well, let me tell you how they fuck with you on Black Friday is such a big thing? Is that why people love Black Friday? Well, let me tell you how they fuck with you on Black Friday, everybody. The month coming up to Black Friday, most places raise their prices to then discount them to the price that they want to sell it to you at. There was studies done back in about 10 years ago, it was 2012. There were studies that were done and they

Starting point is 00:12:05 found that most companies raise their prices around 23% before Black Friday. So companies raise their prices and then discount that price to give you the price that they were originally selling it for anyways. So you're not really buying it at a discount a lot of times. You're buying it for the price they wanted to sell it for, but retailers get away with it as long as it looks like the product is for sale from the quote-unquote full price. And they make that quote-unquote full price higher, 23% higher, the month before Black Friday. And this was started, people actually started figuring this out in 2012 when the CEO of JCPenney's gave a presentation about the company's quote unquote sales and showed that customers were receiving an average of 60% of a discount. 60% of a discount.

Starting point is 00:12:57 The twist is that they weren't saving any more money. In fact, they were still paying the exact same price that they were before. So people shopped at JCPenney's at this point and thought to themselves, oh my gosh, I'm getting a 60% discount. But in reality, you're actually paying the exact same price. This is also why if you go car shopping, they always show you the most expensive car first. You know, we just bought a new car and we went to the BMW dealership. And I was like, I wonder if this guy's going to try any sales tactics. Like I always love looking at these things and start watching them because I've been in sales for so long. So I'm like, I wonder what type of tactics are going to give us.

Starting point is 00:13:32 So we walk in and the guy's like, well, what type of cars are you looking at? I was like, I'm looking at this one, this one, and this one. He's like, all right, cool. Let me go ahead and get you some keys. I'm like, cool. Go ahead and get us some keys. He comes out. Guess what he does? He brings us the keys to the most expensive car of the type that I wanted. So we were looking at, you know, BMW X7s. So he brings out the special edition BMW X7, which was the most expensive car that we looked at that entire day. And he brought it first. Why would he bring it first and not last? Because when he brings out a car that's $108,000, which is not what I want to spend on BMW, but he brings $108,000 car

Starting point is 00:14:13 and we drive it. I'm like, damn, this is pretty nice. Like this shit's pretty amazing. I'm not going to spend that much for a car. And then he brings out three other cars right after. So we looked at four cars total. What's interesting is he did all of them, smart guy, in descending order, $108,000 to $94,000 to $80,000 to $76,000. Now, the last car that we just looked at, and I'm like, damn, this one's pretty good. It was $78,000. Now I'm comparing $78,000 to $108,000. And I'm like, this is $30,000 less than it was. And I'm starting to notice that this guy used the anchoring effect on me. I was like, shit, I even know what the anchoring effect is. And he used it on me. So this is a good example because the 78, when I'm like, man, I really like

Starting point is 00:14:59 this 108. Oh God, but I want to spend 108. And then I see 70 and I'm like, okay, that seems much better. So this is an effect that you can use and you could use it for sales. You can use it for negotiating. We won't talk about all of them, but you can also just use them the very first time you meet somebody and you shake somebody's hand and introduce yourself to them. You are anchoring the thought of you into that person's mind. Let's say that you want to buy a new car, right? And you want to show this car to your spouse. How could you use the anchoring effect to show this to your spouse? Well, you could find the car that you really, really want, and you could find three to four other cars that you like as well. And what do you do? You could show a car that's $80,000.

Starting point is 00:15:41 You could show a car that's $70,000. You could show a car that's $70,000. You could show a car that's $60,000. And then the car that you really want is $50,000. And that $50,000 car, when it's compared to a $60,000, a $70,000, $80,000 car, seems like a really good deal, doesn't it? That is using the anchoring effect. It can also use it, you can use it for negotiations as well. The initial offer should always be significantly higher than what you're actually looking to go for. So if you're in negotiations, if you're in a business negotiation, you could say, hey, we have two different options of what we could do. Let's say you're selling your services to a company. We have two different services and what we could go with. The first one is $30,000 a month and you get blah, blah,

Starting point is 00:16:21 blah, blah, blah, blah, blah, blah, blah. Or if you want, you can go for $10,000 a month and you get blah, blah, blah, blah, blah, blah, blah, blah, blah. Or if you want, you can go for $10,000 a month and you will get blah, blah, blah, blah, blah, blah, blah. Well, now when the company that you're negotiating with sees, okay, we have an option of 30,000. Damn, that's a lot. And we have an option of 10,000 and 10,000 actually looks like most of the stuff that we need. That 10,000 doesn't look like a lot compared to the 30,000. And this is where a lot of people screw up a lot of their sales tactics. If you don't really know sales is they'll go, we have option A and we have option B. Here's both of them. And they show them on a piece of paper. No, no. You want to present the higher one first and then present the lower one second, because the lower one is always going to seem smaller than if you present the first one at the

Starting point is 00:17:03 higher price. So the anchoring effect can have a really big impact on negotiations as the initial offer is going to significantly influence the outcome of the negotiation. And if you're in negotiations with people, it's always important to be the first one to present pricing at all. Let's say that you work for a company, you've been there for five years and you want to raise. So why don't you just go in and ask for 10% more than you think you're really worth? See what you should, see what they say. And usually they might say no, they're probably going to say no. And then you come down to what you actually were going to ask for in the first place. So as a consumer, this is really important for us to know, right? It's important for you to know that psychologists are in all of

Starting point is 00:17:44 these companies and they help all companies come up with marketing plans, especially the biggest companies in the world. Biggest companies in the world hire psychologists to think to how can we get more people to buy, right? So as a consumer, the anchoring effect is really important for you to know. In business, whether you work for a company or whether you own your own company, this is really important for you to know when you go out and you present pricing. If you are a salesperson, this is really important for you to know. Always have the biggest price first. In negotiations, this is really important for you to know. Always present the bigger price first. And just in relationships, you are constantly going to be meeting new people every single moment. First impressions actually do matter because the

Starting point is 00:18:26 anchoring effect is how they remember you. Even meeting people for the very first time, you have to remind yourself how important it is to get that first impression to be right. And let me show you what I mean by that. Do you want to know why we love dogs so much? Because they always get the first impression right. Whenever you walk in the door, what do they do better than anybody else? They greet, right? And that's one of the reasons why we love them so much because the first time we see them, every time we come home, it's a freaking party, right? They, dogs, do the first impressions better than any other species I've ever met. And that's one of the reasons why we love them so much. So this right here is the anchoring effect. You can use it in many ways in your life.

Starting point is 00:19:08 Please, please, please, as I said, use it for good. Don't use it for bad, but at least understand the way the psychological phenomenon works. 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.

Starting point is 00:19:24 Once again, go ahead and follow us on YouTube as well. We're putting out a bunch of new YouTube videos that are separate from these podcast episodes as well. So if you want tips and tricks on how to improve yourself and your mindset, go ahead and search me, RobDial, R-O-B-D-I-A-L on YouTube. And I'm going to 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 Master Persuasion

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