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Influential Leadership

In my latest edition of Breakthrough Leadership I share 10 concepts and techniques that can have a significant impact on how people are influenced when making decisions. 

These are relevant to everyone who is making economic decisions in their business or life. 

Leaders and managers need to positively influence their teams and run their business. 

Sales people need to engage and influence their clients to make positive buying decisions.


Breakthrough Leadership - Influential Leadership

Why am I talking about Behavioural Economics?

The reason I wanted talk about this topic is because these techniques come up so frequently in the work I do.

During coaching sessions some of these techniques are very effective at supporting individuals reframe something so they can move forward positively.

In leadership and team development programmes I use some of the techniques to help delegates understand how people influence each other to drive outcomes that they require.

In sales a significant amount of activity is focused on working with customers to influence them to make a positive economic decision to purchase a particular solution or product.


What is behavioural economics?

Behavioural economics is the study of the psychological, cognitive, emotional, cultural and social factors involved in the economic decisions of individuals or organisations.

In an ideal world, we would always make optimal decisions that provide us with the greatest benefits and satisfaction. This theory assumes that we are capable of making rational decisions by weighing the costs and benefits of each option available to us.

However, because we are humans, we are emotional and easily distracted. This means we don’t always make the best decisions. Our behaviours are often a result of cognitive bias, emotions and social influence.


“We are fallible, easily confused, often irrational and make decisions as a function of the environment we are in”

Examples of behavioural economics and techniques you can use.

Many of these techniques are relatively straight forward. They involve peeling back the layers of human behaviour and revealing cognitive biases, emotions and mental shortcuts, which can be very effective at influencing the choices individuals make – whether that’s in the realms of finance, sales, business or life.


1. Framing


This techniques relates to how something is presented to an individual. An outcome can definitely be determined by how something is presented. This can be very powerful techniques to influence a negotiation. Focus on aspects that are important to the outcome you desire.  In the retail world we see this every day when we buy something. Ending prices in “.99” leverages the mental accounting bias, tricking our brains into perceiving a lower price.

We’ve all heard the phrase about a 50% filled glass. Is the glass half full or half empty? 

How we frame this can influence the level of optimism or pessimism towards a situation.


Half full or Half Empty - You decide!

2. Confirmation Bias and Reframing 


Confirmation Bias is when we make decisions based on pre-existing beliefs or views. These thoughts hold us back and prevent us from making positive decisions. Typical confirmation bias comes from assumptions, limiting beliefs and interpretations.


When coaching clients I find that many individuals have created their own dialogue (framing and thoughts) in their head which often hold them back and hinder our decision making.


Re-framing your thoughts, beliefs, assumptions or interpretations can be a very effective way to re-tune your mind and ensure you take more positive actions going forward. Here is just a very simple thought that many of us will recognise. Just by reframing this thought can significantly change our feelings and actions.


“I can’t do this because I’ve not got enough experience” re-framed becomes

“I’ve got nothing to lose and will learn from the experience”




3. Loss Aversion


People do not like to lose. In fact we are 4 times more likely to take action to avoid a loss than achieve a gain. This is why most sales training focuses on exploring customer’s “pain” relating to a problem or need they have, before focusing on the “gains” they could achieve.


Imagine you are an investor and an advisor calls you with two different investment options:


(1)    An investment opportunity which will make you £10,000 today if you invest today

(2)    An investment action which will prevent you from losing £10,000 today by acting now


The first option is about gaining something, whereas the second is about avoiding a loss. You are four times more likely to take action relating to the second option.

Loss aversion can show up in a range of ways.


  • Risk aversion  is when an individual places more importance on avoiding risks or losses even when the odds of winning or losing are the same.

  • The Endowment effect means that people demand more to give up an item they own, than they would be willing to pay to acquire it.

  • Status Quo Bias implies that we have a preference for keeping things the same and resist change – preferring what we are currently doing to what we could be doing.


These are behavioural preferences we often need to recognise when driving major change in an organisation or selling new solutions to a client which requires new ways of doing things.


Loss Aversion - acting to avoid pain

4. Contrast Bias


This technique often involves increasing the pain by directly contrasting it with potential gain from a situation. This approach builds on loss aversion and is a powerful technique used by sales people to build the size of the “value” or “benefits” the client is missing out from the problem they have.


Equally this could show up with the work environment when you are comparing individuals or situations. Imagine a situation where you are completing performance reviews with your team. 


You’ve just completed a review with an outstanding high-performing member of the team. You then review another member of your team who has met expectations against targets. 

How would you ensure you avoid making unfair comparisons with the high-performer and using contract bias inappropriately?


Contrast Bias - pain of not acting plus the gain of taking action

5. Single Option Aversion & Nudging


Most people prefer to have a choice. In fact the science shows that we are more likely to make a decision or choice if we are given options. It also shows us that if we are not given a choice e.g. only one option is provided, we are more likely to not make a decision or choice.


This is particularly important to sales people when making proposals to clients. Provide some options which the customer can choose or tailor. This is much more likely to create a positive buying decision from the client.


Equally when you work with your teams and explore ways to empower them to deliver think about some coaching techniques that allow you to avoid single option aversion with your team members. The GROW coaching techniques involves a stage “O” which refers to “options”. This is where the individual explores the options available to them to achieve a particular goal. By exploring these options and then choosing one which works for them they will feel more accountable and committed to taking action.



Providing Choice to avoid Single Option Aversion

Nudging: When talking about choices it’s useful to be aware of Nudge Theory. This implies that when we are given two alternatives we tend to choose the option that is easier and more convenient, rather than the one that could lead to better outcomes.  We can create ‘nudges’ to influence people's choices and decisions.


6. The Peak End Rule 


This cognitive technique is important because we tend to remember two key elements of engagements with other people. The Peak (s) which can be a high point or a low point of an interaction and the Ending. It’s so important to prepare and be aware of your messages and the emotional reactions you create during your engagement with others – particularly those crucial engagements where decisions will be made.


Think of a memorable presentation you’ve seen. You will almost certainly remember a high point if it was good or a low point if it was bad. On top of that you will most likely remember the ending and the impact it had on you. Perhaps it involved telling a story which provoked an emotional reaction or drew you into something highly relevant and insightful that blew your mind away.


When I’m working with leaders on their personal brand and presentation skills this topic is very relevant. What impact do you want to have? How will you land your message? And will your audience remember it?


When I work with sales team this rule is particularly important when individuals or teams are making a sales pitch or formal proposal to a client. Have they done the preparation and rehearsed what to present so the client gets what they need and it stands out in a positive way.


Peak End Rule - create a high point and end strongly

7. Sunk Cost Fallacy


We tend to have emotional attachments to activities we’ve done in the past. We find it particularly hard to let go when we’ve invested significant time, resources and effort to something whether that’s a financial investment or a critical business project. 

Remember that when performing a cost/benefit analysis, sunk costs should be ignored entirely, if they cannot be recovered. It has no financial bearing on the future outcome of a decision.


This is so important in business when making tough decisions around the continuation or termination of projects. All too often we are emotionally invested in the project, time and effort put into it that we have a bias towards continuing with it and trying to find a way to make it work. This is when you need to evaluate the situation in the cold light of day and perhaps bring in external expertise to provide an independent perspective.


If a project needs to be stopped – whether it’s a sales opportunity in the pipeline that’s really dead, or it’s a new commercial offering that is just not getting traction – find the confidence to kill it, learn from it and move on.



Know when to stop!

8. Signalling


Signalling theory is useful for describing behaviour when two parties (individuals or organisations) have access to different information. Typically, one party, the sender, must choose whether and how to communicate (or signal) that information, and the other party, the receiver, must choose how to interpret the signal.


In sales this can be particularly important as the seller needs to send strong signals to help a buyer evaluate their solution or product. At the same time this needs to be done in a way that builds trust with client so it has to be completely orientated around the client not the salesperson. Maybe there is some important market data or information that is going to transform a potential client’s market and the sales person is able highlight this information and the potential impact on the client, in a way that positively influences the client’s perception of the seller’s solutions.


As a leader it’s important to show-up effectively and recognise that both yourself and your team members will have bad days. How you check-in and check-out with your team members could be an effective way of signalling the importance of creating a culture where you support each other and recognise that you cannot perform at your best all the time.



Signalling - a powerful way to share how you are thinking or feeling

9. Anchoring


The anchoring effect is a psychological phenomenon in which an individual's judgement or decisions are influenced by a reference point or "anchor" which can be completely irrelevant. It is possible to create both numeric and non-numeric anchor points to influence decisions and responses from others. An Anchor can be any aspect of an environment that has no direct relevance to a decision but that can nonetheless affect people’s judgement.


A leader may purposefully share their opinion on a topic during a meeting with his or her team. By doing this they are anchoring the discussion. People can then respond based on what they think might be important to the leader or how want to appear to the leader. In this instance it might provide focus and clarity on the most important topic. It might prevent getting distracted on other areas. Be aware that it might also close down the opportunity for new ideas and perspectives.


In sales anchoring shows up all the time in negotiations. The opening offer and initial price presented is a critical reference point throughout a negotiation process. This is often referred to as the anchor price because once the initial price or desired cost are revealed by the seller or buyer this sets the context for future negotiations and how much the price can shift.


Anchoring - look out for it in commercial negotiations

10. Social Proof


We look to other people for information on what to buy or what service to use. We tend to conform to the behaviour of others in social situations. We are herd animals, and make decisions based on what those around us do. Social Proof is the phenomenon of people following the behaviour or opinions of others. This is particularly prevalent when people are “uncertain” or influenced by “authority”.


As a leader you can use social proof to persuade your teams, key stakeholders or customers to adopt your ideas, goals or actions.

Examples of Social proof which you can leverage to influence other’s decision making include:


  • Certifications: stamps of approval from an authoritative authority or industry body – these demonstrate your credentials, credibility and skills.

  • Expertise: an authority in your industry recommends you or your services -  a shout out on a podcast, in the news or on social media.

  • Users: when your existing customers endorse or recommend your services – positive review ratings, testimonials or positive social media comments.

  • Wisdom of the crowd: This is when a large group or people endorse your brand – think of those viral posts on social media that quickly create massive awareness.


This form of behavioural economics shows up in digital marketing activity all around the world. Social Media is massive. Digital Marketing had taken over from traditional advertising. Every company is trying to create positive social proof to support their services.


Social Proof and Digital Marketing

So, in summary


Remember we are humans, we are emotional and easily distracted. We don’t always make the best decisions. Our behaviours are often a result of cognitive bias, emotions and social influence.


However, the good news is by better understanding behavioural economics you can positively influence your own decision making, those in your teams and your clients.


🙏 Thank you for reading this edition of Breakthrough Leadership focused on how to influence and the role of Behavioural Economics.

💯 I hope you are able to use some of the concepts to improve your confidence and ability to influence others positively whether that's as a leader or a sales person.

💯 If you'd like to know more about some of the work I do and explore how I could support you please get in contact:



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