Lessons from Yes! 50 Scientifically Proven Ways to be Persuasive
Posted under: Category | 23 January 2008
This is a book about social psychology applied to marketing, sales and general persuasion. It is an interesting read of what is essentially hundred of social studies and test complied into a laymen format with applicable real life examples.
I have complied my summary after reading the book. Do note that this is not in the order for the 50 chapters in the book. I have even grouped them under headings not found in the book for my own use.
How to encourage a response
1)The herding instinct
The reciprocity Principle
1) An ounce of personalize extra effort is worth a pound of persuasion
2) Three Major factors make a gift or favor more persuasive and more likely to be reciprocated
4) Favors change in value over time
How to get commitment
1) Get a small commitment before asking for successively bigger ones
2) Asking "Even a bit will help" increases the possibility of an action
3) People perform to expectations when labeled
4) Asking a simple question of volunteering
5) To increase the possibility of following through - Commitment should be voluntary, active and publicly declared to others
6) Active commitments- Written are more likely to be fulfilled
How to change people’s mind
How to get a positive perception
Confluence
Scarcity principle
Perceptual Contrast
Loss aversion principle
Names:
Interpersonal Dynamics
Others
Physiology
- By saying many people are doing it
- By referencing people similar to the target audience
- Increasing social approval of an action
- Seeing a mirror or a set of eyes encourages self reflection and a stronger sense of sticking with the social norm
- When customers are not clear about requirements
- People choose the middle product as a compromise
- Present at least 2 products
- Present the more expensive one first
- The more clearly people see behavioral means for ridding themselves of fear, the less they will need to resort to denial
The reciprocity Principle
1) An ounce of personalize extra effort is worth a pound of persuasion
2) Three Major factors make a gift or favor more persuasive and more likely to be reciprocated
- Significance
- Unexpected
- Personalized
4) Favors change in value over time
- Recipients placed a lower value
- Doers place a higher value
How to get commitment
1) Get a small commitment before asking for successively bigger ones
2) Asking "Even a bit will help" increases the possibility of an action
3) People perform to expectations when labeled
4) Asking a simple question of volunteering
5) To increase the possibility of following through - Commitment should be voluntary, active and publicly declared to others
6) Active commitments- Written are more likely to be fulfilled
How to change people’s mind
- when presenting ideas that might be inconsistent with previous behavior,
- free them of their previous behavior by saying it was the correct decision at that time given the evidence and information
- Use the word “Because”
- Adding this in your conversation with a good following reasons increases willingness of the other person to help you
- Get the other party to say because to you because it reinforces their beliefs about you
How to get a positive perception
- asking someone who does not like you for a favor might help change their perception of you for the better
- See the virtue of others instead of their flaws
- get someone/something to introduce you and blow your trumpet
- promoting your weakness puts you in a better position of trust to sell your strength
- Promoting a weakness and then a related strength enhances the preference of your product
- Taking responsibility for your mistakes shows that you control over future events and the fix ready
Confluence
- Bring up similarities between you and the other person to increase the chances of that person agreeing to a request
- People like names that are similar sounding to their own
- Parroting a person’s word will make them feel more at ease and confident that you have understood them
- Names should be pronounceable and easy to remember
- Product Slogans that rhyme
- Asking for too many reasons of why a product is good might induce a negative perception because of the difficulty of coming up with the number of require reasons
Scarcity principle
- The more scarce, the more people are likely to horde it
- People – who knows or have it
- Things – Limited quantities
Perceptual Contrast
- The amount of information that a preceding message has affects the positive influence on the next message. The less information, the more influence the second message is.
- People will be more likely to complete task and programs if there is an indication that there is already some progress towards completion instead of no progress.
- in a competitive market, a lower starting price is better as it generates more attention and buy in from early bidders
Loss aversion principle
- Instead of pointing out what they stand to gain if they do A, point out what they stand to lose if they don’t do A
Names:
- Unexpected Descriptive, Ambiguous names create a sense of fascination and attraction with it compared with common and common descriptive names
Interpersonal Dynamics
- Team > one person’s thinking. Encourage input but make your own decisions
- a true devil advocate will increase confidence in the final position
- It is easier to reach an agreement with someone when there is background information on each other
Others
- learning from examples of past mistakes is more effective than just learning good practices
- Cultural differences affect the strength of messages
- Bundling will devalue the bundle product
- Instead of using the word free, state the value of the product
- “Receive $250 security program at no cost to you”
Physiology
- Emotional affect decision making.
- Avoid decision making when you are feeling down
- Take time out before making a decision
- Being distracted or tired makes you more susceptible to untrue persuasion
- Caffeine consumptions make you more easily persuaded with good arguments. Bad arguments have no effect.
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Ten Rules of Thumb for a Volatile Market
Posted under: Category | 23 January 2008
Focus on Organic Growth.
With Citi’s economic forecast calling for below-trend GDP growth (typically considered to be approximately 3% annualized) over the next year, we believe that investors will place a premium valuation on companies possessing the ability to increase their earnings at rates well in excess of the S&P 500, through organic (non-acquisitive) growth. Companies in the early stages of new product cycles or brand line extensions of popular products offer the best opportunities for organic growth and economic resilience, in our view.
Focus on Companies that Make Other Companies More Productive.
With productivity gains and resulting cost savings becoming more difficult to achieve given macroeconomic headwinds, we believe that companies will focus on those products and services offering a “value proposition” or enhanced return on investment (ROI). For example, oil service companies that possess the latest technologies can charge a premium price because they provide an efficient way to extract difficult-to-access oil and gas deposits. Similarly, technology companies that offer products that make accessing data easier and more pleasurable are likely better able to withstand slowing demand, in our opinion.
Identify Long-Term Growth Trends.
Shifting demographic patterns or new legislation can often lead to critical behavioral changes that influence the products and services consumers and corporations purchase. Often, these trends are less affected by economic conditions because of necessity. In many cases, companies enjoying either critical mass or “first mover” status reap the benefits of these changes and develop strong customer loyalty, which, in turn, can lead to strong recurring revenues.
Maintain an Emphasis on Companies Possessing Financial Flexibility.
During periods of heightened uncertainty, access to new or additional capital might be more difficult to obtain. We believe companies that possess the financial strength to fund internal or external growth opportunities through strong and rising free cash flow(and low debt service costs) will tend to exhibit lower volatility and more stable returns. Metrics that take on added importance in the late stages of a credit cycle include: interest coverage, working capital efficiency, and free cash flow. We believe companies that possess low debt levels as a percentage of total capital will be rewarded by investors,particularly when access to financing is perceived as becoming more limited.
Make Sure “Perception” Can’t Become Reality – Avoid Companies That Need to Roll Debt or Access the Capital Markets During Adverse Conditions.
Recent market events show that a company that needs to raise capital or roll maturing debt can suffer severe consequences in the current market environment. What would normally be a regular occurrence has become a potential sign of weakness, given the extreme illiquidity in the market. Furthermore, share price weakness can raise questions about the perceived inability to raise capital and put a company into bankruptcy orconservatorship just as quickly as a lack of financing options can.
Pay Attention to the Quality of Earnings.
A good measure of a corporation’s quality of earnings is how closely its free cash flow (net income + depreciation and amortization +/- changes in working capital – capitalexpenditures) matches its net income. For a time, a corporation may be able to obscure an underlying deterioration in fundamentals through financial engineering. Generally Accepted Accounting Principles (GAAP) are based on accrual accounting and may allow for a higher degree of flexibility in recognizing revenues and expenses than free cash flow allows for.
Scrutinize Free Cash Flow.
We believe free cash flow is the clearest measure of a company’s financial flexibility. Companies generating excess free cash flow may choose to reward shareholders through the payment of a dividend or a share repurchase program. Other corporations maychoose to direct cash flow toward strategic acquisitions or internal growth opportunities. Investors should closely monitor corporations where significant changes in depreciation schedules can have a meaningful impact on near-term earnings. Additionally, a large increase in receivables or inventories can be an indication of potential trouble ahead.
Avoid Value Traps.
In our view, investors should focus on forward earnings projections because many economically sensitive companies, particularly at or near cyclical peaks, tend to appear attractively valued based on trailing earnings. A focus on consensus earnings estimaterevisions can provide investors with some insight into near-term operating momentum. Often, particularly during a period of slowing economic growth, the first earnings shortfall may act as a harbinger of future earnings disappointments.
Merger & Acquisition (M&A) Selection Criteria Shouldn’t BeDismissed.
While many investors believe a slowdown in M&A and leveraged buyout (LBO) activity could lead to a lower stock market valuation, we do not believe this implies an absenceof value. In our view, many of the same characteristics that financial buyers were drawn to over the past several years (strong free cash flow, low leverage, and solid profit margins) remain in place today, though in many cases at significantly lower valuations than last year. Screening for companies with free cash flow yields well in excess of prevailing bond yields can often be a starting place for attractive investment ideas.
Focus on the Long Term and KeepEmotions In Check.
Successfully negotiating difficult market environments requires a willingness to act quickly on investor misperceptions that frequently occur due to “panic-selling” or “group-think.” Emotionally charged markets are often driven by fear rather than thecareful analysis of fundamentals. In our view, a disciplined investment process, emphasizing strong or rising free cash flow, profit margin expansion, attractive valuation, positive changing internal dynamics, incremental market share opportunities, and strong management, can help maintain clarity in volatile markets.
With Citi’s economic forecast calling for below-trend GDP growth (typically considered to be approximately 3% annualized) over the next year, we believe that investors will place a premium valuation on companies possessing the ability to increase their earnings at rates well in excess of the S&P 500, through organic (non-acquisitive) growth. Companies in the early stages of new product cycles or brand line extensions of popular products offer the best opportunities for organic growth and economic resilience, in our view.
Focus on Companies that Make Other Companies More Productive.
With productivity gains and resulting cost savings becoming more difficult to achieve given macroeconomic headwinds, we believe that companies will focus on those products and services offering a “value proposition” or enhanced return on investment (ROI). For example, oil service companies that possess the latest technologies can charge a premium price because they provide an efficient way to extract difficult-to-access oil and gas deposits. Similarly, technology companies that offer products that make accessing data easier and more pleasurable are likely better able to withstand slowing demand, in our opinion.
Identify Long-Term Growth Trends.
Shifting demographic patterns or new legislation can often lead to critical behavioral changes that influence the products and services consumers and corporations purchase. Often, these trends are less affected by economic conditions because of necessity. In many cases, companies enjoying either critical mass or “first mover” status reap the benefits of these changes and develop strong customer loyalty, which, in turn, can lead to strong recurring revenues.
Maintain an Emphasis on Companies Possessing Financial Flexibility.
During periods of heightened uncertainty, access to new or additional capital might be more difficult to obtain. We believe companies that possess the financial strength to fund internal or external growth opportunities through strong and rising free cash flow(and low debt service costs) will tend to exhibit lower volatility and more stable returns. Metrics that take on added importance in the late stages of a credit cycle include: interest coverage, working capital efficiency, and free cash flow. We believe companies that possess low debt levels as a percentage of total capital will be rewarded by investors,particularly when access to financing is perceived as becoming more limited.
Make Sure “Perception” Can’t Become Reality – Avoid Companies That Need to Roll Debt or Access the Capital Markets During Adverse Conditions.
Recent market events show that a company that needs to raise capital or roll maturing debt can suffer severe consequences in the current market environment. What would normally be a regular occurrence has become a potential sign of weakness, given the extreme illiquidity in the market. Furthermore, share price weakness can raise questions about the perceived inability to raise capital and put a company into bankruptcy orconservatorship just as quickly as a lack of financing options can.
Pay Attention to the Quality of Earnings.
A good measure of a corporation’s quality of earnings is how closely its free cash flow (net income + depreciation and amortization +/- changes in working capital – capitalexpenditures) matches its net income. For a time, a corporation may be able to obscure an underlying deterioration in fundamentals through financial engineering. Generally Accepted Accounting Principles (GAAP) are based on accrual accounting and may allow for a higher degree of flexibility in recognizing revenues and expenses than free cash flow allows for.
Scrutinize Free Cash Flow.
We believe free cash flow is the clearest measure of a company’s financial flexibility. Companies generating excess free cash flow may choose to reward shareholders through the payment of a dividend or a share repurchase program. Other corporations maychoose to direct cash flow toward strategic acquisitions or internal growth opportunities. Investors should closely monitor corporations where significant changes in depreciation schedules can have a meaningful impact on near-term earnings. Additionally, a large increase in receivables or inventories can be an indication of potential trouble ahead.
Avoid Value Traps.
In our view, investors should focus on forward earnings projections because many economically sensitive companies, particularly at or near cyclical peaks, tend to appear attractively valued based on trailing earnings. A focus on consensus earnings estimaterevisions can provide investors with some insight into near-term operating momentum. Often, particularly during a period of slowing economic growth, the first earnings shortfall may act as a harbinger of future earnings disappointments.
Merger & Acquisition (M&A) Selection Criteria Shouldn’t BeDismissed.
While many investors believe a slowdown in M&A and leveraged buyout (LBO) activity could lead to a lower stock market valuation, we do not believe this implies an absenceof value. In our view, many of the same characteristics that financial buyers were drawn to over the past several years (strong free cash flow, low leverage, and solid profit margins) remain in place today, though in many cases at significantly lower valuations than last year. Screening for companies with free cash flow yields well in excess of prevailing bond yields can often be a starting place for attractive investment ideas.
Focus on the Long Term and KeepEmotions In Check.
Successfully negotiating difficult market environments requires a willingness to act quickly on investor misperceptions that frequently occur due to “panic-selling” or “group-think.” Emotionally charged markets are often driven by fear rather than thecareful analysis of fundamentals. In our view, a disciplined investment process, emphasizing strong or rising free cash flow, profit margin expansion, attractive valuation, positive changing internal dynamics, incremental market share opportunities, and strong management, can help maintain clarity in volatile markets.
Source: Citi Investment Research
Famous Logo Designs
Posted under: Category | 23 January 2008