You’re being manipulated.
Believe it or not, you’re being influenced to spend more than you really should. Ever wonder why at the end of the month you just haven’t saved quite as much as you wanted?
Behavioral psychologists have been researching human behavior for decades now, and they seem to have a good handle on how to get people to spend. The principles of influence and manipulation are very well understood.
This same research eventually found its way into the hands of corporate marketing departments, where it’s used in the pursuit of profit (and our detriment).
Damn those behavioral psychologists!
While it may not be entirely obvious, as a consumer you are constantly being manipulated to spend by some deviously good psychological tricks. These “tricks” exploited by marketers are a bunch of well-researched quirks in human behavior, centered around influence.
One behavioral psychologist decided to take a different path with his knowledge. Instead of taking his research and selling it to the highest-paying Fortune 500 company, he wrote a book.
This behavioral psychologist is Robert Cialdini, and his book is Influence: The Psychology of Persuasion. Ultimately the book ended up selling a ton of copies (over 3 million!), so that career move might have turned out okay in the end.
Influence by Robert Cialdini
I first read Influence: The Psychology of Persuasion nearly a decade ago when I was studying for my master’s degree. The text was cited as one of the most important books about marketing ever written, and I believe it.
Many books are the “read and forget” type. You read it once, and then promptly forget it a week later.
Influence isn’t that kind of book.
Now, a decade later, I still think about the principles set down in this book — Tonight I was watering the lawn and thinking about Cialdini’s Influence. I thought, “Well, shit! If I still think about the stuff in that book it’ll probably make for a decent blog post.”
And so the idea for this post was born.
While I never worked in a marketing department, this book had an enormous impact on my life. Why? Knowledge is power.
There is continuous blast of marketing messages coming your way 24/7, and if you’re not careful you’ll easily fall victim to these tricks.
The Principles of Influence
So what’s the big deal? Why is the book any good?
In his 35 years of behavioral research, Cialdini and his researcher buddies were able to identify 6 principles of influence in human behavior. Notice I said ‘influence’, not control. That distinction is important, and we’ll get back to that a little later.
Instead of ‘marketing tricks’, Cialdini calls them “principles”. Same difference if you ask me!
Ultimately the book’s hypothesis is believable because once identified, we can see these principles used everywhere.
So what exactly are the principles of influence? Well, it’s best to just find a copy of Cialdini’s book, he does it justice far better than I ever could. I highly recommend it.
That said, I will try to give you a very basic summary of the 6 principles:
If you’ve ever been invited to a Tupperware, Pampered Chef, Party Lite, or Thirty-One gifts party, you’ve been exposed to the Liking principle. The Liking principle in essence, “People like those who like them”.
We tend to purchase more when it’s someone we like.
In the case of a Tupperware parties, the fact that we like the host (usually a friend), we’ll purchase more because of our relationship with the host. Hence the overwhelming success of these ‘home party’ multi-level marketing schemes.
Sales people use this principle frequently. I notice it especially when I go shopping for cars. Generally the sales person will pepper you with compliments and point out the great things you have in common — the theory being you’re more likely to purchase from them.
It never works on me, but I can see them trying to build that relationship
The principle of reciprocity is the human tendency to “repay in kind”. Kindness will be repaid in kind, and generous behavior will be repaid with our own generosity.
Humans don’t like being ‘in debt’ to people, and marketing uses this to great effect. ‘Free’ gifts are the most common form of this principle in action. Ever eat the free samples at Costco? I know I do! Through the principle of reciprocity, we’re likely to buy far more than we would without free samples. Typically the goodwill generated from free gifts provides benefits that far outweigh the cost of the gifts.
3. Social Proof
Social proof is the human tendency to “follow the herd”. We often take our cues on how to think, act, and purchase from the behavior of others. It works best when the “others” are people of similar circumstances – our coworkers, friends, or neighbors.
Think buying that iPhone is completely your own decision based on factual evaluations of the technology and devoid of outside influence? Highly unlikely! It’s more likely that you made your purchase because the “social proof” said it was the right purchase.
Most of us will never do a detailed study of the technical schematics, individual electrical component reliability, battery chemistry, construction precision, material strength, or overall longevity of a device like a smartphone. It would be way too hard and take way too long. Social proof is a shortcut, and one that doesn’t always lead to the best answer.
Marketers, like Apple, that make great use of social proofs are able to charge far more than those without the same social momentum. Assuming similar technical specifications, you probably wouldn’t pay the same price for a Huawei phone. That’s social proof.
Cialdini’s consistency principle is our tendency to remain consistent to our stated goals or beliefs.
If you’ve ever had to do a performance review at work with “goals”, you’ve probably encountered this principle. Humans generally don’t respond well to pressure, but if a manager can get us to create our own performance goals we’re far more likely to follow through until review time.
Marketers frequently make use of this principle by aligning their sales pitch with our internal beliefs. You name an internal belief, and there’s a product matching it to capture your dollars: fair trade, Non-GMO, free range, organic, lead free, acid free, low salt, “local”, low carb, high protein, gluten free, wild caught, hormone free, and on and on…
The authority principle refers to the behavior of deferring to experts. Good or bad, when we lack the required expertise ourselves, we trust the experts to make our decisions.
From mustached bloggers, to stock-market talking heads, experts are everywhere trying to recommend and sell you products. Most of them are very well paid for these marketing efforts.
Authority can take other forms too — Ever hear the phrase “9 out of 10 doctors prefer [product name]”. That’s a marketing team using the authority principle to lend credibility to their product. There may in fact be 9 doctors that prefer the product, but that same marketing team never said they weren’t hand picked. Heck, they never even specified what kind of doctors they might be.
The scarcity principle takes advantage of our human desire to fight over scarce resources. As a product becomes “scarce” we want it more. Marketing departments use the principle of scarcity to create a sense of urgency around buying. Stop me if you’ve heard any of these phrases before:
“Limited Time Offer”
“Act now while supplies last.”
“I can only guarantee you this price today,”
“Only 2 left at this price.”
“One day sale only!”
You get the idea. By exploiting human nature’s propensity for loss avoidance, we’re spurred to buy endless mountains of crap we don’t need.
The Power of Influence isn’t Control
Do yourself a favor and read Influence. Cialdini’s spent more than 30 years researching human behavior, and compiling his book. For anyone seeking financial independence, I think it’s paramount that we understand how human behavior is manipulated through these psychological principles.
It’s an incredible tool to have in our financial toolkit, and I’m adding the book to my recommending reading list. It deserves to be there.
Thanks to books like this, we’re not stuck under the control of corporate marketing-droids hell-bent on our financial manipulation. Influence doesn’t have to mean control. We still have the free will to make our own decisions and identify when behavioral psychology tricks are used against us.
The best way to avoid the marketing message of course, is to just turn it off.