05 May 2021

On today’s show, Robert Leonard chats with Dr. Robert Cialdini to discuss his book, Influence, New and Expanded: The Psychology of Persuasion. Dr. Cialdini is a New York Times Best Selling Author of Influence and Pre-Suasion.

He is also CEO and President of Influence at Work where they focus on ethical training, corporate keynote program, and the CMCT (Cialdini Method Certified Trainer) program. He received his PhD from the University of North Carolina and post-doctoral from Columbia University. In acknowledgment of his outstanding research achievements and contributions in behavioral science, he is frequently regarded as the “Godfather of Influence.” 



  • What influence is and why there is so much psychology in persuasion.
  • What the levers of influence are.
  • How the world of digital business is impacted by influence.
  • What makes our cell phones addicting?
  • How do we spot phony online reviews and why this is important?
  • Why personalizing gifts increases the returns of gifts.
  • Which psychological principle Coca-Cola missed that led to a disastrous marketing decision?
  • Why Amazon offers to pay each of its fulfillment employees up to $5,000 if they quit.
  • The question job candidates can ask at the start of an interview to increase their chance of success.
  • What the unity principle of influence is.
  • And much, much more!


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

Robert Leonard (00:02):
On today’s show, I chat with Dr. Robert Cialdini to discuss his book Influence, New and Expanded: The Psychology of Persuasion. Dr. Cialdini is a New York Times best-selling author of Influence and Pre-Suasion, CEO and president of Influence at Work, where they focus on ethical training, corporate keynote programs, and the CMCT, Cialdini Method Certified Trainer program. He received his PhD from the University of North Carolina, and postdoctoral from Columbia University.

Robert Leonard (00:34):
In acknowledgement of his outstanding research achievements and contributions in behavioral science, he is frequently regarded as the godfather of influence. During this interview, we talked in-depth about the concepts found in his updated book that you can use in your daily life. Dr. Cialdini gave insight on how impactful psychology is in business, what makes our phones so addicting, how we can spot phony reviews online, and he even shares a story about how Warren Buffett and Charlie Munger gifted him a share of Berkshire Hathaway’s A stock because the book impacted them both so much.

Robert Leonard (01:13):
Warren Buffett actually ranks Cialdini’s book as his number three best business book of all time, and Charlie Munger ranks it as number one. I feel so honored to have Dr. Cialdini on the show with me today and to have the opportunity to speak with him. His books are some of my favorites. So without further delay, let’s get right into today’s fantastic episode with Dr. Robert Cialdini.

Intro (01:37):
You’re listening to Millennial Investing by The Investor’s Podcast Network, where your host, Robert Leonard interviews successful entrepreneurs, business leaders, and investors to help educate and inspire the millennial generation.

Robert Leonard (01:59):
Hey, everyone, welcome back to the Millennial Investing Podcast. As always, I’m your host, Robert Leonard and with me today, I have a guest that I am super, super excited for, Dr. Robert Cialdini. Welcome to the show.

Robert Cialdini (02:14):
Well, thank you, Robert. Glad to be with you.

Robert Leonard (02:17):
My guess is that a lot of people listening to the show today have read your book, one or multiple of them, or have at least heard of you but for those who haven’t, please tell us a bit about yourself and how you got to where you are today.

Robert Cialdini (02:32):
Well, I’m a behavioral scientist, and I have always been intrigued by the study of influence and persuasion, what got people to move in a particular direction. So that has been my commitment. It’s been my passion for over 35 years now, and I’ve acquired a lot of information on the topic. So I thought it was a good time to do an update of my book, Influence where I consider these issues, one that takes into account a lot of the new research that’s been done.

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Robert Leonard (03:08):
I am honored to have received an early release copy of the newest edition of your book that you just mentioned. I was reading through all of the new material that was included, and we’ll certainly spend quite a bit of time talking about that, but before we get into the new content, I want to spend some time talking about some of the concepts that were included in earlier editions of the book to provide a baseline so we can get to the new material. For those who are new to your book and your material, what is influence? Why is there so much psychology in persuasion?

Robert Cialdini (03:39):
Well, my definition of persuasion is the ability to move people in your direction, in the direction of your offer, without changing the merits of that offer one bit, but only changing the way you deliver those merits, the way you present those merits to the recipient of your offer and that’s all psychology, isn’t it? It’s not design of the product or service. It’s not production. It’s not anything like that.

Robert Cialdini (04:13):
It’s about the ability to convey or communicate those merits in a way that makes them more attractive to the individual involved. That’s actually how I got interested in studying the influence process. All my life, I’ve been a kind of a sucker, a patsy, an easy pushover for the appeals of salespeople who would come to my door, people selling magazines or asking me to contribute to causes I’ve never heard of and I would always find myself in unwanted possession of these things or giving contributions to causes that on their merits, didn’t seem to generate that. What could it have been?

Robert Cialdini (05:01):
It occurred to me, it must have been something in the psychology of the way they presented those merits to me that made them come alive, made them grab me and want to possess them. So I started to study the influence process, partially out of self-defense, but more generally out of an intriguing question of what are those delivery systems that we might have? Those psychological keys employ to make the influence process more successful.

Robert Leonard (05:39):
How often do you notice these things in your everyday life? How often are you like, “Oh, I recognize this principle here or these different concepts in everyday life.”

Robert Cialdini (05:48):
Every day, every day. I’m attuned to them. It’s interesting. An example in my book where I had an experience very similar to one of my readers who wrote about it, but I was in an airport a couple of years ago. The guy behind the counter said, “Well, we’re overbooked, and could we get some people who would be willing to take the next flight? We’ll give you a voucher.” He said, “A $3,000 voucher.” Well, that got everybody’s attention. He said, “Oh, only kidding. It’s a $300 voucher.”

Robert Cialdini (06:26):
Not one person offered to give up their seat. He had to raise the amount twice to be $500 before he got anybody to do it and I know why. Because he made the mistake of beginning with a large number like $3,000, which made $300 seem like a pittance. So I went up to him, and I suggested … His name was Clyde, this is that British Air.

Robert Cialdini (06:52):
I said, “Why did you do that?” He said, “Well, I wanted to get people’s attention and I wanted to get a laugh.” So I said, “Why don’t you try this.” It has to do with something called the contrast principle of perception. “Instead of saying, the voucher is $3,000, and then retreating to 300, why don’t you say, ‘And if you’ll agree, we’ll give you a voucher of $3.'” That would have gotten everybody’s attention. Then when he said, “Oh, no, sorry. It’s actually $300,” he would have gotten the laugh, and a lot more people volunteering simply by virtue of this principle of perceptual contrast. So I see it all around me.

Robert Leonard (07:37):
I see people use that wrong all the time and I see different concepts that I study outside of psychology and finance, in my everyday life, too. So I can only imagine how often that you see it. What are the different levers of influence?

Robert Cialdini (07:52):
Well, for me, the levers of influence are the universal principles of persuasion that if incorporated into a request, a proposal, a recommendation we would make to others, significantly increase the likelihood that we will hear yes, that we will get assent to what we’re proposing. Now, I want to be careful to emphasize the word likelihood here, because we’re talking about human behavior, and behavioral science, not magic. You’ll never get any principle or tactic or strategy or practice that works on everybody all the time, but using the scientifically proven principles of persuasion, the levers of influence, you can guarantee that you will increase the likelihood of success every time.

Robert Leonard (08:57):
Would you say it’s almost a game of probabilities and a law of numbers? The more you do it, eventually, you’ll come to this probability number that it works, and the reason I asked that is because it kind of reminds me of what we talked about on the show a lot about options where you implement this options trading strategy, and it has a likelihood of succeeding, say, 70, 80% of the time. If you only do it once or twice, you might not win, but if you do it 100, 1,000 10,000 times, you’ll probably come back to that mean, or that 70 to 80% expected probability. Is it the same with this type of work?

Robert Cialdini (09:29):
It is, of course. In any one instance in any one individual that you’re talking to, of course, there are a number of factors that may not work as well. But over the large range of situations, of instances and people these principles will increase significantly, the odds of success. Now, what’s crucial is that those odds will have already been determined for you by the scientific process.

Robert Cialdini (10:05):
You don’t have to engage in trial and error to recognize the probabilities. There’s scientific research that shows your probabilities will be elevated significantly if you use this principle, or that practice, in the situations where you want to get compliance with a request or agreement with a proposal.

Robert Leonard (10:28):
If you’re familiar with Gary Vee, he has a saying and even a book called Jab, Jab, Jab, Right Hook. Your book and what you’ve been studying has been around far longer than Gary Vee. So it’s interesting to see how many successful people are using the ideas that you teach in your book, whether they know it or not. Talk to us about this idea of reciprocity, the old give and take.

Robert Cialdini (10:55):
So that’s one of the levers of influence. One of the principles, if included in a message or an approach, significantly increases the likelihood of ascent. The principle of reciprocity or reciprocation exists in every human society, and every human society trains its members from childhood in this rule that says, “We are obligated to give back to others the form of behavior they have given to us.”

Robert Cialdini (11:25):
So if you invite me to a party, I’m obligated to invite you to one of mine. If you remember my birthday with a card or a gift, I’m obligated to do the same for you and if you do me a favor, Robert, I owe you a favor. I’ll say very simply, in the context of obligation, people say yes to those they owe. You see the implication here?

Robert Cialdini (11:53):
If we go first, if we’re the first to give benefits, or advantages or information, or even a positive mood, positive outlook at the office, we will get that back. Have you ever walked down a corridor and you see somebody coming towards you and you smile at that person? What do you get? You get a smile, but you only guarantee that you will get that smile if you go first.

Robert Cialdini (12:24):
So this is what the rule says, “Whatever you want in a situation, if you give it first, people will give that back to you.” Let’s take an example from a study that was done in Southern California in a chocolate shop. They did a little experiment. One week, all of the customers who came in were met by the manager at the door greeted warmly and then escorted to the candy counter where they could make their choices. That was for half. The other half was greeted warmly, and given a small piece of chocolate, and then escorted to the counter.

Robert Cialdini (13:05):
Those people were 42% more likely to buy candy. They had received, they felt obligated to give back, even though it was just a little morsel of chocolate. Now you might say, “Well, maybe they just liked the chocolate, and thought, oh, well, I’ll get more of this,” but if you look deeply into the data of this study, that’s not what happened. The majority of them didn’t buy any more chocolate.

Robert Cialdini (13:32):
They bought small amounts or amounts of other things at the counter. So it wasn’t what they had received. It was that they had received that spurred them to move. Here’s one more example, a study that shows the importance of going first with all of this. This was done in McDonald’s locations in South America, Colombia, and Brazil. They tried a little experiment.

Robert Cialdini (14:03):
When families came into the store, they wanted to increase the total amount of food that they purchased. So the kids of the family, each one of them would get a balloon, but they changed when the kid would get the balloon. For half of the kids, it was as they came in. For the other half, it was as they were leaving. Those families whose kids got a balloon when they came in bought 25% more food than the families who bought one on the way out.

Robert Cialdini (14:39):
Was the same balloon, cost the McDonald’s franchisor the same amount, but by giving it at the end, you fumble away the power of the rule for reciprocity. Now here’s another interesting thing about that study. They also looked at the percentage of coffee orders from the family.

Robert Cialdini (15:00):
Now, the kids aren’t going to drink coffee, but the parents did. The parents bought more coffee, they didn’t just buy more food for their kids, they bought more coffee, because, and this has to do with another one of our principles of influence, the idea of unity. If you do a favor for my child, you’ve done a favor for me, and I owe you and that’s what they found. 20% more coffee purchase. So that’s the principle of reciprocity.

Robert Leonard (15:29):
What I think is so fascinating about all of this is that there are so many business strategies and tactics that tap into these things, and I don’t think a lot of people even realize the fundamental or underlying psychological reasons as to why they’re doing it. If you study Gary Vee at all, he always says, “Give away a ton of free stuff. Just give away free, free, free, free free, and then eventually ask them to buy and they will, because they feel like they owe you and they’ve gotten so much value from you.”

Robert Leonard (15:57):
He talks about that, but he doesn’t talk about all the underlying psychological pieces and it’s fascinating because almost everything in business has a psychological undertone or underpinning to it, just like you just mentioned.

Robert Cialdini (16:08):
Here’s the mistake that a lot of organizations make. They give you things as a bonus, after you’ve purchased instead of giving you something upfront, which causes you to purchase more. I know you’ve been in a restaurant like me, where on the counter, as you leave, there’s a bowl of candy, mints that you can take as you leave. What a mistake. There’s research to show that if the server gives you a mint on the tray with your bill, his tip goes up 3.3%.

Robert Cialdini (16:45):
If the server gives you two mints, his or her tip goes up 14%. All in keeping with the rule of reciprocity, the more you’ve been given, the more you feel you have to receive, but you’re not engaged by it until before you’ve made the decision to purchase. There are a lot of mistakes that are being made by giving people bonuses rather than inducements or gifts from the outset.

Robert Leonard (17:15):
I’m so glad you just added that last point because that was exactly going to be my next question is, I wonder if it works from an employee-employer relationship perspective. We always hear about people getting bonuses after they’ve done something well, and I guess that makes sense from verifying that they actually got the results that they needed to to get that bonus. But I wonder if they could even increase their results even more by giving them some sort of bonus when they start, maybe give more people sign-on bonuses so that they’re even more incentivized when they first start. I wonder if this idea of reciprocity could be used?

Robert Cialdini (17:46):
Well, one way that it works is to give them a bonus at the start, that if they don’t reach their goal, they don’t receive. So it’s going to drive them to receive because people don’t want to lose what they’ve already received. So start out with a bonus that is contingent on you doing well. That’s going to drive people to do well and it has the benefit of being given to you first.

Robert Leonard (18:17):
Is that different than knowing you could earn a bonus afterwards? So just say you’re given a bonus of $10,000. Somebody else is told if you reach these results, you would get a bonus of $10,000. Are those different situations or by telling them that there’s the possibility for that, is that enough?

Robert Cialdini (18:33):
Those are different situations psychologically. I have not seen research on it. There is research, in fact, to show … Now that I think about it, there’s research to show that one way to get people to live up to a commitment is to give them a bonus or an amount of resources, money first. People will then fight like crazy to avoid losing it, as opposed to as just as you said, telling them that they will get the bonus afterward. One reason is loss is more powerful psychologically than gain. People are more mobilized into action by the idea of losing something than of gaining that very same thing.

Robert Leonard (19:21):
This is very timely for me, and I think you might have just saved me from making a mistake I was just making because I’m actually hiring two freelancers or contractors to help me with some I have going on in my business. I just told one of them yesterday that we would start out at a certain rate and then if they perform well, we would then look at bonuses and in increasing their rate. I think I might have to go back to them after this call and say, “Actually, let’s start you out a little bit higher, and then if it doesn’t work out, we can come back down to a different rate,” or maybe something along those lines.

Robert Cialdini (19:55):
You’ve nailed it. That’s exactly right.

Robert Leonard (19:58):
Well, I appreciate you for saving me from making that mistake. In your book, you reference liking as the friendly thief. Why and how are these two things related?

Robert Cialdini (20:10):
Well, one thing that happens when we like someone is that we let our guards down, and people who want to take advantage of us can do so if they first get us to like them. That’s not a very savory thing that I would recommend people to do to get people to like you so you can take advantage of them, but get them to like you so they have a sense of rapport with you, and want to do business, want to carry on continuing exchanges. That sounds to me entirely ethical and effective at the same time.

Robert Cialdini (20:43):
There are two things that the research shows will cause people to feel that sense of rapport with you, that are very easy to implement. One is pointing to genuine similarities that exist between you and the other individual. There was a study done of negotiators. They were negotiating online with one another and because online negotiation is very difficult, there’s no humanity there, there are just words on a screen. This was by email, they were negotiating.

Robert Cialdini (21:19):
30% of the time, they were deadlocked. They could not come to a mutually agreeable resolution to the negotiation. But another group of them, the other half of them, were asked to do the negotiation but before they did, they were asked to send some information to their bargaining opponent about themselves. What their hobbies are, what their interests are, what their marital situation is, where they went to school, where they grew up. These kinds of things. Then begin the negotiations.

Robert Cialdini (21:57):
What happened was the number of stymied negotiations where nobody won, both sides walked away with empty pockets, dropped from 30% to 6% of deadlocks. So what you get is people like you more when they know certain things about you. That could be explained, well, you’ve humanized yourself in their minds, but when they looked at the data closely, again, they found it wasn’t just the amount of humanizing information that was sent back and forth. It was only when there were commonalities in the information [inaudible 00:22:38].

Robert Cialdini (22:38):
“You’re a runner? I’m a runner. You’re a firstborn? I’m a firstborn. You’ve got twins,” whatever it was. When they found the commonality, that’s what triggered the willingness to give the other person grace in a negotiation, even at a point where they were stuck, so that they could get to a mutually beneficial resolution. That’s one thing, similarities. The other is compliments.

Robert Cialdini (23:09):
People love compliments, and they love the people who give them compliments. One new piece of information that’s in the new book that I’ve written is about compliments that are especially effective when you give them behind someone’s back. So you don’t give that compliment directly and risk the possibility that the people around you who witness it will see you as somebody is trying to butter up the boss or trying to curry favors. No.

Robert Cialdini (23:44):
Suppose you’re in a meeting and your boss says something you think is brilliant. You can’t raise your hand and say, “You know what, Kelly? What you just said was truly insightful. I thought it was so smart.” Because it seems like you’re currying favors. You may have ulterior motives there under those circumstances. Instead, here’s what I’m going to recommend. Tell your boss’ assistant that you thought he or she said something brilliant in that meeting, what exactly it was.

Robert Cialdini (24:17):
Your assistant will be sure to tell your boss because people want to be associated with good news in the eyes of their superiors. The assistant will tell the boss who will love you for it .Give compliments behind people’s back.

Robert Leonard (24:36):
One of my favorite parts of the newest edition of your book is the inclusion of insights about digital businesses. I also like the chapter summaries, but I think my favorite part is about the digital businesses. As you prepare to include this content, what were you most surprised to find in your research? How is the world of digital business impacted by influence?

Robert Cialdini (25:01):
This is a good question because I was surprised. I was surprised that what has changed with these new digital platforms and routes to possible influence is the technology, but not the psychology. There was a study done of 6,200 E-commerce sites that used A/B designs to decide which particular features of the site would be particularly effective in turning prospects into customers, conversions.

Robert Cialdini (25:40):
What they found, it was not things like free delivery or technology on the site that allowed people to move around more quickly and get into their purchase basket more readily. Nothing like that. It was the six principles of influence, whether those principles were there. For example, reciprocity. Have you given something to people first? Have you sent them a white paper or a piece of information? The five biggest mistakes you can make in this particular domain, not selling your product, just giving them information that helps them be more informed in the particular domain.

Robert Cialdini (26:25):
That was one. You know what was the top? Scarcity. Another one of the principles that we’ll talk about. It was that if what you have to offer is of limited number, or of limited-time access, that was the most effective. Next was social proof, the idea that if a lot of other people are doing this, and they showed the most popular items, or those with a trend, that was also very effective.

Robert Cialdini (26:57):
The liking principle. Here’s something that they found that very few digital sites have, a welcoming letter, just something that increased liking for the website and designer, significantly increased conversions. Here’s the thing that I thought was most interesting. My book, Influence has been called the Bible of electronic commerce, of digital commerce. When it was first written, there was no digital commerce, there was no internet.

Robert Cialdini (27:34):
So what’s crucial about these principles is that they work online too, not that they work online in some other way. They work online too, and that was the thing that was most surprising to me. I expected to find some different configuration. Nope, exactly what we find in face-to-face contact or typical marketing approaches, shows up on digital sites as well.

Robert Leonard (28:06):
My next question isn’t related directly to digital business, although it does impact many digital businesses, especially social media sites, and some others, but it’s something I struggle with personally big time and I know a lot of other people do. So I’d love to hear your thoughts on this idea. What is it about our cell phones that makes them so addicting that 84% of people say they couldn’t go a single day without their mobile device?

Robert Cialdini (28:37):
They have two incredibly reinforcing features, your cell phones. They give you immediate access to desired information. When you go on your cell phone, you can go online, you can go on Amazon, Google, whatever you want. You can get the information you want. Sometimes it’s information that comes from one of your network members, Facebook information, sometimes it’s an email. You get that right away. You don’t have to call anybody, you don’t have to make a phone call. You don’t have to set an appointment with them. You get it right there.

Robert Cialdini (29:13):
Desired information, immediate, and here’s the other thing that’s desirable that comes immediately, connection. You get immediate social connection. So those two things, information and social connection are right there in your hand, and that’s what makes it so difficult to be without them.

Robert Leonard (29:36):
How can we beat this?

Robert Cialdini (29:38):
Well, I’ve heard people say they put themselves on a diet. They fast, and they put their cell phone away for a while. I had a graduate student who was very productive. I remember that she got more work done than any other two of my graduate students combined, and I asked her about it. “What do you do?” She said, “I don’t go to my email, or my phone until three o’clock in the afternoon. I don’t allow myself to get distracted. I don’t allow myself to get waylaid, off into other directions. I know what’s important. I start out with a list of what’s most important for me to be doing, and I work on that list, and then at three o’clock I answer my phone or my email.” It’s tough.

Robert Leonard (30:27):
Yeah, it’s so, so hard. I like to think I’m a pretty productive guy and actually, a lot of people ask me for time management tips and strategies, and I think I do pretty well with it, but I know I can be better. The reason I know that is because I know I spend so much time on my phone, and I absolutely hate it. It’s something that I’ve tried to work on. I’ve turned off all notifications, I’ve done every other little hack that you could find on the internet and it’s just still hasn’t worked for me.

Robert Leonard (30:51):
Just last week, I actually did something similar to what your grad student did is, I always had set my phone on Do Not Disturb when I sleep just so it doesn’t wake me up, but usually I’d set it from like 10 PM till like 5 AM. So that didn’t really help because it didn’t wake me up at night, but at least when I woke up, that was the first thing I did was check it. So it didn’t really solve anything. I just extended it from 5 AM to like, I forget if it’s eight or 9 AM, but I extended it a bit.

Robert Leonard (31:16):
So at least now I’m not checking it first thing when I wake up, I’m at least checking it maybe mid-morning now. We’ll see if it works for me, but I might have to extend it out to 3 PM like she did.

Robert Cialdini (31:25):
There’s some fascinating research on the difference between information that is important to know, and urgent, and its implications. It’s possible, and I wouldn’t say not just possible, it’s probable that a lot of the urgency of information has to do with things that are not important. Not as important as the ideas you structure for yourself at the outset of the day. These are the things I need to get accomplished.

Robert Cialdini (31:58):
This other stuff comes and because it’s urgent, sweeps us away from importance and into this domain of urgency. Even if it’s unimportant, we find ourselves in the weeds.

Robert Leonard (32:12):
I know that I personally rely on reviews a ton when I’m shopping these days. I don’t know how people bought things before there was online reviews, because I rely on them so, so much. I was surprised to see new content about this from you. How do we spot phony online reviews, and why is this even important?

Robert Cialdini (32:33):
Very important, because those online reviews engage another fundamental principle of influence, the one we call social proof. The idea that if a lot of other people around me, like me, are having a particular experience with a product or service or anything, we’re likely to have that same experience or something close to it. So again, we can use those individuals and their experience as a beta test for these products and services.

Robert Cialdini (33:06):
We can see what they think about it, how they experienced it. Very important way that we decide what to do, what are the people around like us doing? Those stars give us the chance to do that, especially on sites that will give us information about the reviewer, and we can tell how similar that person might be to us and so on.

Robert Cialdini (33:28):
When phony reviews get entered into the system, they degrade the informativeness of that review process. We can’t trust it anymore. So how do we tell what’s a phony review versus a genuine review? And just like you, I’ve seen a lot of examples of that. Bad language, people not being very grammatical inside the review, or not providing any common [inaudible 00:33:58] at all. Just stars. These kinds of things make you worried a little bit if that’s a real review, or one that was purchased, or one that was fabricated by the product manufacturer.

Robert Cialdini (34:08):
But there was a study at Cornell University that found there were three things that I had never heard before that differentiated phony reviews from genuine ones. First of all, they’re more general than specific. They talk in more general terms than in terms of specificity about the product and its features. Secondly, they use more first-person pronouns, I, me, than other kinds of pronouns, and thirdly, they use more verbs than nouns. Now it seems to me we can explain all of those in terms of people who don’t have much experience with the product or service itself.

Robert Cialdini (35:00):
So first of all, they’re talking generally about it rather than specifically. Secondly, they’re talking about themselves, rather than the product or service. They’re talking about their experiences and describing themselves in interaction with the product or service. Finally, they’re talking about things that they’re doing, rather than features of it, like a noun would be. So how they’re interacting with it. Again, it’s all about them, rather than the thing. So when you see reviews that are loaded like that, that’s a tip-off. There’s a greater chance that that would be a phony review.

Robert Leonard (35:49):
Another popular book I enjoy is called Giftology, and it talks about the art and science of using gifts in business. You talk about how a small gift more than doubled investment bankers’ large donations to charity, and why personalizing gifts increases the returns of gifts. Talk to us a bit about these ideas.

Robert Cialdini (36:09):
Well, first of all, in that study that was done in London, there was a large international investment bank that had a London headquarters and they had partnered with a pair of charities in the UK area, and they wanted their investment bankers to commit to giving a full day’s salary during this period of giving that the bank was fostering. When they got a letter saying, “It’s time to give. Would you give a full base salary?” They only got about 5% of the people willing to do that. That’s a lot of money for an investment banker, a full base salary, thousands sometimes.

Robert Cialdini (36:58):
What if, on their way into the bank on that day, where they could give, they were met by a solicitor from one of the charities who said, “Would you be willing to do this,” and gave them a small packet of sweets. In addition to this letter, now they get a packet of sweets, and the number of people who comply jumps to 12%.

Robert Cialdini (37:27):
So you go from 5% to 12%, because they had received something in the moment before they were asked to give. Amazing. Now you asked about personalization. The more personalized you can make whatever you give to individuals, the more effective it will be in urging them to give back to you at the highest possible level. So for example, there was a study done in restaurants, where I was talking a little bit about it before.

Robert Cialdini (37:58):
If a waiter put a comment on the tray at the end of the meal for each diner, he or she got a 3.3% increase. If the waiter put two minutes on the tray for each diner, the increase in tip went up 14%, but if the waiter said to them, “For you nice people, because you are such good customers,” and gave them two mints, first one and then came back to the table and saying, “Because you’re such good customers, here’s a second mint,” tips went up by 20% now.

Robert Cialdini (38:40):
So by personalizing, telling them, “This is for you, people, I don’t do this for everybody. It’s personalized to you,” you get that kind of effect. So whenever you’re thinking about giving a gift, if you can give something that is personalized to the preferences, to the needs, or to the current challenges of the person who’s receiving it, that person will want to give back to you at the highest possible levels when you ever make a request of them.

Robert Leonard (39:13):
We talk a lot about Warren Buffett here on the show, and it’s widely known that he’s a big investor in Coca-Cola. He’s even talked about this next situation I’m going to ask you about from a business perspective. So I’d love to hear the psychology side of it. Which psychological principle did the Coca-Cola company miss that led to the disastrous marketing decision to replace its traditional coke formula with the new coke?

Robert Cialdini (39:37):
They missed the principle of scarcity. If you remember, back then they didn’t just add a new coke to their product offerings along with the traditional coke. They took away the taste of Coca-Cola, the traditional taste of Coca-Cola that people had grown up with.

Robert Cialdini (39:56):
People get crazy when they lose opportunities that they have experienced in the past and feel that they are entitled to, or when something is rare or scarce or dwindling in availability, they want it more than ever. What Coca-Cola failed to recognize, even though they did taste tests, blind taste tests, where the majority of people who tasted the new Coke versus regular Coke preferred the new Coke. Even though that was the case, when the old Coke was taken away, now, there was a rebellion.

Robert Cialdini (40:34):
People went nuts demanding to get the old Coke back, which they did by causing Coca-Cola to capitulate and pulled the new Coke eventually off the shelves and replace it with the new Coke.

Robert Leonard (40:50):
I remember reading news headlines a few years back about how Amazon pays its employees if they quit, but I didn’t hear much about the psychology side of it. I just heard of it really from the business perspective. Which principle of influence explains why every year Amazon pays fulfillment employees up to $5,000 if they quit?

Robert Cialdini (41:12):
It’s the principle of commitment and consistency. People want to be consistent with what they have committed themselves actively to doing. If you read what Jeff Bezos says about this policy, this policy of inviting people to quit. He says in the memo that they get sent every year, “We will give you $5,000 if you quit.” If you want to quit right now, we’ll give you $5,000. He says in the memo, “But we hope you won’t. We don’t want you to quit,” and in fact, that’s exactly what happens. Almost none of these individuals will abandon this job for $5,000.

Robert Cialdini (41:58):
It’s a pretty good job in terms of pay and benefits and so on. It’s not the greatest in terms of the amount of effort that’s involved. So they don’t, but they go on record saying, “I don’t want to quit,” and it’s that act of making the commitment to staying that causes them to feel better about their employment, because they’ve just witnessed themselves making a decision that pushes away $5,000 so they can stay there and they have to say to themselves, “I must really like it here,” and that’s what they find.

Robert Leonard (42:32):
Do you think understanding psychology is a big differentiator between successful business leaders like Jeff Bezos, for example, and those who are less successful?

Robert Cialdini (42:44):
Absolutely. Warren Buffett and Charlie Munger frequently endorse the book, Influence and I wonder why is it that they are so effective, not just in knowing how the world works within the finance and investment domain, but how people work in terms of wanting to purchase their shares. I think it’s because they read behavioral science, they read about psychological theories and psychological experiments that have been done, which allows them to then do better at predicting the markets and urging people to come on board with Berkshire Hathaway.

Robert Cialdini (43:32):
I don’t think we’ve ever talked about this Robert, but several years ago, quite a few years ago, I went to my mailbox one day and found an envelope. I opened it to find a share of Berkshire Hathaway, A stock with a note from Charlie Munger and he said, “You know, your book, Influence has helped us so much that by your principle of reciprocation, you’re owed something in return because we’ve made such profits understanding human behavior. You’re entitled to something.”

Robert Cialdini (44:10):
At the time the share was between 70,000 and $75,000, which was amazing to me at the time. Of course, now it’s worth something like $380,000, not just because Warren Buffett and Charlie Munger are such brilliant financial experts. They’re also brilliant psychological communicators about how brilliant they are as investors. In the shareholders’ letter, the annual report that Warren Buffett sends every year, I now get it because I’ve got this sheriff stock and I see that that man really understands human psychology and I think that accounts for a lot of his success.

Robert Leonard (44:59):
That is an incredible story and I have to ask, have you held the share ever since you were gifted it?

Robert Cialdini (45:06):
Absolutely. Because as I said, what this showed me when I now receive those annual shareholder letters every year is wow, this guy really understands not just the psychology of investment, but the psychology of communicating about investment to make people want to hold their shares and buy more of them. He’s brilliant at it.

Robert Leonard (45:34):
They’ve also both talked about, and I’ve read about it in some of their books or books about them, that they have been able to purchase businesses solely based on how they’ve gone about the transaction. They were not always the highest bidder. There was a lot of cases where they weren’t even close to being the highest bidder, but for whatever reason, that person still sold their business to them, and I think a lot of it has to do with psychology and if I had to guess, Charlie and Warren probably have your book to thank for that.

Robert Cialdini (46:00):
Well, Charlie, rates the number one business book he’s ever read and Warren rates it number three.

Robert Leonard (46:07):
That must feel incredible.

Robert Cialdini (46:09):
I can’t tell you how great that feels, and every year at the Berkshire Hathaway meetings, they sell the book in what’s called the Berky Bookstore and they also will often refer to it in their comments. I always get the Berkshire Hathaway spike in sales of the book as a consequence.

Robert Leonard (46:30):
I’ve actually been out to the meeting in Omaha, and I believe I remember actually seeing the book there now that I think back to it because I’ve been to that bookstore that you’re referencing. I’ve actually recently left the corporate world and I hope that I don’t have to go back, but when I was in the corporate world and I was interviewing for different jobs as I was climbing the corporate ladder and advancing my career, the hardest part for me was always coming up with questions to ask during an interview.

Robert Leonard (46:56):
I was always pretty good at the RESC, but not really at asking questions, which is actually kind of ironic now that I host a predominantly interview-based podcast. But for those listening who may have an interview in the future and they struggle with the same thing I did, what question can job candidates ask at the start of an interview to increase their chance of success?

Robert Cialdini (47:18):
So at the very start of the interview, of course, you want to say, “I’m so glad to be here, and I want to answer all of your questions fully, but before we begin, I wonder if you could answer a question of mine. What was it about my resume? What was it about my credentials that spurred you to invite me here today?” What you will hear is the various people in that room telling you of all the things … They will be saying out loud all the things that were positive about you and your qualifications and experience.

Robert Cialdini (47:56):
In other words, they will make a public active commitment to your strengths, and by the principle of commitment and consistency, they will then conduct the rest of the interview in a way that is consistent with those positive features that they see of you. Without you ever having to make the case for your strengths, they will have done it for you and they’ll do it for one another.

Robert Cialdini (48:23):
One person might say, “Well, I really like your experience.” The other person might say, “I really like the way your education allowed you to be a good candidate for the job,” and there’ll be crosstalk where they’re pumping you up because you’ve asked them to simply identify those things about your resume that they found resonating with the job descriptions. Not only does that give you great information to then pursue within the rest of the interview, it puts them in a position of having made a commitment to your candidacy. I have an acquaintance who told me about this. He says he swears he’s gotten three better jobs in a row using it.

Robert Leonard (49:06):
When in the interview process would you recommend using this? Typically in my experience, you get a phone interview first and then an in-person one if you make it through to that step. Do we use it in the phone interview part or do we use it in our first live interview?

Robert Cialdini (49:19):
Your first live interview, unless there’s only going to be a phone interview because at the stage of the phone interview, they haven’t really made a selection for you to the same degree that they have if they’ve invited you to the corporate headquarters or wherever to talk about it. Now, you really can say, “What was it about my candidacy that led you to do this?” And now they’re going to commit themselves to something that they consider very important.

Robert Leonard (49:49):
I want to talk about the nation’s most successful car salesman and how he uses the unity principle of influence to achieve his success, but before we talk about his specific tactics, please explain to us what the unity principle of influence is.

Robert Cialdini (50:06):
Unity principles say that any communicator who can convince us that he or she shares a social or personal identity with us is a member of a particular in-group with us becomes immediately more influential to us. We trust that person more. We want to cooperate with that person more. We want to learn more from that individual. We want to say yes to that individual more. We say yes to the people who share the boundaries of what I call a we-relationship.

Robert Cialdini (50:48):
So these are not people who would be able to say, “Oh, Robert is like us.” That’s not it. It’s, “Robert is one of us. Robert is of us.” If you can get them to say that, everything is easier for you now inside the influence process. Let me give you an example from a study that was done on a college campus. Young woman, college haze woman, stop people who are walking by, students, and ask them to make a contribution to the United Way.

Robert Cialdini (51:20):
She got some level of success out of the standard request that the United Way makes to people, but if she began with one preliminary sentence, she more than doubled contributions and the sentence was, “Hello, I’m a student here too. I’m one of you.” Now, more than twice as many people gave more than twice as much. So how did the world’s greatest car salesman use this principle?

Robert Cialdini (51:52):
It used to be a man named Joe Girard. Joe Girard has since passed away, but he wrote about the strategies he used to get people to buy his cars and trucks, which he sold on an average of … Every day he worked, he sold an average of five cars and trucks, and he used all kinds of methods for doing so, making sure that people liked him, making sure they knew he liked them. That was the most important one, but also if they ever came in and worked with a repair, making sure that the people in the repair shop gave them high priority and so on.

Robert Cialdini (52:33):
He had a series of these and the new king, a guy named Ali Reda in Dearborn. Michigan said he patterned his approach directly on Joe Girard’s, and yet he outdistanced Joe. Even in Joe’s most successful years, Ali is doing better. Now, why? Well, I don’t know how much you know about Dearborn, Michigan, but it is the single American city with the greatest population of Arab Americans or people of Middle Eastern descent who have settled in Dearborn, and Ali who is also of Arab descent, interacts with them at all kinds of community events and so on so that they know he is of them and they come to him to buy their cars and trucks. He’s got one thing that Joe Girard didn’t have. He’s got ethnic commonality with the majority of his customers and that elevates his success over Joe’s.

Robert Leonard (53:46):
Bob, thank you so much for joining me today. It has truly been an honor to have you here and to have the opportunity to speak with you. I told you before we started recording that your books have been some of my favorites and I was really looking forward to this interview and it definitely did not disappoint. This has been one of my favorites. I know the listeners are going to absolutely love it as well. For those listening that want to learn more about you and your book, where is the best place for them to go?

Robert Cialdini (54:13):
The best place is our website, wwwinfluence@work.com. Influenceatwork, all one word, no spaces, .com.

Robert Leonard (54:24):
I will put a link to that website below in the show notes. I highly recommend that everybody listening goes and checks that out. You’ll be doing yourself a disservice if you do not do that. If you’re watching the video version, you can see the book behind me here. I absolutely love it. I could not endorse it enough. My endorsement is nothing. It pales in comparison to Charlie and Warren. So if you don’t take my advice, at least take theirs. Bob, thanks so much for joining me.

Robert Cialdini (54:51):
I enjoyed it.

Robert Leonard (54:52):
All right guys, that’s all I had for this week’s episode of Millennial Investing. I’ll see you again next week.

Outro  (54:59):
Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday, we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.


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