Monday, February 29, 2016

Rich Dad, Poor Dad

Second book from 2016. I would consider this to be just a motivational book about taking action in order to save and invest your money in your asset column.

The key lessons are:
  1. The Rich Don’t Work for Money
  2. Learning Financial Literacy
  3. Mind Your Own Business
  4. The History and The Power Of Corporation 
  5. The Rich Invent Money
  6. Work to Learn- Don’t Work for Money

Saturday, February 13, 2016

Influence: Science and Practice

Influence: The Psychology of Persuasion

This is the first book I finished reading in 2016. It took me a little bit longer than I expected to read it but it was worth it.
Following a summary of the most important take aways of the book.


1. Reciprocity – As humans, we tend to be almost uncomfortable when we take a debt or a favor from others. Regardless of whether the favor is intentional or unintentional, we usually try to return the favor as soon as we can. If you’re a business owner, you can bestow a few favors on your customers so that the principle of reciprocity works effectively. For example, if you send a sample of your product as a gift to your customers, they might be obliged to purchase more products from you because they appreciate your kindness. Remember that the key to reciprocation is to offer a personalized gift to your customers when they least expect it.

2. Commitment and Consistency – Commitment and consistency are desirable traits, so we strive to be consistent every day. Therefore, if your customers are committed to you, whether it’s written or verbal, they are more likely to continue doing business with you. If you’re running a business where you need to meet your customers, you can ask them to write down their appointment details for you on a card you provide. Once they write the time and the date of the appointment, you can rest assured that most of your customers are going to turn up simply because they have given you a commitment already.

3. Social Proof – This principle is about how people rely on the safety of numbers. As you may already know, people tend to follow a ‘herd mentality’ and do whatever others are doing, especially when they are uncertain. For instance, if some people feel that hordes of other people are behaving in a particular manner, then they will behave in the same manner by assuming that it is correct. This means that people buy products that are bought and liked by others, so if you’re a business owner, you can provide statistics of your products by displaying your best selling ones in order to make it easier for the customers to get rid of their uncertainty and purchase it. Make sure you use the power of social media to obtain maximum benefits because if people see that their friends are using your product, they are probably going to do the same.

4. Liking – The principle of ‘Liking’ depends on three other factors that help customers make a decision. As humans, we like to buy products from people who are similar to us, give us loads of compliments and cooperate with us. For example, Tupperware came up with this brilliant idea of house parties where a customer could invite his/her friends for a Tupperware party. Now, since people loved to buy products from their friends, the sales increased dramatically. Therefore, if you employ sales agents who are friendly and compliment people whenever necessary, you will definitely see a rise in your sales. In addition, you can develop your listening skills and social skills to interact with your customers efficiently.

5. Authority – It’s no surprise that people follow the advice of knowledgeable experts since they tend to feel a sense of obligation towards people in powerful positions of authority. You will usually see experienced doctors and surgeons participating in pharmaceutical campaigns because people think that if an expert or a person in authority endorses it, then it must be great. Similarly, doctors display their Diplomas in their office as people are more likely to listen to their advice. Thus, you can use this weapon of influence in your business by hiring someone who has several years of experience under their belt. Also, if you’re talking to your customers, you can introduce them to your colleagues who have a lot of experience in the field, thus making it easy for the customers to buy your products.

6. Scarcity – This principle simply states that people love items that are scarce, which means that products seem more attractive when the supply is limited. In order to gain maximum benefits of this principle, you have to make the customer understand how your product is unique and why they simply can’t miss out on it. So, if you’re selling a product, you can limit the supply and announce a closing date to your customers. Once they realize that the product is going to be scarce soon, they will take action, thus making your sales increase drastically.

The six principles explained by Robert Cialdini might be a boon to advertisers and marketers to gain more sales; however, if you’re a customer, you must know how to resist the weapons of influence used by others to persuade you. Simply put, you must understand how to say ‘NO’ if you aren’t comfortable when others try to get you to say ‘YES’. As explained earlier, it makes a lot of sense to use these principles as short cuts to gain desirable outcomes and they work like our allies, but it’s imperative to use them moderately or they might not work all the time. Let’s take a look at the six principles again and see how you can resist them if you’re a customer.

1. Reciprocation – As mentioned already, the principle of reciprocity makes you feel obligated to return a favor, so if you experience a situation where someone’s trying to give you a discounted service or a free gift when you’re uncertain about the product, ask yourself if you are going to be uncomfortable or feel obligated to offer something to them in return. If you aren’t interested in the product, decline the favor so that the feeling of obligation is eliminated.

2. Commitment and consistency – Now that you know that your commitment might work against you, you need to think about the consequences of your actions before you agree to anything, even if it’s at a preliminary level. If you’re uncertain about something, take your time before you give a verbal or written commitment, thereby reducing any guilt you might feel.

3. Social Proof – Many of us buy products when others buy them because it proves that the products are working efficiently; however, think carefully before buying something that’s isn’t right for you, even if it’s pursued by many people. It’s best to avoid the herd mentality when you’re purchasing something since it might affect your decision negatively.

4. Liking – While it can be very tempting to purchase a product because the sales man is extremely likeable, you need to think if the product is of any use to you. For example, let’s assume that you want to buy a car and walk into a showroom. If the salesman is very knowledgeable and is similar to you, you might really like him and buy the car, but do you really like the car? Are you buying the car because it’s perfect or have you fallen under the spell of the salesman who gives you several compliments? Once you distinguish between the two factors mentioned here, you’ll be able to take great decisions.

5. Authority – We often see commercials where actors, physicians and other experts offer their opinions on a product. Though the person in a position of authority might have several years of experience, you need to ask yourself if you’re purchasing the product only because of him. Are you buying the product because it’s worth it or are you persuaded by the expert? If you’re swayed by the expert, think whether he has useful credentials that support his views on the product. In addition, you also need to understand that the expert who benefits from the sales of the product might not be able to give you an unbiased opinion.

6. Scarcity – Do you jump in and buy a product whenever you see an advertisement screaming that the stock availability is going to be limited? If yes, think again. Decide whether the product is really going to be useful when you buy it, but don’t purchase it simply because the availability is scarce.