Class 5

Question 1

The 6 key routes to persuasion according to Robert Cialdini

Answer 1

• Liking
• Reciprocity
• Consistency
• Reference groups
• Authority
• Scarcity

Question 2

Liking

Answer 2

• Liking = We comply with those who like us. The sources of liking include:
• 1. Physical attractiveness: we like pretty people because we believe they have other qualities as well (the halo effect)
• 2. Similarity: we like similar others and those who mimic us
• 3. Familiarity: we like familiar things (the mere exposure effect)
• Liking: we like those who signal they like us through smiles and touch. (restaurant people give more tips and evaluate the service as better when they receive small touches in hands, arms and shoulders/ Touching is neutral among those who don’t like to be touched)

Question 3

Reciprocity

Answer 3

• Reciprocity = people repay in kind
• One has to be the first to give, make the gift personalized and unexpected (the example of the mint study in which tips increased 23% when the mint brought by the waiter was personalized and unexpected)
• This is also the mechanism through free samples and free home inspection work. By providing something first, the company is likely to receive something in return from customers.

Question 4

Consistency

Answer 4

• Consistency = People fulfill public and voluntary commitments
• Asking people to commit to something enhances their likelihood of doing it. For example, restaurants reduced no-shows by instead asking them to please call if they are not coming, to answer whether they would call if they are not coming
• Customers often said they would call. As a result, those who couldn’t go to the restaurant, were more likely to call to cancel the reservation. And those who were not sure if they would go, were more likely to come to the restaurant given that they hadn’t cancelled the reservation

Question 5

Reference groups

Answer 5

• Reference groups = people follow others by a normative influence (people like to follow others) or by informational influence (what others are doing should be the correct thing to do)
• The Ash experiment is a demonstration of this principle

Question 6

Authority

Answer 6

• Authority = People defer to experts and even fake experts
• For instance, real estate agents increased sales by 15% answering customer inquiries firstly mentioning their expertise: “speak to Pieter our head of sales, he has 20 years of experience selling properties”

Question 7

Scarcity

Answer 7

• Scarcity = people want more of what they can have less of

- This is true especially when the items were available before and they became scarce because of others’ demand

Question 8

Online ratings

Answer 8

• Online ratings and reviews influence consumers especially when:
• 1) the situation is ambiguous/risky (and therefore for immaterial services more than for tangible/material products)
• 2) the reviewer is similar (from the same country, similar age, same gender…)
• 3) the review is negative (unless the consumer really wants to buy something, then negative comments will be skipped).

Question 9

Reference groups Beijing study

Answer 9

• The Beijing study is another example of the effect of reference groups: Highlighting the most popular items in the menu of a restaurant in Beijing increase orders by 13% to 20% and increased customers’ satisfaction significantly
• This is because by highlighting the most popular items we signal that these options are approved by others
• In addition, we make choice easier. Thus, someone who was in doubt about asking for dessert, now has a good reason to ask.

Question 10

Goal persuasion (small area hypothesis)

Answer 10

• Small area hypothesis: People are more motivated the closer they are to a goal
• Can get even more motivated if focus on the progress already made at the beginning and on the effort remaining at the end of goal pursuit
• When motivating customers to buy more in a loyalty program it is best to say: “you have achieved 30% of the Silver level” and “you have 30% left to move to the Gold level”.

Question 11

Two routes to persuasion

Answer 11

• There are two routes to persuasion
• Peripheral route = Little elaboration and effort. Often used by low involvement products. Number of arguments used to buy a product is the key to persuasion
• Central route = More elaborate and effortful. It is used by high involvement products. Number of arguments & the strength of arguments are important for persuasion

Question 12

Eye-contact

Answer 12

• Eye-contact and gestures: Eye-contact helps when clients agree and are almost buying the product
• Gestures need to fit the receiver regulatory focus (promotion vs. prevention).

Question 13

Handmade products

Answer 13

• Handmade products are expressions of love and of specialty
• People are more likely to buy a handmade product to give to a close person.
  Handmade products are better evaluated among high price products and then among low price products.

Question 14

Peak-end rule

Answer 14

• People remember the most extreme and recent experience: the peak-end rule
• Important for a company to deliver very high satisfaction in the most recent sale or service encounter

Question 15

Compromise effect

Answer 15

• Compromise effect = consumers are more likely to select a middle option
• So when a third bigger option is added to the menu, most people will ask for the second biggest option.

Question 16

Recovery process after failure

Answer 16

• It is important for companies to start the recovery process when a failure happens
• Professors research indicates that when the company first acknowledges a problem and apologizes, customers are way less likely to make negative word-of-mouth (even if the problem is not solved)