6.2 Hobbies of Highly Respected People

6.2 Hobbies of Highly Respected People

  1. They constantly invest in relationships and themselves. They invest in education, experience, overcoming new challenges, and they place their faith in the use of intangible investments and their long-term payoffs.
  2. Qualified prospects call them. They are a source of value. They give value first and as a result are seen as experts in their field. Note: this hobby requires a sense of abundance and not scarcity of knowledge.
  3. They have integrity. They know they will succeed in the long-term so there is no need to take short-term shortcuts that could spoil their hard work in the past.
  4. Excellence. Forget the competition and aim for excellence on your own terms focusing on the customer.
  5. Highly respected people are hard workers. There are no shortcuts, no free lunch. Highly respected people act like famous or rich business people did on their way up the ladder to success, not how they act now that they have their own t.v. show or 3 private jets.
  6. Highly respected people are usually good writing or speakers. Being able to professionally and clearly communicate your ideas is critical in most fields. Learning how to do this better can be an asset for you to utilize every day.
6.2 They are always learning. Learning about new business models, competitors, and opportunities. In the movie "Big Fish" the old witch says the biggest fish in the river gets that way by never being caught. They don't explain exactly what this means in the movie because it mean different things to different people. Highly respected people don't let themselves get caught in unethical practices, easily sell-out strategies that hurt their long term plans, or getting stuck in in a rut of negative attitudes or self absorption.

- Richard

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Sales Journals

Sales Journals

I write in my journal every day. I wouldn't call it a sales journal but I write two entries every day, one on my personal life and one on sales. This practice allows me to identify the most important things in my life so I can work on first things first and more importantly initiates an internal dialog with myself on how I am going to tackle one my current challenges. There might be several challenges I am facing involving school, personal relationships, or sales but in every case it helps to write out what the problem is and how I might possibly solve it. Sometimes it becomes obvious that I need to get advice or just have patience when before thinking about it and writing down the ideas it seemed stressful. So far my journal is about 350 pages long on my computer, usually writing a few paragraphs each day. Some things to consider doing while writing in your own journal include

  • Separate personal from business idea discussions
  • Write out everything even if it seems trivial or only a temporary issue
  • Try consistently writing about the same challenge after reviewing what you have written before. Many times you will be in different moods and have had different daily experiences that could allow you to come up with creative solutions to problems if you consistently come back to them with new thoughts.
  • Include best practices, quotes, or lessons you learned at work. This way you can "control f" search for them within word at a later point if you want to review them again.
  • Write for yourself and nobody else. If you use the journal like I do this if for your career and personal development and nothing else.
  • They say you save 5 minutes for every 1 minute that you spend planning. I wonder how many years of a fulfilling life you gain for every year that you spend writing in your journal every day about your challenges, goals and dreams?
  • Start writing in your journal today. It only takes 5 minutes a day.
- Richard

Hedge Fund Clones

Hedge Fund Clones are a relatively new type of invesmtent product that is being offered on wall street. These funds try to clone or replicated the investment strategies of hedge funds in hopes of reaping some outsized returns with minimized fees and lock-up periods for end-clients. While this strategy hasn't been around long enough to have much of a track record interest in the product is growing quickly. The typical fee for hedge fund clones currently being offered are around 1% which is much lower than the flat 2 and 20% fees of hedge funds. (2% flat fee + 20% performance fee).

FIrms launching hedge fund clones include Goldman Sachs, Merill Lynch, Morgan Chase, State Street Global, and Deutsche Bank. Most hedge fund clones offered by these firms can be purchased and sold ona daily or weekly basis.

Most of these hedge fund clones are structured as premium indexes. This is why many researchers on the academic and professional side of the investment industry have doubts about the returns that hedge fund clones will produce. Hedge fund clones indexes may be superior to several other indexes in terms of total return but nobody could expect an index to keep up with the returns of the top 20% of hedge funds which is partially what motivates high net worth investments to invest in hedge funds in the first place.

Most hedge fund clones are created using the "factor model approach." This approach creates the hedge fund clones by looking at the performance over the last set period of time such as one year and then figuring out what securities you would have had to hold to achieve those returns. This is an important point to understand as this approach has been critized as simply creating a similiar risk/reward portfolio to hedge funds without any of the diversified asset as nimbly adjusted portfolios of true hedge funds. While most of these hedge fund clone models are updated each month I would venture to say this will speed up to once a week or even more frequently in the near future as the products become more competitive.

- Richard

First Time Author

First Time Author

First Time Author Tips

First Time AuthorI have just recently (2005) become a first time author and would like to help others write their first book. Let me know if you have any questions about how to do it or just where to start. Some tips I can provide are:
  1. Start writing 5 pages every day, even if it is just notes on what you might write a book about
  2. Define your goals for the book early on. Are you writing it for fun? profits? to get your dream job? The answer to this question can change your writing process
  3. Check out Lulu.com and Amazon.com's publishing services
  4. Find a mentor or two and a great editor as early in the process as possible
  5. Create a brief marketing plan for your book
  6. Interview experts in the industry as additional references, mentors, or book reviewers
- Richard

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Hedge Fund Sales

Hedge Fund Sales

Hedge Fund Sales Positions

Hedge Fund SalesIf anyone is looking for hedge fund sales positions please see the Job Listings or the Marketing, Sales & Investor Relations Jobs sections of this site.

For over 30 articles including tips and how-to articles on selling hedge fund products and marketing hedge funds please see this guide to Hedge Fund Marketing.

- Richard

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Hedge Fund Entry Level

Hedge Fund Entry Level

Entry Level Hedge Fund Jobs

Hedge Fund Entry LevelMany people find my contact details online and email or call me to ask about how to obtain an entry level hedge fund job. I have put together this list as a resource for those looking for a little bit of guidance on this subject.

  1. Subscribe to 5-10 free newsletters relating to the hedge fund industry. Some places to start might be HedgeWire, HedgeWeek, Fierce Finance, and the Albourne Village.
  2. Join Linkedin.com and invite me to join your network - Linkedin.com/in/RichardcWilson. Invite others to join and find 10 people here who you could get advice from
  3. Purchase 3 books on hedge funds and 3 books on the specific area you want to work in such as trading, analytics, or sales. If you are unsure then buy a few books in each area or buy a guide on Vault.com to help you make sense of the industry.
  4. Make sure your professional image is 1st class. Review your resume 100x and make sure that you have not exaggerated a single item on it so you can sell hard when you are face to face with the decision maker at a hedge fund.
  5. Focus on approaching potential employers with items listed within my "What You Can't Teach" blog entry from earlier today (7.24.07).
  6. Call 15 potential employers or sources of advice every day for 10 business days. These 150 people will find someone who needs your skills and you will find a job. That brings up two questions. Is that a lot of calls? Yes. How bad do you want a great entry level hedge fund job?
  7. Offer to work for free for 10 days to show your value after stating the ballpark salary range you would be comfortable staying for.
  8. Attend conferences if you can afford to. This will get you face to face with dozens of prospective employers.

I have recently found an individual willing to help improve your hedge fund or investment resume. If you would like 1-4 hours of resume editing, coaching and career guidance please send me an email at Richard@RichardCWilson.com.

- Richard

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How to Engage Anyone

It seems like sales experts always stress the importance of engaging prospects and delivering value to them first. Even though I read this about once a quarter I have yet to see a great list of ways to engage different types of prospects so I'm going to create one here for those 3 lucky people who read my blog.

Not all of these ideas will be right for you but they will get you thinking and hopefully help you connect with a few more prospects that weren't returning your phone calls. This list is far from complete so please comment with any additional ideas.

  1. Mail a cell phone to the executive you are trying to reach with a professional note saying that you have been trying to reach him but his phone must not be working so please use this one and give me 3 minutes of your time.
  2. Fax your resume or 1 page pitching piece over to your prospect. Not many people receive faxes these days so unless you target very large corporations your fax will almost certainly be noticed.
  3. Email anyone directly. Having a hard time connecting over the phone? Don't have someone's email address? Search the company domain name on Google by typing in @richardcwilson.com into the google search field. If you scroll down through the results for whatever company's website domain you are researching you will eventually find some examples of email addresses within their company. Note how they are formated and once you see a consistent pattern try guessing the email address of your top prospect or two at the firm and email them directly.
  4. Join them on a cab or limo ride next time they are heading to the airport. (Pursuit of Happyness style)
  5. Linkedin.com. - Join it and use it to connect with local business professionals who can help your business grow. Invite people from my contact list of almost 700 professionals. http://www.linkedin.com/in/richardcwilson
  6. Talk to the secretary of your prospect and ask for hints on when you should call back or how to best get in touch with the prospect
  7. Write 4 white papers that are valuable and useful to the prospect and send him one every month and then call and ask for a 10 minute meeting.
  8. Send 3 qualified leads to your top prospect first and then ask for 10 minutes of his time (a Jeffrey Gitomer gem. See Gitomer.com for 100's of more gems.)
  9. Mail your top prospect a trash can with your 1 page pitch page glued to the outside of it and have another one inside of it. Tell them that you know they were going through away your marketing materials anyways but you just wanted to save him some time, BUT if you ever are looking for our type of services please give me a ring and we can talk about how our firm can solve your pains (Another Gitomer.com gem.)
  10. Send your prospect the best 3 business books you have ever read
  11. Take two copies of your 1 page pitching piece or resume and roll them up. Now stuff each into two separate brand new expensive leather shoes. Mail these to your top two prospects that could help you break your sales record or give you your dream job.
- Richard

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You Can't Teach This

Have you ever heard someone say, "you can't buy loyalty like that." Well, they were right. You can't buy loyalty, passion, or integrity. In fact if you try to you might well end up with the opposite.

One of the best lessons that I have learned while interviewing for jobs and interviewing others is that a lot of the factors that go into whether someone gets hired or not are things you can't teach people. Many people can be taught algebra or how to bake a pie but few people can be taught to be energetic. You either are or you are not. Other un-teachable skills that can be highly valuable to potential employers include:
  • Passion
  • Creativity
  • Loyalty
  • Integrity
  • Ability to learn quickly
  • Attitude
  • Diligence - Investment in yourself
  • Ambitions
  • A great smile
These aspects are often overlooked by employers and not emphasized enough by many interviewers. They have helped me both obtained jobs and recommend others for competitive positions at international organizations.

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Applied Knowledge is Power

Asking the right engaging questions is key to any phone call with a potential business prospect or partner. The more you know about the other party the more friendly, familiar, and intelligent you will seem. You can find common ground before you even pick up the phone.

Use the following websites to learn more about just about anyone you will work with in the investment industry.

http://www.Linkedin.com - Searchable business networking profiles.

http://www.ZoomInfo.com - Search by Company or Person - Read a collection of articles that mention one individual's name and you can learn a lot about their strengths and weaknesses.

http://www.Google.com - Search for their company and then search using their name. Don't have someone's email address? Search in google using the @ symbol followed by the company's website domain name (Example search: @RaiseAUM.com). 80% of the time you will see results that include an employee's email address. Note the formatting of that email address and use it to send an email to your prospect. Don't have a name of the person you need to speak to? Use the Linkedin.com website mentioned above.

- Richard

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Business Decision Making Models

Decision Making Systems to Employ in your Investment Marketing & Sales Efforts

Everything you do as an investment marketing professional can be segmented into sets of distinct decisions. In an article entitled “Great Escapes” in Fortune magazine, Michael and Jerry Useem refer to tools that can help you effectively manage decision-making processes. These tools are applicable to managing yourself or your sales team and should assist you in analyzing your own decision-making systems or processes.

Burn the Boat

"No matter how far you've gone down the wrong road, turn back."

- Turkish proverb

In the 1960’s, Symour Cray ran two unrelated businesses, selling both sailboats and supercomputers. His supercomputers were unique having several designed-in extras such as decorative fountains. While he spent much time customizing his supercomputers, he realized that they would be obsolescent within a year or two. To help remind himself of this reality, and drive the point home to his team, he builds a beautiful sailboat every spring and burns it the following fall.

It can be very hard to throw away something one has invested time, money, or personal image into. In the 1920’s, Henry Ford wrote, “My advice to young men is to be ready to revise any system, scrap any methods, and abandon any theory if the success of the job demands it.” Ford followed this strategy himself until sticking to his own original strategy lead to his company’s decline and General Motor’s jump in market share.

What is your sales team spending time on that is no longer effective? What are you still doing in the name of tradition or because it was profitable yesterday? Ensure that you are burning your boat every fall and not proclaiming innovation while resting on laurels of past success, as was in the case of Henry Ford.

“I try to learn from the past, but I plan for the future by focusing exclusively on the present.”

- Donald Trump

Voice Questions

Good managers want employees to voice their opinions. Managing conflicting ideas is how you extract value out of a diverse sales or management team. “If you walk into a room as a senior person and innocently say, ‘Here’s what I’m thinking about this,’ you’ve already skewed people’s thinking,” says Marine Gen. Peter Pace, who was nominated to become the next chairman of the Joint Chiefs of Staff. He recommends to “start with a question and don’t voice an opinion.” This way no one can line up behind you reinforcing your original idea instead of stating his or her own perspective on the situation. “If you are looking for answers, ask the question,” advises Pace, and “you ought to be the first person to self-critique.” Be cognizant of how your own views are affecting the actions of your teammates. Strive towards excellence in decision-making and execution, not unanimous agreement on all decisions.

Let the battle rage

Similar to the lesson suggested above, another tried and true value of competitive competencies is letting conflicts work themselves out. Arguments based on principles of the decision, and not political camps are healthy and push everyone to analyze the true merits of each case.

In the 1980’s, Gillette experienced some beneficial internal conflicts while debating whether to meet Bic, Inc. in the market with cheap plastic razors or invest millions in developing a higher quality metal version. CEO Colman Mockler let the divisions fight it out. For nearly two years, Mockler played a neutral position until finally declaring the new metal razor camp the winner.

Educate your instincts

Should you trust your gut? That depends on what you are made of. What experience and education have you been exposed to that makes your instincts more robust? The instincts of a veteran police officer have been shaped by years of experience, so when his gut tells him that something is wrong it is usually right. Research shows that others with less experience in similar situations perform poorly because the unconscious intuitions have not been developed. Your mind calls upon hundreds of resources every minute that you are not even aware of. In Malcolm Gladwell’s book “Blink” he refers to “thin slicing.” This is his terminology for the second analysis of situations or ideas that we conduct while making a decision. If you or the person making the decision is cognizant of the important variables at hand and has made similar decisions their gut reaction should probably be trusted.

Keep this in mind when managing your sales team. What sales and industry-based newsletters have your employees subscribed too? What books do you recommend to them and how can you support further education on their part? The minute you have to manage anyone, you have made a poor hiring decision. Identify people with great instincts, a thirst for knowledge, and a hunger for learning.

  1. June 27th Fortune Magazine page 97-102 “Great Escapes” Time, Inc. Copyright © 2005 Volume 151 No. 13.
- Richard

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Summary of "Good to Great"

Summary of Good to Great by Jim Collins

Summary of Good to Great by Jim CollinsThe following is a book summary of Good to Great by Jim Collins. This summary is pulled from Richard Wilson's book entitled Rainmaker which is online at www.Lulu.com/RichardCWilson. It is a great book, if you like this summer please buy it.

Jim Collins states in his book Good to Great that “almost any organization can substantially improve its stature and performance, perhaps even become great, if it conscientiously applies the framework of ideas found and used by Good to Great companies.” The book touches on the following themes, which were found throughout companies that have gone from good to great:

Good is the Enemy of Great

This idea is similar to the “good is never enough” concept from Built to Last. In this section of the book, Collins urges companies to focus equally on what to do, what not to do, and what to stop doing. He believes that most companies focus too much on what to do and ignore what not to do or what they should stop doing. What are you doing based on tradition or industry standards? What assumptions or processes have you rested on because they were “good enough?” Good should be viewed as horrible because neither “great”.

Level 5 Leadership

This term “Level 5 Leadership” is used to describe a certain type of leader who was seen among many of the companies, which made the leap from good to great. They were more than just “clock builders”, they had unique characteristics such as humility and professional will towards excellence. This type of a leader is known for taking credit for bad performance while giving credit to others when things go well.

First Who… Then What

Collins says, “People are not your most important asset. The right people are.” He uses the analogy of a bus driver to while describing how to create a winning team within your organization. He recommends that you first get the right people on the bus, and then you get the wrong people off the bus, then the right people in the right seats, and then figure out where you want to drive that bus. Hire people with characteristics you cannot easily instill. Focus on who you are paying, not how. He also recommends analyzing someone’s character, work ethic, intelligence, and dedication to their values before deeply analyzing credentials and practical skills.

Confront the Brutal Facts

Collins found that companies that made the leap from good to great, had a consistent belief in their ability to succeed in the end. He believes that if companies do their due diligence and gather all of the facts, the right path will often unfold in front of them. He recommends the following four ways to build a culture where the truth is always heard:

Lead with questions, not answers. Engage in dialogue and debate, not coercion. Conduct autopsies without blame. Build “red flag” mechanisms for turning information into information that cannot be ignored. The Hedgehog Concept

Every morning the fox wakes up and starts crafting elaborate plans on how it will finally catch it’s nemesis, the hedgehog. It uses creative strategies, combining old ideas and trying to catch the hedgehog off guard. Yet every time the fox approaches the hedgehog, the small animal simply rolls up into a ball and waits until the fox leaves it alone. It does this on a daily basis, without fail. If it tried to run or use one of the fox’s tactics it would die, however it can consistently rely on it’s hedgehog strategy to save it’s hide and move forward with it’s life.

Your company’s hedgehog concept is the “one big thing” for your organization to understand and stick to. What does or can your organization do, understand, or use as your core solution to competitive threats and changes in the industry? The concept itself is similar to your core ideology (which never changes), differing only in the sense that it can be slightly less permanent. Your hedgehog concept must be something you are deeply passionate about, best at in the world, and are able to make a profit by doing. Figure out what falls into all three of these categories, and obtain an understanding and strategy based on it.

“Behold the turtle; he makes progress only when he sticks his neck out.”

– James Bryant Conant

A Culture of Discipline

Hire people who are disciplined in their own right. The second you need to manage someone, you have made a hiring mistake. Manage systems, not people. Collins believes this is superior to managing people because:

When you have disciplined people, you do not need hierarchy. When you have disciplined thought, you do not need bureaucracy. When you have disciplined action, you do not need excessive controls. The Flywheel Concept

A flywheel takes relentless pushing to get it to turn over even once, but after a while of pushing in the same direction it starts to gain momentum until it is a very powerful force. Collins contends that “Good to Great” transformations never happen all at once. They are the result of years of persistence. It might look dramatic and revolutionary from the outside, but on the inside it is more of an organic development process.

Collins, Jim “Good to Great – Why some companies make the leap and other do not.” Copyright © 2001 Harper Business, Inc.

Enjoy this book review? Read a few more by visiting our Investment Book Reviews Directory.

- Richard

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In Search of Excellence Summary

In Search of Excellence Summary

Short In Search of Excellence Summary

In Search of Excellence SummaryThe following is a book summary of lessons from "In Search of Excellence" by Tom Peters and Robert Waterman. This summary is pulled from Richard Wilson's book entitled Rainmaker which is online at http://www.lulu.com/richardcwilson

In Search of Excellence, by Tom Peters and Robert Waterman was written based on a study of 47 of the greatest companies in America. They found the following 8 themes common among the group of companies. All of which revolve around people, customers, and action. The 8 themes or principles the companies were grounded on include:

1. A bias for action – “getting on with it”
2. Close to the customer – learning from the people served by the business
3. Autonomy and entrepreneurship – fostering innovation and nurturing “champions”
4. Productivity through people: treating rank and file employees as a source of quality
5. Hands-on, value-driven: management philosophy that guides everyday practice – management showing its commitment
6. Stick to the knitting: stay with the business that you know
7.Simple form, lean staff: some of the best companies have minimal headquarter staff
8. Simultaneous loose-tight properties – Autonomy within shop-floor activities plus centralized values and visions.


Peters, Tom and Waterman, Robert “In Search Of Excellence, Lessons from America’s Best Run Companies” Copyright © 1988 Warner Books, Inc.

Enjoy this book review? Read a few more by visiting our Investment Book Reviews Directory.

- Richard

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Are Your Customers High?

Are Your Customers High?


In a time where each consumer sees thousands of advertisements or corporate symbols every day this article discusses several components of the highly researched area of drug addiction and draws parallels use in the world of sales and networking. The bulk of this article is based on the knowledge and research of Dr. Scott Lukas, Dr. Robert Cialdini, and Dr. Kevin Hogan who are experts in reward circuitry and the psychology of influence and persuasion. By examining the way and reasons why we become addicted to substances and activities we can discover truths about how the reward circuitry in our brain works and create actionable product positioning and sales steps towards a more profitable business or successful career.


Virtually everyone becomes addicted to something at some point in their lives. Many times it is to drugs like nicotine or caffeine but it can also be to sex or the feelings experienced while shopping with a group of friends. Our brains are wired to reward positive experiences that benefit us while minimizing those things that create a negative impact or feelings on our life. This reward center pathology is at the core of what creates patterns of use that are very reinforcing and sometimes lead to negative health consequences or even death. This is because the brain can become conditioned into desiring a certain behavior or substance to the point where the logical points of ceasing the activity are ignored(Kuhn 2003). A good analogy for this is imagining your unconscious mind is a jet engine strapped to the back of your conscious mind, a minicooper. When your unconscious mind fires it can be difficult to control the steering, or bring it to a halt. It is not often that experts in sales and marketing look directly at addiction for clues on how to gain loyal customers. This means that while most companies profit from our natural reward center pathology, few consciously apply an ethical yet systematic application of these lessons in an attempt to tap the same reward circuits that creates addiction.

This article discusses four components of addiction; initiating use, the environment, a rapid high after use, and the employment of cues. The goal is to introduce specific methods that a company as a whole or individual sales person could use to create an addicting product or service without the use of any drugs. While the use of these methods brings up several ethical issues, these warrant a lengthy discussion in itself and will not be discussed in this piece.

Description of Key Findings

There are three types of drug (or product) users. Experimenters, Compulsive users, and Floaters.

  • Experimenters are usually defined as those individuals who use a drug from time to time but generally out of peer pressure or curiosity. The equivalent to this might be the individual who only goes to the gym when going along with a friend or to see what cardio classes are offered.
  • Floaters are those who use relatively sparingly and mostly when provided with the drug from someone else. An example of this could be the individual who only goes to the gym for four weeks out of the year during the times when his friends can get him the two week free gym trial memberships.
  • Compulsive Users focus a relatively large percentage of their energy to use of the drug. An example of this is the individual who enjoys going to the gym 90 minutes everyday. In addition to the workouts this person might also spend hundreds of dollars and dozens of hours a month on sports supplements and research on how to increase their gains from working out (Dr. Lukas PSYCE-1410)

The point of describing these three types is that individuals can move between the groups. What’s important to note however is that most people who become compulsive users cannot easily downgrade and maintain their drug use at the experimenter or floater level. A parallel can be seen in product purchasing patterns. Sales people should work towards converting the experimenters and floaters of their product up towards being a compulsive user. The point is not to convince someone to do something that is unhealthy financially or physiologically. In the example of the gym members the movement would be from slightly profitable customers to extremely profitable customers.

Initiating Drug/Product Use

To get someone addicted to using your product or at least to have them experience some positive reinforcing experiences they will have to at least try your product. Therefore the first step is finding an in-road to a new customer. Dr. Lukas of Harvard University has detailed these two learning-based processes that can lead to experimenting with a new drug or product:

  • Your peer group is 2nd only to your parents in their ability to influence your drug-taking behavior
  • If a drug is associated with gaining approval or affection it can be reinforcing (Dr. Lukas PSCYE-1410)

Do we have any reason to believe that this would be different for product purchasing behaviors? The success of Avon, viral marketing firms, Mary K, and websites such as Myspace.com are great examples of peer groups and families being used for commercial gains. Dr. Robert Cialdini of the Arizona State University has done a significant amount of research on this subject of peer and social pressure. He calls it “social proof,” and believes that one of the most powerful ways people make decisions is looking to see what others are doing or believing in that arena. This is even more heavily relied upon in situations of uncertainty or when the individual believes that the others being observed are similar to themselves. (Cialdini 2001)

Before you can create an environment to “addict” someone to your product, you will have to educate them. If they don’t know you exist they cannot seek you out. Camel Cigarettes is an expert at making sure everyone knows that they exist. In Fischer’s 1991 study on brand logo recognition his team found that 30% of 3-year-old and 91.3% of 6-year-old children could match the Joe Camel logo with a picture of a cigarette. Starting a very young age we are exposed to and remember advertisements. (P.M. Fischer 1991). Do 3 year olds recognize your logo? Does it matter? The point is imagery is a very powerful way of raising familiarity with a product and is the most popular reminder or cue (more on this later) that corporations use today.

Environmental Influence

How do most people act in the library? How about at a dance club? A Church? The meek and shy will sing out in church and the overly extroverted vocal individuals will remain quiet in a library. These are direct effects of the environment influencing how we act.

The environment an individual is in directly affects the likeliness and extent to which they will buy and use a drug. There is strong evidence that individuals that have taken a certain dose of a drug in a comfortable familiar environment later overdosed while taking the same amount of the drug in an unfamiliar environment (Dr. Lukas PSYCE-1410). This shows how powerful our environment is on influencing our actions. Dr. Kevin Hogan author of “The Science of Influence” believes that changing the environment is the single most powerful way to influence someone’s behavior.

This has two important applications to accessing profitable reward circuits. The first is that you can increase some immediate positive impressions or experiences by setting the right environment. In the same way you can limit any immediate negative perceptions or feelings by being sensitive to what might set some of those off. The environment can stimulate new behavior and almost instantly changes an individual’s actions when they enter into it. The second important application is that in a new environment the brain is trying to interpret and adapt so enters into what Hogan refers to as a “state of flux” and it becomes influenced much easier (Hogan 2005).

Smoke the competition

Smoking a drug is the quickest way for a user to feel a high. The active ingredients enter the lungs where the alveoli capillaries absorb the substance and the blood is quickly pumped through the heart and directly to the brain. Smoked substances are usually the most addictive because of the rapid onset of positive feelings experienced after taking a hit.

One of the best pieces of evidence that something will become addicting is when there is an immediate positive experience following the activity with a delayed or un-associated negative experience. The closer the positive experience is to the action and the farther away the negative experience is, the more likely the drug is to become addicting. Dr. Robert Cialdini and Dr. Kevin Hogan have both conducted extensive research on influencing others by creating a positive initial experience for new customers.

Dr. Robert Cialdini has completed over 30 years of research in the psychology of influence. His most well known book entitled, Influence: Science and Practice, details 6 tools of influence and was based on decades of research focused on the logic and mechanics behind influencing others in the business world.

To gain an instant positive first impression Dr. Cialdini prescribes to use the influence tools of Liking and Reciprocation. Below are descriptions of these tools that directly relate to and work with the immediate positive experience components of addiction.

  • Liking: The Friendly Thief
    • People like to buy from other people they know and like. Physical attractiveness, similarity, and familiarity are three levers that can be employed to increase this “liking” factor.
  • Reciprocation: The Old Give and Take…and Take
    • This deeply imbedded social rule is what makes one feel obligated to repay someone who has provided us with a gift, favor, or concession.

Dr. Cialdini does not research reward pathways or the process by which we become addicted to activities or drugs. His research describes how you can gain a greater ability to influence others or defend yourself against those who might be using these same tools of influence. This is an important distinction because his advice is in line with the lessons that can be taken by looking at addiction and the reward pathways that fuel it.

If you follow Dr. Cialdini’s advice you successfully give something away that your customer believes is valuable and come off as very friendly and likeable you would not only create an obligation on their behalf to repay you with a purchase but you would be triggering their reward center pathways in the same fashion as a drug with a high potential of being addicting. The quicker and more powerful the early positive experience the more “addictive” your product or service becomes. (Cialdini 2001)

Dr. Kevin Hogan believes we are constantly undergoing 4 second evaluations. Every time somebody sees us they are evaluating dozens of details about our clothes, body language, hair, facial expression, and movements to categorize us into a general yes or no category. Do they generally like you and associate with you or feel that you completely different or possibly someone with different values and morals? You are placing everyone in buckets of Yes I would like to meet or do business with this person or No, I am not interested.

All of this happens very rapidly and almost completely unconsciously. It is part of how we are wired, relying upon thousands of mini stereotypes that help us make decisions such as deciding whether to trust a company, product, or sales person. One some level this is almost required of us so that we can process all of the information we receive (Bodenhausen, Macrae, & Sherman, 1999, Fiske & Nueberg, 1990), it helps us make sense of everything without having to start from scratch with each observation (Gigerenzer & Golstein, 1996) In The Science of Influence Dr. Hogan discusses how your first impression is recorded and used again and again later in time. Manage your four seconds. (Hogan 2005)

What does your logo, website, customer service reps, store, and product say within 4 seconds of looking at or talking with them? It has been shown that we automatically assign traits such as talent, kindness, honestly, and intelligence to attractive individuals (Eagly, Ashmore, Makhijani, & Longo 1991). While I have not found a specific study on the same effect applying to products I believe that an attractively designed product would create automatic judgments of the products quality, reliability, value, etc. This is a powerful piece of the puzzle because all of these judgments occur so rapidly, if you can make them extremely positive you or your product will be far more attractive. Four seconds happens to be very close to the amount of time it takes for a smoked substance to enter the blood brain barrier and create a high. If you can get your customer to smoke your drug(try your product), do you want them to feel nothing, get sick to their stomach, or really high?

Bottom line: Create a rapid and powerful positive experience for your customer. Use the rule of reciprocity, be likeable and friendly, be cognizant of the first 4 seconds, and avoid or delay any negative experiences or feelings at all costs. Remember, once you have done the legwork to get them to “smoke” your product experience you want to make sure that your product creates the most rapid positive experience possible to create an initial advantage over your competitors.

Cues – Reinforcing Use/Purchases

One of the most commercially profitable lessons to take from the world of psychopharmacology is the role that cues play in the process of addiction and drug use in general. Cues are triggers, reminders of a dug that makes you think of feelings and experiences associated with a drug. Cues are often what reminds users to continue use, immediately seek the drug, or relapse and begin use again. Cues are so powerful that after months in a drug rehab program a single cue can set someone on edge and induce use. Cues can be odors, symbolic objects, sounds, or people. Activity in several areas of the brain rapidly change after a cue is observed. An example of a cue for someone who has quit smoking could be the simple smell of a lit cigarette being held by someone walking 20 feet ahead of them on the sidewalk. Just the smell triggers activity in their brain and brings back the old desire and feelings that led them to begin or constantly reinforced smoking in the first place (PSYCE-1410). Cues are used in the business world all of the time. They are billboards, freshly baked cinnamon rolls placed on a shelf, or life size Oscar Meyer Weiner waving you towards their hot dog stand on the corner of the street. These are things that remind us of the positive experiences we associate with a product.

The following is based on a true story and it provides examples of cues that can be and are commercially employed.

Imagine a 30 year old woman who used to shop at Macy’s 3-4 days a week after work or during her lunch break. It was comfortable, fun, and exciting. For years she continues this “use” of shopping on a weekly basis enjoying new purses, shoes, and perfumes. While this was not going to put her into financial ruin, her husband would like to buy a vacation home and they have been trying to save more money for one. At one point she successfully reduced her shopping at Macy’s to one weekend a month when she would go out with her husband. One day at lunch she eats in a food court and walks past the front of Macy’s on the way there. She can smell all of the perfumes and lotions (Cue #1: Smell) that are just inside the open doors. Several areas of her brain are activated by this cue and she begins thinking about how fun it would be to go shopping for some new spring clothes. She goes to lunch and all she can think about is how her purse is looking a little out of style and how she wishes she could buy the same shoes the lady is wearing (Cue #2: Symbolic Object) at the table next to her. She resists the urge to shop and tries to forget about the whole thing. Two days later she gets a Macy’s catalog (Cue #3: Image) in the mail, they have a 40% off sale. That same day she takes a two hour break from work and heads to Macy’s. As she searches the racks and tries on each item her brain is being flooded with dopamine and she remembers exactly why she used to shop 3-4 days a week. She ends up spending over $1,000 on products she could have done with out.

The golden nugget to take from the use of cues is that through thorough analysis of each type of customer you serve you can inject daily reminders of the high they experienced or could experience from purchasing your product. Analyze your business practices and systematically tinker with using cues that other professionals in your industry have ignored.


Hundreds of studies have been conducted on influence and persuasion and hundreds more on addiction. Very few articles or live experiments have looked for a direct connection between these two areas. This article has detailed four direct ways to learn from the thousands of research studies done on addiction and reward circuitry in the brain and use it to create loyal customers who can’t get enough of your product. These include Initiating Use, Environmental Influence, Smoking the Competition, and Employing cues. Using these in a systematic fashion will uncover ethical avenues of creating a more profitable customer base.


Bodenhausen, G.V. (1990). Stereotypes as judgmental heuristics: Evidence of circadian variations in discrimination. Psychological Science, 1, 319-322.

Cialdini, Robert B., “Influence: Science and Practice” 4th Edition Copyright 2001 by Allyn & Bacon. See also www.influenceatwork.com.

Eagly, A.H., Ashmore, R.D., Makhijani, M.G. & Longo, L. C. (1991) “What is beaitufl is good but…”: A meta-analytic review of research on the physical attractiveness stereotype.

Fiske, S.T., & Nueberg, S.L. (1990). A continuum of impression formation: Influences of information and motivation on attention and interpretation. In M.P. Zanna (ed.), Advances in experimental social psychology (Vol 23, pp. 1-75. New York: Academic Press.

Gigerenzer, G., & Goldstein, D.G. (1996). Reasoning the fast and frugal way: Models of bounded rationality. Psychological Review, 103, 650-669.

Hogan, Kevin, “The Science of Influence.” Copyright 2005 by Kevin Hogan.

Kuhn, Swartzwelder, Wilson, “Buzzed” Copyright 2003 by Cynthia Kuhn, Scott

Lukas, Scott E., “Psychopharmacology lecture notes,” Harvard University. Copyright 2006 Harvard University.

P.M. Fischer, M. P. Schwartz, J. W. Richards Jr, A. O. Goldstein and T.H. Rojas “Brand logo recognition by children aged 3 to 6 years. Mickey Mouse and Old Joe the Camel JAMA, Dec 1991; 266: 3145 – 3148

- Richard

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