Category Archives: Customer Psychology

Winning a Jackpot: How do you decide?

Situation: Imagine you are participating in a game show and after going through qualifying and elimination rounds, you have reached the finals.  The game-show host presents you three options A, B & C and you have to select one of the options which are the respective doors. One of the doors leads to a jackpot (say a Mercedes) and the other doors to an insignificant prize, say a tennis ball through each door. Now let us say you have selected option A. You are curious and excited to see if you have hit the jackpot. The host asks you to be patient, opens the door C and what you see is a tennis ball. Now he asks you whether you would still stick with option A or switch to option B? What would you choose and why?

When this question was put on different platforms like linkedin, what’sapp it was observed that 95% of the respondents voted for A. Now read on:

Analysis: Generally people tend to stick to option A, the reason being they would not like to regret their decision. If A is selected leading to a jackpot, then he would be happy; however if otherwise, then he  blames  the circumstances or his fate. But at least he has the consolation that he was firm in his decision. However if he were to choose B, and were to lose; he would regret his decision and also for not being firm in his decision making process.

Let us see how this situation can be seen from a statistical probability basis. Generally people make decisions through their self-interest and do not look at a situation objectively. For example we tend to discount the impact of the environment on our decisions. When a person selects option A, the  probability of success is 1 in 3. However when door C has been opened with a tennis ball, the probability of B has increased to 50%. Assume instead of 3 options you were given 100 options. And now 98 doors are opened without any jackpot. Would you still bat for A? Now you will appreciate that at the beginning of the game the probability of winning A was 1% but after the events have unfolded B has risen to 50%. So in a single event even though A and B has equal chances, over the long term it makes sense to switch over considering the environmental factors.

What happens if the game of ABC is played 100 times. or 100 people play this game simultaneously? Now you will understand that the human mind is not programmed to think in a statistical manner. During most of programs our clients ask us to train their executives to think out-of the box. But sadly they  are hardwired to think otherwise.

Most people tend to overestimate fatalities and death in aeroplane crashes more than car accidents even though statistically air travel is much safer than car travel. One of the main reasons people tend to assign higher risk to air travel is due to wide publicity in media to such rare events.

A survey was carried out in the US after the 9/11 disaster. More people died in the three months  on  roads than those killed in the aircrafts during  the twin tower tragedy.  People tend to fear dread risk of low-occurrence and high consequence events such as the twin tower attack. ( Dread Risk : September 11 and fatal traffic accidents, by G. Gigerenzer) .There are two types of risks,  actual risk and dread risk, the latter is more out of anxiety quite often overestimated than the actual risk. This in part may answer why people would still go on playing option A.

Another reason for dread risk is an illusion of control. A person driving a car feels more in control of the situation than while flying in an aircraft driven by someone else. Most of our unconscious processes control our thoughts and behaviour, which in turn creates an illusion of self- I or the soul. It also makes us feel that I exist, I am in control and thus I can make my own decisions. But the truth is otherwise. Most of the events in life are beyond our control; there is no self.  And to create that illusion we tell stories, we fabricate them saying how intelligent we are.

The above problem is called as a Monty Hall problem ascribed to the presenter of the famous game show in USA,  Let’s Make a Deal. Monty Hall Problem states that there are two errors people make while taking decisions:

  1. They ignore the influence the external environment makes on their decision making and
  2. How their perceptions are shaped by the external environment. In fact we feel we are making decisions in a neutral environment and our decision making is rational. We feel we are safe when we are in control of our destiny. Rituals and routine give us more control of the situation. However truth is otherwise, Dan Ariely, author of Upside of Irrationality says we are poor in risk analysis and are irrational animals.

Rajan Parulekar|rajan@paradigm-info.com|98450 14098

Difference between Convincing & Con-Vincing

Soumyajeet Mohanty ran Edu Solutions,  an educational consultancy service in Bhubaneswar Odisha. Initially he started Sunrise Coaching Solutions providing tuition to engineering students. As the venture did not yield much returns, he ‘moved up the value chain’ by providing  ( fake) admissions to students wishing to get into medical colleges. Continue reading

Do Sales Incentives necessarily Improve the Margins?

One of our clients in Pune had invited me to diagnose the problem of their poor margins. When I asked the VP-Sales he said,” We are facing this problem for the last three years, so last year we have launched an attractive incentive scheme, but still it is not producing results.”

Most of the sales managers intuitively feel that incentives lead to higher margins.  However the research carried out by Edward Deci and Richard Ryan at the University of Rochester and Adam Grant at Wharton say that the effectiveness of motivation varies with the task.  There are two types of tasks:  Algorithmic and Heuristic tasks. Continue reading

Volition & Motivation: The Gap between Doing and Knowing

Most of us feel that attending a motivational program will help people achieve the individual and organizational goals. Kurt Lewin and Narziss Ach have made pioneering contribution in the field of motivation. Lewin was known for his field theory as well freezing and unfreezing  concepts in changing the human behaviour and believed that motivation and volition are the same. Narziss Ach  treated motivation and volition differently.

Volition happens at three levels: Continue reading

A Tale of Two Key-Note Addresses

“We are having our Annual Sales Conference and we would like you to deliver a Key Note address for our Pan-India Sales Team on Value Selling.” said Ramesh, the HR Manager of an IT company over phone.

“Thanks, but how did you know about me? “ I asked. “We make our own referral checks in the market before deciding on the speaker.” said Ramesh. Continue reading

Root Causes of Employee Disengagement

A number of surveys show that the majority of employees are disengaged from their work.  Factors that lead to the alienation of the modern executive  are: viewing life as  a means to an end ,  no respect for quality, abstractification and commodification. Continue reading

Importance of Weak Ties in Strengthening your Social Network

In your social network you have two types of ties:

  1. Strong Ties: These include your close friends whom you know well and with whom you interact frequently.
  2. Weak Ties: These are the acquaintances who know you superficially and your interactions with them are rare.

Between the two of them who should support you more in propagating your service? The intuitive answer is obviously the former,  that is the strong ties.  Let us look at a hypothetical scenario.  You (A) have strong ties with B & C with whom your total strength of the network is 28 connections whereas with X & Y you have weak ties and the total network among you is 25 connections. Which one should give you more mileage? (refer figure below)

strongweak-tie

Let us look at it mathematically.

You will observe that in strong ties there are lot of common connections which lead to a great deal of overlap. Whereas in case of weak ties, the overlap is less and the distributed network is high.

strongweak-tie_graph

You will observe that your message will spread to 7 new connections with strong ties whereas with 18 connections with weak ties.

Let us look with two examples:

  1. My book, Contextual Selling was published a few years back. I had conducted a few sales training programs for Rittal India, a leading manufacturer of IT enclosures. When Jacob Chandy, the Vice president Sales and Marketing went through the book, he immediately ordered for 80 copies. In the last 5 years I might have met him hardly 3-4 times.

I was delivering a Keynote address for Metrology Division of Carl Zeiss in 2014. After seeing the book, Mr. Wolfgang Schwarz, VP Sales based in Germany ordered for 30 copies. Our interactions over mail and linkedin are hardly 3-4 in the last two years.

I suggested Sunil my good old friend (strong tie) who was in sales about the book. He said, “I need a complimentary copy.”

  1. Last week I was conducting a program for Bruker Analytics in Mumbai. I had interacted with Dr. Shreeram Oak CEO, only once in 2012. After that meeting the second time I met him was while conducting the program.

In Mumbai I have two close friends, Amar and Ramesh (names changed) who are CEOs of companies in similar field and competing with Bruker. Both of them know me for the last 25 years. (We were working in the same company earlier ) Whenever we meet,  they regularly  complain about the poor quality of their salespeople and the need for a training program But training program to Rajan , no way!

Strong Ties:

  1. They know you too well. ( familiarity breeds contempt?)
  2. They move in almost similar circles
  3. There is a considerable overlap in their networks.

Weak Ties:

  1. They know you enough about your professional competence.
  2. More novel information about you can move into this network.
  3. There is a less overlap

The concept paper on Weak ties was developed by Mark Granovetter a Harvard Theoretician in 1972 as a part of his Ph. D. thesis. The Strength of Weak Ties is considered as a most influential sociological paper.

Quite often life is illogical and counterintuitive, do not ignore the weak ties,make the best use of them to improve the strength of your social network. Wish You a Very Happy and Prosperous New Year!

Rajan Parulekar|Paradigm Trainers Private Limited| #7, 7th Main, Binny Layout, Vijaynagar, Bangalore 560 040| T: 080 23207930, M: 98450 14098| rajan@paradigm-info.com