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As we saw in the last episode, “Rational Randy” holds the title of decision maker, but he usually defers at least in part to “Aileen”, who leans in ways that may seem irrational but are at least predictable.

Here are three important tendencies that can skew the decisions we make:

First, we hate losing more than we like winning. In other words, losses outweigh gains in our minds. For example, the majority of people won’t take a one-time bet in which they have an even chance of losing $100 or winning $150. This tendency toward “loss aversion” means that we prefer sure things when it comes to gains but we’re willing to gamble to avoid losses, as illustrated by the following choice:

A: 50% chance to win $1,000

B: Sure $500

84% chose B

C: 50% chance to lose $1,000

D: Sure loss of $500

70% chose C

Second, where we end up depends on where we begin. It’s called anchoring: the first information we hear has an inordinate effect on subsequent information. As related by Dan Ariely in his book, Predictably Irrational, an audience is first asked to write the last 2 digits of their social security number, and, second, to submit bids on items such as wine and chocolate. The half of the audience with higher two-digit numbers would submit bids that were between 60 percent and 120 percent more. The simple act of thinking of the first number strongly influences the second, even though there is no logical connection between them.

Third, nothing makes sense except in comparison to something else. If you put your left hand in a bucket of cold water and your right into a bucket of hot water, and then plunge them both into a bucket of room-temperature water, your left will suddenly feel warm and your right will feel cold. It’s the same with numbers or ideas, and good persuaders know how to choose the comparison to improve the appeal of their proposal.

So What?

To influence “Aileen”, persuaders need to learn to go with the grain of her tendencies. Here are five suggested ways:

1. Sell the problem, not the solution. At least early in the process, it’s important to ask questions and direct the conversation to the costs and consequences of not acting.
2. Choose the reference point. No one likes to pay a penalty for using a credit card, but they will gladly take a discount for cash. How you describe the choice matters.
3. Make the most extreme initial offer you can reasonably support. Although people will adjust from this anchor, they usually under-correct.
4. Choose the comparison. This will put your idea in the best possible light.
5. Narrow the choices. More choices lead to fewer decisions. One effective tactic is to place your proposal in the middle of three alternatives.

If you want to learn more about this fascinating topic, here are three books I strongly recommend:

Thinking, Fast and Slow, by Daniel Kahneman

Predictably Irrational, by Dan Ariely

Priceless: The Myth of Fair Value, by William Poundstone

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This is the first of three podcasts about the psychology of decision making, which is a fascinating and difficult topic, mostly because the way in which people say they decide is often much different from how they actually do. Business communication is ideally completely rational and evidence-based, but we all know it’s more complicated than that. There are at least four approaches to decision-making, which I call Randy, Aileen, Norma, and Gus.

Rational Randy has a mind like a spreadsheet and relies for his decisions completely on a precise calculation of expected benefits, weighted both by priority and probability. Randy wallows in weighing, gauging, estimating, calculating, weighted decision matrices, sensitivity analysis, expected value, and return on investment. He has tons of questions, and likes footnotes, sources and large random samples. When things get complicated, he asks for more data. Randy is officially considered the decision maker, but for all his rationality, he seriously overestimates his influence within the committee. This is because the other members have a quiet conspiracy to let Randy claim credit for their work.

Aileen tends to support Randy. She likes to think of herself as completely rational, but—usually without realizing it—leans one way or the other in reasonably predictable ways depending on how the information is presented. Although she respects facts and numbers, she does not treat them all equally. She’ll pay special attention to some and completely overlook others, sometimes give greater weight to those that are presented as losses rather than gains, or she might let the first ones she hears affect how she sees the next. When things get too complicated for her, she will take shortcuts, although she denies this.

Norma has a strong sense of who she is and what’s important to her, and makes decisions based on norms or rules that are integral to her identity and values. She sometimes aspires to being a better person, and will decide based on the question: What does a person like myself do in these situations? Norma does not get involved in all the different decisions, but when she does decide to get involved, she can carry a tremendous amount of weight—sometimes even veto power. Things don’t often get complicated for her, because she tends to see the world in black and white.

Gus is the laziest but can be the most powerful member of the committee. He decides totally on his gut, what feels right. Gus usually makes snap decisions, and can sometimes change his mind just as quickly. He’s in the driver’s seat when Randy is not paying close attention, and even when Randy gets deeply involved he’s working behind the scenes in cahoots with Aileen and Norma. He’s very jealous of his status and is extremely concerned with fairness. Gus doesn’t like to work hard, so he usually tells the others to just accept his decision, and if they want to use their language to make it more palatable to others, that’s fine with him.

It’s difficult to influence decisions when you don’t know which of the four is in charge, and it’s different for every decision. And what makes it really tough is that all four reside in every individual mind!

We’ll start with what it takes to influence Rational Randy’s decisions, because companies have invested a lot into systems that take the subjective human element out of their choices, which is why we have RFPs that weigh several pounds that feed into weighted decision matrices and algorithms which spit out clear winners and losers. If you’re selling to them, you must absolutely be in their ball park to have any chance of winning.

One model is the weighted decision matrix, which is what Amazon is using to decide where to establish their second headquarters. They’ve narrowed down the choice to 20 cities. It’s a huge decision, and it will be based on eight major criteria.

The other principal model is the investment decision, which includes calculations of differential cash flows, their expected timing, run through a model that adjusts for risk using the expected cost of capital. It’s all very neat and precise; all you have to do is plug in the appropriate numbers and the best logical answer spits out the other end.

Although we know that there’s a lot of room for subjectivity even in these objective models, we have to be able to speak the language and provide the information needed to succeed in Rational Randy’s world for major business decisions. There are three key points:

• Speak the language: business and financial acumen is a key competency to make you a persuasive communicator.
• Answer the mail: you have to have the answers to these questions, or you won’t even get a chance to go any further.
• Start early: it’s your best chance to influence what will be chosen to feed into the rational decision model.

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So far in this series about the psychology of persuasion, we’ve talked about the first three things that happen in a persuasive communication effort. You’ve made a first impression, grabbed their attention, and delivered your message so that they could understand exactly what you intended. So, we have the communication part covered, but now we turn to the persuasive part. There are three aspects that I will cover in this and the next two podcasts. First, will they believe you? Second, can you influence their decision? Third, will the take action?

If you want people to believe you, content is definitely king, but it doesn’t rule by itself. Let’s suppose you’re presenting an investment proposal to a roomful of decision makers. It could be an internal presentation to your C-Level, or maybe a sales presentation. You put together a slide deck filled with charts, tables and hard data, and you present an airtight case. Will it be enough?

The answer is—it depends. Someone may question your sources, someone may agree on the facts but draw different conclusions from yours, someone might sense a little uncertainty in your voice and someone might not like the fact that your shoes aren’t shined. Of course, they won’t mention anything like the latter two reasons if they run you down, but things like that do make a difference.

There’s a lot going on in the listener’s mind as they’re judging your credibility. They’re consciously paying attention to your content while at the same time forming unconscious judgments about whether to trust you. And everybody is different. Some are like Spock and can set aside “feelings” while others won’t even try to follow your logical arguments—they just know they can trust their gut.

So obviously you would prefer to be as strong as possible in both the material and the source. I’m going to start with what types of material people find to be the most credible, and then look at the personal qualities that they perceive while judging whether to believe.

Content

We have to start here because content is king. And keep in mind that this podcast is about business communication, so we have to operate within the presumption that there is an objective standard that’s going to be applied. In this case, bottom line profit. Besides, your most important persuasive communication opportunities will be with high level audiences, so you generally have more sophisticated listeners who have a higher “need for cognition”.

Here’s a rough hierarchy of they types of evidence that people value:

1. Empirical data such as statistics and metrics – most business decisions are held to an objective standard.
2. Personal observation – if you’re the only one who has been on the scene, they have to believe you.
3. Appeal to authority- borrow credibility from someone with greater credentials or experience.
4. Social proof – if other companies are doing it, we’d better not get left behind.
5. See for yourself – make it concrete and visible.
6. Causation and common sense – even if it hasn’t been done before, show that it’s plausible.
7. Because I said so – Trust me, I’m an expert. (Only works when you already have credibility.)

Personal Credibility

Besides Content, there are four other C’s of personal credibility:

1. Credentials – what are your qualifications and experience?
2. Clarity – are you candid and direct, and do you have a command of the facts?
3. Confidence – do you believe in your own proposal without being overconfident?
4. Concern – do you care about what’s in it for me?

Podcast: Play in new window | Download

There are an unlimited number of wrong ways your message can be taken, and only one right way. So, you must ensure that you are crystal clear in what you’re trying to convey, first in your own mind and then in the mind of the listener.

In this podcast, I talk about why understanding is critical, and then go into the science of what is going on in the listener’s mind as they receive information; finally, I suggest techniques and tips to ensure that you won’t be misunderstood.

Understanding is important because it’s a crucial step in delivering value to the other person—transferring knowledge they can use. Second, it’s also persuasive, because our minds equate simplicity with truth. If it’s easy to understand it feels right.

There is a lot going on in both minds when two people communicate. First, you have to turn the ideas in your brain into words and coherent sentences. Next the listener captures the incoming information through two channels, the auditory and phonetic. Second, they must process the material; most of the mental work of understanding takes place in working memory, which is a mental “scratch pad” where you interpret the information, retrieve knowledge and existing models from your long term memory, figure out how to connect what you’re hearing and seeing with what you know, and finally store it for future use.

There are five ways to ensure that you are clearly understood:

1. Meaning before detail: give them the big picture so they can orient themselves.
2. Provide clear structure: so they can follow your logic and organize incoming detail.
3. Feed the information at the right pace: don’t overload or underload working memory.
4. Use simple language: pretentious language actually makes you sound less intelligent.
5. Adjust to your audience: Start with what they know, and monitor their reactions.