The Pratfall Effect

Philip now runs a successful insurance practice in California. But three decades ago, he was struggling as a rookie. He had made initial sales to friends and clients from his former occupation as a real estate agent, but he found himself in a dry spell. When meeting with prospects, Philip would ask questions about their situation and engage them in conversation, just as he had been taught, and then talk about how he could help. Prospects often appeared interested and impressed at first; but, toward the end of meetings, they seemed to put up their guard. Philip would learn later that they had taken their business elsewhere or had decided to put off buying insurance altogether.

Philip began to question whether he was in the right business as he struggled to understand what he was doing wrong. He asked Richard, a veteran advisor in his office, to sit in on a meeting with a couple to whom Philip had sold a house in his previous career. That’s when he got the advice that changed the direction of his new career.

– Trying too hard

Toward the end of that meeting, the prospects had answered all of Philip’s questions and seemed receptive, nodding at the points that he was making. Then, Philip went for the close: “Based on what you’ve told me, here’s how much insurance you need to protect your family. Assuming that the cost is affordable within your budget, is there any reason that you wouldn’t move forward?” The couple looked at each other and then the husband answered that they would think about it and get back to Philip.

“Where did I go wrong?” Philip asked Richard afterward. “The couple was sending strong buying signals and then, all of a sudden, they just pulled back.”

Here’s the advice Philip got from Richard:

“Son, you need to remember one five-letter word and you’ll be fine. That word is relax. You’re trying way too hard – and the harder you try, the less confident you come across and the more pressure prospects feel. And when people feel pressured, their defences go up and they retreat.

“You’re correct that you were getting ‘buy’ signals,” Richard continued, “right until you went for a high-pressure close. You should have told the couple, ‘I recognize that this is an important decision for you. If you’d like to take a few days to think about it and then schedule a time to meet again, that would be fine. Or, if you’re ready to go ahead now, that would be fine, too.’

“That way,” Richard added, “people don’t feel that you’re trying to railroad them into a purchase decision. And you come across as concerned about their situation rather than just trying to go for a quick sale.”

Then, Richard highlighted another area in which Philip could improve. During the meeting, Philip had delivered a rehearsed anecdote about how he had helped another family put insurance in place that helped them keep their home after the main breadwinner got into an accident.

Here’s what Richard had to say about that:

“If I was a prospect listening to you tell that story, my ‘BS detector’ would go off. Even if it’s true, it doesn’t sound real. When you talk about insurance, people are already feeling lots of stress. Your job is to reduce stress, not increase it.

“When I’m talking to potential clients, I tell them that the most important thing is to ensure that they have the right insurance for their needs. I sometimes tell prospects that early on in my career, I allowed one couple to buy more insurance than they could really afford. As a result, the premiums became too much of a burden and they ended up cancelling the policy entirely, so that they didn’t have the protection that they needed. I tell people that I learned from that mistake, and that my goal is to sell them the amount of insurance that they need and no more than that.”

The conversation with Richard was a turning point in Philip’s career. From that meeting onward, Philip abandoned all the pressure-based closing techniques that he’d been taught. And he also began talking about what he’d learned while working with people in situations similar to the prospects he was talking to, both in terms of what had worked and some small mistakes that Philip had made. As a result, he found that he was more relaxed and that prospects were more relaxed as well, and more and more of the prospects Philip met became clients.

– Stumbles enhance credibility

What Richard had described to Philip was the Pratfall Effect, first identified by social psychologist Elliott Aronson. One of the pre-eminent psychologists of the 20th century, Aronson conducted research in which viewers saw a successful game show contestant spill a cup of coffee. Afterward, the viewers rated that contestant as being more proficient than did people who saw the same contestant without the coffee spill.

Aronson’s finding was that once people establish their expert credentials, a slight stumble humanizes them and makes them someone to whom people can more readily relate. This is the same reason that actress Jennifer Lawrence saw her popularity spike after she stumbled while walking to the stage to collect an Oscar. That stumble made her more real and more human.

Aronson pointed out two important conditions for the Pratfall Effect to work:

1. The person who suffers the pratfall must be seen as possessing superior expertise. That same small blunder would undermine the credibility of someone who is seen as mediocre.

2. The blunder must be relatively minor in nature and not jeopardize the individual’s credibility.

– Power of uncertainty

This principle still applies today. In an interview on the Harvard Business Review website entitled “Experts are more persuasive when they’re less certain,” Stanford Business School’s Zak Tormola discusses how, in several studies, advice from experts is more credible if those experts demonstrate some uncertainty on minor points.

Restaurant reviews, for example, are more persuasive if reviewers identify one small thing that needs improvement, such as how the reviewer was greeted upon arrival.

Along similar lines, Tormola suggests that CEOs’ talks at annual meetings would be more powerful if, before reviewing the company’s accomplishments, they identify one or two minor things the company had gotten wrong and what management learned from the experience.

Warren Buffett often uses this approach in his annual letters to shareholders. Before highlighting the things that went well, Buffett sometimes talks about minor mistakes.

Recently I heard an award-winning portfolio manager begin a talk by highlighting the mistake he’d made in 2008 – underestimating the importance of liquidity – and how that lesson laid the foundation for his approach to managing money today. After the talk, advisors who were in the audience told me that the portfolio manager, by admitting to his mistake in 2008, came across as being more credible and persuasive.

It’s clear that when talking to prospects, your first goal is to build credibility and your expert credentials. But once you’ve established those credentials, don’t hesitate to confess to small mistakes that you’ve learned from and that have helped to shape your approach today. In an unexpected way, doing that can make you more credible, easier to relate to and more likeable and persuasive.

Dan Richards is CEO of Client-insights (www.clientinsights.ca) in Toronto. For more of Dan’s columns and informative videos, visit www.investmentexecutive.com.

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