(A word of warning: if you don't like swearing and sexual gestures, don't watch the clip.)
The reason I chose this video clip is not because I have a deep love for Leonardo Dicaprio (well I do, but that’s not the point), but because the character he plays in the Wolf of Wall Street is an incredible sales person.
This particular clip shows stockbroker Jordan Belfort (i.e. the beautiful Leo) training his employees to be persuasive salesmen by highlighting the tactics they need to settle a deal with a client. He explains to his employees that they need to become a trusted source by first selling shares of reliable and familiar companies, such as Disney or IBM. Then, once the trust has been built, they can sell the shares that earn them the most money, such as penny stocks, which often have commission rates of 50% or higher. Here, Jordan has cleverly used the foot in the door technique whereby getting his clients to buy the reliable stocks makes them more likely to buy other shares that are suggested to them in the future. The foot in the door technique has been found to be an effective tactic where once a small request is accepted, a person is more likely to be persuaded to accept a larger request (Freedman & Fraser, 1966), which in the case of this clip are the much riskier “penny stocks”.
Another technique he uses is to put pressure on the client using the tactic of scarcity. Previous research has shown that putting time pressure when trying to sell a product increases product evaluation (Balachander, Liu & Stock, 2009). In this clip, Jordan Belfort puts time pressure on this client in order to make him evaluate the shares he is selling more positively. Using silence alongside this time pressure puts the client in an uncomfortable situation, hence making them more likely to agree to the requests in order to alleviate this tension.
Finally, there is justification. Why would someone be trying to sell you stocks if they weren’t going to be successful from it as well? This line “I plan on being one of the top brokers in my firm and I’m not going to get there by being wrong” is a justification to the client that makes them more likely to believe your persuasive argument. Studies have found that compliance increases when a reason is given for a request (Scott Key, Edlund, Sagarin & Bizer, 2009) and as we can see in the clip, it works!
Thank you Leo for that demonstration of perfectly executed negotiation.
Keep up the good work.
But to be honest, it’s not like people would ever say no to someone with a face like that anyway…
Balachander, S., Liu, Y., & Stock, A. (2009). An empirical analysis of scarcity strategies in the automobile industry. Management Science, 55(10), 1623-1637.
Freedman, J. I., & Fraser, S. C. (1966). Compliance without pressure: The foot-in-the-door technique. Journal of Personality and Social Psychology, 4, 2, 195-202.
Scott Key, M., Edlund, J. E., Sagarin, B. J., & Bizer, G. Y. (2009). Individual differences in susceptibility to mindlessness. Personality and Individual Differences, 46(3), 261-264.