Hi there. I'm Matt. Don't hate the player. Hate the game.1

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Aug 3, 2009 | Comments

An Apple store employee told me to how sell the iPhone with a great success rate. His words:

Man walks into Apple Store.

Man: I’m thinking about getting an iPhone. But I’m not sure.

Apple Employee: Let’s walk over to the phones.

Man: So how does the iPhone work?

Apple Employee: Here. Try it out.

Man: But I don’t know how to use it. I have no idea how to even make a call!

Apple Employee: How do you suppose you make a call?

Man: Oh. I guess it’s this button here…and then I guess I just type the numbers here…

Time passes. Man stumbles upon 50% of phone functionality. Employee has not touched phone once.

This may not seem breathtaking, but compare this to my experience in the Sprint store, when I purchased a Palm Pre.

Me: I’d like to check out the Palm Pre.

Sprint Employee: Let me get the demo Pre…here it is.

Me: How does it work?

Sprint Employee: [Employee holding Pre] Well you swipe this way to move between programs. And this button brings up the menu…[5 minutes later]…

This is the absurdity of teaching a technology via traditional, lecturing techniques. The best way for someone to understand a technology is to experience it themselves (UX experts, hopefully we’re all nodding in agreement). Apple has figured this out and Sprint is in the dark ages. Poor Palm.

But more importantly, it illustrates the power of exploiting cognitive biases. I’ve written quite a bit about biases recently, and Apple employs a very important one: the endowment effect. It says that people value something more when they possess it. Here’s the bias in practice:

  • Group 1: shown an assortment of random, trinket objects: rubber bands, paper clips, beer cozy, post-it notes, etc. They were asked to value each object–all were roughly valued the same.
  • Group 2: shown the same objects, but were told that they could keep the beer cozy after the experiment. The value of the cozy doubled for these respondents. [academic source]

Car salesman are aware the endowment effect–that’s why they let you test-drive the car. As soon as your hands touch the steering wheel, the endowment effect owns. Your perceived value of the car and the salesman’s close-rate increases. In short, sales are difficult when products are behind a glass case (marketing experts, hopefully we’re all nodding in agreement).

Something to think about: are there any other instances of salesman using psychological maneuvers on customers?

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  1. Hey what’s up Matt?

    I just started reading your blog last week – lots of great info.

    I used to use the “endowment effect” all the time when I worked in sales, although I didn’t know that that’s what it was called back then.

    One example was giving the customer a calculator so they could plug the numbers in themselves and see how much they were spending or saving.

    Something else I learned was that “The fear of loss is always greater than the desire for gain.”

    In other words, using your cell phone example, once somebody has the iPhone in their hands, it’s like giving the customer a sense of temporary ownership. To be asked to return it, then, is playing on that fear of loss.

    Apple’s definitely done a great job of training their salespeople.

  2. @Dennis: Thanks man. Never thought of the calculator as a tool for “endowing” ownership, but it definitely materializes the benefit of a product. I imagine seeing $300 savings after typing into a keypad a hell of a lot more relevant than a salesman preaching “you’ll save $300″ to me.

    Your phone example reminds me of a great quote from Malcolm X (I really should have included it in my post).

    “Don’t condemn if you see a person has a dirty glass of water, just show them the clean glass of water that you have. When they inspect it, you won’t have to say that yours is better.”

  3. I really like the Malcolm X quote – I’ve been meaning to read his biography (it’s on my bookshelf right now). That quote actually ties in really well with another book I’m reading right now: “How To Win Friends and Influence People.” One of the principles is:

    “Let the other person feel that the idea is his or hers.” — this is kind of what’s going on in the iPhone example.

    One of my other sales lessons was that “People hate being sold…but they love to buy.” The Pre customer is being sold/told. The iPhone customer, however, is being allowed to make that purchase decision on their own (with the Apple rep as a guide).

    The ability to visualize the $300 in savings is very powerful, although I used to phrase it a little differently: “So if you decide you don’t want to move forward you’re actually going to be LOSING about $300/month.” It may seem like a very subtle difference, but the idea of LOSING $300 vs. SAVING $300 is pretty significant.

    And yes, I graduated from MAS back in March – still on the job hunt. Staying positive.

  4. Giving someone a demo unit to take home to play with definitely increases the possibility of a sale – this is a great tactic.

    I like the fact that the technology explains itself, as it should.

    Any explanation between people will be difficult unless they are at the same exact level of understanding and explaining of technology.

  5. Hey Matt, thanks for reminding me of cognitive endowment. If you think about it, the entire Apple experience uses the idea – from a 30 second sample in iTunes to the entire Apple store experience.

    Still, I don’t necessarily look at this as damning for Palm. After all, if you had walked into an AT&T shop rather than an Apple Store, I wonder if the comparison would have held. Sprint’s not in a position to own the distribution, and the only reason why Apple enjoys that advantage is because, well, they’re Apple.

    Thanks for sharing this and making me think today. Too few days go by w/o me doing that.


  6. @Dennis: Another great book–Carnegie was definitely touching on our innate self-interest in your quote.

    And the second quote on losing vs. winning hits another cognitive bias–risk aversion. I’ve read that humans typically value $200 saved equal to $100 lost, or about 2:1 risk to gain. So if asked you to bet $100, you’d want the 50% chance of winning $300 against a 50% chance of losing $100.

    @Eric: Good point on the disconnect on the level of understanding of technology. I guess this is why every salesman is told to put themselves in the “customer’s shoes.”

    @Marc: Good point about ATT. You’re right; this is something specific to Apple and I’m sure every cell phone store still operates on the point & listen mentality.

  7. Matt — Great post. I found it based on a tweet someone made at StockTwits (www.stocktwits.com) re: Apple.

    Thanks for taking the time to initiate this conversation. I just bought my iPhone two weeks ago and can totally relate.

  8. When you let people *try* something, you greatly improve the chances they will buy it. It is as though the act of giving it a whirl gives them a temporary sense of ownership. Salespeople have known this for years…witness the test drive at an auto dealership. They work hard to get you behind the driver’s wheel, because they know that once you do, you have crossed a small mental barrier toward ownership.

    Likewise, recent research shows that part of the reason the Apple App store is doing better on sales than its competitors (like the Android store) is because there are more *lite* (read: free or trial) versions of the apps in the Apple store. Most users reported that they were more likely to buy an app that they’ve tried than one they haven’t: http://tinyurl.com/la9ak5

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