There’s a fascinating scene in the controversial Hollywood film ‘The Wolf of Wall Street’ that takes place prior to Jordan Belfort (played by Leonardo De Caprio) establishing his infamous stock brokerage firm.
In this scene he’s gathered together his band of, soon to be multi-millionaire, misfit friends’ and challenges each of them to “Sell me this pen”.
Brad (a drug dealer and someone Jordan describes as able to sell anything to anyone) accept and asks Belfort to “Write your name down on that piece of paper.” Belfort replies, “I can’t. I need a pen.” at which point Brad casually throws the pen back and says, “There you go. Sold”.
Interestingly, this is the only time during the movie that ‘persuasive’ selling techniques feature. In the language of social psychology, ‘Persuasion’ uncovers a person’s needs before providing a solution that addresses those needs.
So, if he didn’t use persuasion, how did Belfort convince so many victims to part with so much money? And how did he do it in one cold call?…
He used Social Influence techniques.
According to Dr Robert Cialdini, recognized as the world expert on the subject of influence and persuasion, there are 6 basic Social Influence principles that act like subconscious, mental short cuts to speed up our decision-making.
At TIA we educate people in the ethical application of these principles in business. Once you understand these techniques, you can also identify them in everyday life and be resistant to less ethical individuals.
All six principles are used in the movie but we are going to focus on just a couple in this article.
Oh yes, we are also going to hear from the new, ‘reformed’ Jordan Belfort who gave an interview recently in Australia about how to avoid being influenced using these principles.
1. The Principle of Authority – We tend to follow the advice or actions of perceived authorities
Recognizing the power of the principle of Authority, Belfort changed the name of his brokerage to Stratton Oakmont and created a backstory that the owners “came over with the Mayflower.”
As part of his ‘straight-line pitch’ Belfort got his brokers to talk about credible, blue-chip stocks they dealt in like Coca-Cola, Kodak, etc. when they tried to hook a new customer before introducing a ‘great buy’ (and generally worthless) penny stock.
Belfort’s advice: “ I would never give my money to a no-name brokerage firm or a financial adviser who was not affiliated with a major company. It’s up to you to do the research. If someone out there is conducting their business well, it’s not a secret. You can find it, you can double-check it and you can prove it. Then, you can check it again with authorities”
Our Advice: If someone is referencing recommendations supported by people you recognize as credible authorities or credible companies they have worked with, don’t be lazy. Consider the offer on its own merits and check the referencing is true before making a decision.
2. The Principle of Scarcity – The more scarce something seems, the more valuable it becomes
Belfort’s insights: “Bernie Madoff [operator of a Ponzi scheme] one of the largest financial frauds in U.S. history] relied on the oldest hustle of all, which is: ’My club is so exclusive – you want to be a member’. And it worked. He was a classic con man.
You wanted to be in Bernie’s club and if you weren’t in Bernie’s club, you were “less than”. People clamoured to give their money to Bernie Madoff. If you asked questions, he said, ’No, no – take your money back’.”
Belfort’s ‘Straight Line Pitch’ used scarcity with spectacular success; “This is a limited opportunity to get in early”. “I received confidential info that that they are about to IPO”. “ As soon as this information gets out, the stock’s going to go ballistic so act now before you miss out”.
Our Advice: If you are ever in a situation where you feel you are being encouraged to buy or agree to do something because of limited time or supply, ask yourself; “Do I really need this? How could I check that this is a wise choice before making the decision?” Consider what other options would be available to you if you didn’t say ‘yes’ now.
Like to know more about the other 4 principles?
Just leave a reply requesting it below and I’ll send you them…. But hurry, this offer is only open to the first 10 people… (Just kidding!)