Social scientists Itamar Simonson and Amos Tversky conducted an experiment in a 1992 study based on how we frame choices. They offered their test subjects a choice between $6 or an elegant Cross pen. Only 36 percent of the subjects chose the Cross pen. They then incorporated a third choice, a less attractive pen, and asked test subjects to choose. Only 2 percent chose the inferior pen, but 46 percent chose the Cross pen when presented with all three options.
Studies such as this have been repeated with various other products and tradeoffs. One I found particularly interesting involved microwave ovens. Subjects were given the choice between an Emerson priced at $110 and a Panasonic priced at $180. Both microwaves were on sale at one third of their regular price. Less than half of the subjects--43 percent--chose the Panasonic. Then the researchers gave subjects a third choice, a Panasonic priced at $200 that was only 10 percent off the regular price. Only 13 percent chose the $200 Panasonic, but this time 60 percent chose the $180 Panasonic.
What these studies show is that consumers frame choices differently when presented with different alternatives. Simonson and Tversky proposed that when faced with a choice between x and y options, adding a 3rd option (z) that is inferior to one of the initial options (y) will increase the likelihood that the individual will choose y.
How you frame choices for your clients matters. Are there ways that you incorporate this knowledge to help sell your product or service?
Labels: communication
Business transactions can take a long time and require a fair amount of due diligence. This can be painful for both buyer and seller. Buyers, after the initial letter of intent is signed, must verify and validate all the information and numbers on which they based their offer. Sellers must ensure the buyers are provided with detailed information and don’t find reasons to pull out of the deal.
A business broker friend, Scott, who has been involved in a hundred or so business transactions, once told me that the way to get a deal done is to plan the discovery process so that the story got better over time. I asked Scott what he meant by that. He replied that most sellers feed buyers with all the good information up front. Then, as they move through the due diligence process, they run out of new and positive information to share with the buyers. Buyers actually dive into and evaluate the risk factors of the business during the due diligence process. This almost inevitably includes discovering information that does not meet their expectations.
Scott’s belief is that during the due diligence process is the most important time to communicate good news. This helps keep buyer enthusiasm high as the deal gets closer to completion. Scott even suggested reserving some of the good news and information to release during the due diligence process. Careful planning of how the story unfolds for buyers has seen consistent success for Scott across many deals.
I think there are some lessons that service and investment providers can take from Scott’s experience. In any investment transaction that requires research and a reasonable amount of time before closing, it’s important to ensure that the story continues to get better. That’s the best way to ensure the buyer moves forward and closes the transaction. How can you make your story get better over time?
Labels: communication, messaging
I’ve heard many times that only a small percentage of what you communicate when you speak is done with the words. The rest is communicated through body language and tone. This obviously does not apply to e-mail.
In an e-mail, your words are all that matters. That is, unless you have mastered emoticons and characters :). They allow you to tease or be sarcastic in an e-mail without fear of sending the wrong message. Yet teasing, sarcasm and emoticons are not usually appropriate for professional e-mails with your clients. That means your words will have to do. As such, it is important to pay attention to what you write.
Yesterday, one of our editors forwarded an e-mail to me from a gentleman considering contributing some “how to” articles to our website. He suggested she review some of his current articles. She had difficulty finding these on his website and sent him an e-mail asking about where he kept the majority of his articles. She specifically asked for a URL. This gentleman interpreted her URL request as a sign that she didn’t know his website address. He sent her a shocked and curt e-mail asking if she even cared about the quality of content on our site, because he didn’t believe she had even taken the time to review his site.
We absolutely do care about the quality of content on our site. Yet this gentleman’s e-mail was a valid response based on his interpretation of her e-mail. E-mail doesn’t let you communicate tone. It doesn’t allow you to obtain cues from the other party about whether they are following your train of thought. With that in mind, be careful when sending e-mails. Words matter.
Here are two rules of thumb to keep in mind when writing and reading e-mail:
- As a reader: Give writers the benefit of the doubt. Don’t jump to conclusions and try to ask clarifying questions.
- As a writer: Make sure you express your thoughts clearly. It won’t take you receiving many fiery e-mails from clients or affiliates to figure out where you can improve.
Labels: communication
