7 lessons from a $6 billion Shark Tank judge
Category: Blog & News
US “Shark Tank” judge and real estate magnate Barbara Corcoran was interviewed on the podcast “How I Built This” recently, sharing some pearls of wisdom that are worth fleshing out from a behavioural perspective.
1. Establish your credibility
Finding it difficult to stand out in such a competitive industry, Corcoran decided to take her sales data and supply the New York Times with a report on the New York real estate market – something that had never been done before. Two weeks later she found herself in a story on the front page of the real estate section, giving her “instant credibility…all because we were quoted as an expert.”
The lesson: People are persuaded by credibility, and a good way to convey yours is to show other people trust you enough to publish what you say.
2. Signal your authority
People judge attributes like competence, warmth and intelligence on the basis of what you wear. Corcoran used her first cheque to buy a “fancy coat” which she wore for the next few years as a way to signal to herself and her customers that she was in the right place.
The lesson: When it comes to how you represent yourself, you have a couple of decisions to make. Dressing in a conforming way (like a business suit for professional services, black for design or hoodies for start-ups) will likely make people feel comfortable because you are ‘one of them’ or fit with the image of that profession. However if you want to stand out, dressing in a non-conforming way will signal your difference. The catch here is you need to work harder to prove that difference has value.
3. Contextualise bad news
Market conditions change, and through her career Corcoran has found herself having to lay off staff. In one case the downturn struck at a time Corcoran’s mother was working for her. Designating herself the fall guy, Corcoran’s mother insisted she be sacked first and publicly because “no one can be mad at you if you’ve fired your mother.”
The lesson: Bad news doesn’t seem so bad if something is worse. Telling people their price is going up will be easier to swallow if you tell them how much your competitors are raising prices first.
4. Create scarcity
In one of my favourite anecdotes from the interview, Corcoran describes how she managed to sell 88 apartments that other agents had failed to move. These were the apartments no one wanted – some didn’t have kitchens, others no windows – a real mixed bag.
Corcoran identified that the best way to create desire was to pit customers against each other, sparking a feeding frenzy. Knowing it would be difficult for customers to compare one apartment with another, she priced them the same. It meant that people buying a place with a kitchen would feel great, but so would those who didn’t get a kitchen but got a better floor instead. Further:
- Apartments were sold on a first come, first served basis, creating urgency
- No two apartments were the same, creating scarcity
- Sales reps were told it was a “secret sale”, and to limit who they invited because “there’s not enough to go around”, creating both exclusivity and scarcity
The lesson: People will be more likely to buy if they fear missing out.
5. Customers focus on short-term pain and benefits
Corcoran convinced the owner of the unpopular apartments that he should offer two years free maintenance to customers because “no one thinks beyond two years”. Here Corcoran had identified Short-term Bias, where people seek certainty in the immediate term but have a poor sense of future needs.
The lesson: Taking away pain in the short-term will help convince people to act now.
6. Play to your strengths
As she grew her business, Corcoran recognised her time was better spent on tasks other than selling. For that she recruited sales people.
The lesson: As business owners we can fall into the trap of thinking we need to do or be good at everything. You may be better served playing to your strengths and employing the talents of others in particular areas. Remember there’s an opportunity cost to the time you spend doing tasks you hate.
7. It’s about people skills
About business, Corcoran says “All you need to know is how to work with people, and that’s all the business ever is. Any success or failure rests entirely on my ability to work with the people at hand.”
The lesson: Knowing what makes people tick is a big part of business success. For that you can rely on intuition or trial and error, or make it easy for yourself by applying the lessons of behavioural science.
This article also appeared in Smartcompany.
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- How a leading online retailer influences customer behaviour
- What signals are you really sending?
- From unaware to ready to buy: moving customers along the decision pathway
Image of NY city from: https://static.pexels.com/photos/48896/new-york-buildings-tall-top-view-48896.jpeg
Bri Williams deletes all buying hesitation and maximises every dollar of your marketing spend by applying behavioural economics to the patterns of buying behaviour. More at www.briwilliams.com.au.