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Dien Rice
April 11, 2008, 12:08 PM
Once upon a time, Don Alm posted a VERY interesting post...

Let me repost it here...

Years ago when I had a salesforce of 7 people it was always amazing how each salesperson would reach a certain income level then STOP!

If the most a salesperson had made in his or her career was $25,000/yr ($500/wk)...that person had a "Mental Governor" in the psyche.

They'd go out a make $500 on their first 2 sales on Monday then goof off or do "paperwork" the rest of the week....almost as if they were AFRAID to make more money....which would take them "out of their comfort zone".

Thus...I tried an experiment;
I ran an ad for salespeople but, my ad said, "No Sales Experience Preferred!"

I started getting people who had hardly any "sales" experience BUT...they had experience doing something else and had made good money.

For example; One guy had made $80,000 as a Plant Foreman overseeing 30 employees. His "comfort level" was $1500 a week.

So...when this guy went out and made $500 his first day of the week....he kept going until he had $1500 or $2000 before he "slowed up".

So...whenever I interviewed salespeople I don't care if they had made $80,000/yr digging ditches, THEIR MIND WAS SET IN PLACE TO EARN $80,000.

Thus...I had one of the most successful businesses in my field because I was aware of the "Mind-Governor".

This is not to say that someone making $25,000/yr could not make $80,000/yr....a few did but...as a general rule if the most they had made prior to seeing me was $25,000/yr...chances were great that that's the most they'd make with me.


Don Alm
Here's the link to the original post... http://www.sowpub.com/forum/showthread.php?p=11433

I just read about a psychological phenomenon called "anchoring". Here is the article - "In a Sea of Uncertainty, We All Have an Anchor" by Shankar Vedantam (http://www.washingtonpost.com/wp-dyn/content/article/2006/10/22/AR2006102200828.html)

In short, the article suggests that if you don't know the answer to a question (which has a number as the answer), if there's some suggestion of the number from somewhere, people will guess near that number.

For example, in a social experiment, some people were asked whether the number of African countries in the U.N. was less than or greater than 10%. In the end, on average those people guessed that 25% of countries in the U.N. were in Africa.

However, other people were asked whether the number of African countries in the U.N. was less than or greater than 65%. In the end, on average those people guessed that 45% of countries in the U.N. were in Africa.

The point is, the only thing that changed was the question - but that question affected their final guess!

This has a financial part too...

For example, the article says...

Although anchoring is often innocuous, it can sometimes come at a cost. Psychologist Nicholas Epley at the University of Chicago said that people who move from a city with expensive housing to one with cheaper housing are likely to overpay for housing because their minds are still anchored in the more expensive market.
I think this helps to explain Don Alm's observation. People who are used to earning a certain salary, are "anchored" at that number. Because they are "fixed" around that number, it becomes "harder" for them to earn a higher amount, even when they can.

Here's another interesting part of the article...

Epley said he conducted one experiment in which asking people how much money they had in their wallets vs. how much they had in their bank accounts influenced how much they spent. When the experiment was conducted outside a store before shoppers went in, those who were reminded of the larger amount that was in their bank balances spent more than those who were reminded about the smaller amount in their wallets.
Anyway, what do you think about this kind of mental "anchor" and how much people earn? Any ideas on how to overcome this "achoring" bias our minds have?

Are you truly "stuck" at your income level? Or can you mentally change your own "anchor" of how much you earn?

- Dien

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