What is oxytocin?
An article in the New York Times reported on recent “neuroeconomic” research from top U.S. institutions. (Princeton and a few other places.) So before I explain oxytocin, let’s take a crack at explaining neuroeconomics first.
What “neuroeconomists” aim to do is pick apart the brain and see how its biochemistry influences buying behavior. In the first of the experiments reported in the article, here was the setup:
Imagine you have $10 in hand. Your responsibility is to convince another participant in the experiment to take all or some of your money. In any dollar increment you offer. Sounds easy?
Not so fast…
You have one chance to “sell” him on the amount you offer. If the other participant (let’s call him the ‘prospect’) accepts, he keeps whatever amount he’s accepted. And you get to keep whatever is left.
(Example: You offer him $1. If he takes it, you keep $9. You offer him $7. If he takes it, you keep $3).
However… if, for any reason, the customer says no to your offer… you’re both out of luck. You both get zero. Researchers expected an obvious outcome: The ‘prospect’ would take whatever cash came his way. Something, they figured, was better than nothing. But apparently not.
See, when the guy with the money — let’s call him the “salesman” — tried to minimize his losses by making a low-ball offer… in most cases, the “customer” simply said no. And then it got even more complicated.
In the first variation of this seller-prospect experiment, the researchers wanted to see if they could predict which offers would ‘turn off’ the prospect. They used conventional brain imaging technology (MRIs, etc.)… and saw that, each time a “no” was coming, the prospect registered brain activity in exactly the same spot where the brain registers “disgust.”
(Clean a garbage can, register disgust. Get an offer you don’t like, ditto.)
They they tried making a chemical measurement, with blood tests. Oxytocin was now among eight other hormones researchers looked for in the blood stream. Now, you say, you promised to explain what that is. And so I shall…
Oxytocin, according to some, is nature’s “love drug.”
It’s a neuropeptide your brain makes when you’re locked into a long-term relationship that you’re trying to make last. It’s also a hormone detected in animals when they’re with other animals they trust.
Oxytocin is also a social bonding hormone in humans. It flushes through the blood stream and gives you that feeling of relaxation you get when you know you’re among friends and, presumably, you also know you don’t have to keep your hand on your wallet.
But the researchers didn’t stop there.
They added another twist to the experiment. This time, each participant had something of value to exchange. Each person started the game with an extra $10. (You can see the parallel to a real sale more obviously now — both seller and prospect have something valuable the other wants).
So imagine yourself in the lab, under the microscope. This time around, your goal is almost the same. You offer the prospect something of value (cash) and hope he’ll take it. Only this time, if your customer likes the offer, he can accept… he’ll get THREE TIMES what you offered… and, out of that, he can also choose to give something back to you.
You might expect that you’d end up forking over your dough… making your prospect rich… but imagine he might not reciprocate the gesture. After all, you offered. He accepted. More cash for him. And now it was time to hit the racetrack, yes?
But here’s what surprised the researchers. Once again, it didn’t pay off for the ‘seller’ to play his offer to the bone. Low offers brought low acceptance rates and, it followed, low paybacks. But high offers actually resulted in high rewards for both. What’s more, when the offer coming from the seller had a high perceived value, oxytocin levels in the prospect’s bloodstream were ALSO high.
The point is, the higher the perceived value of whatever your offering is… the easier it is (usually) to make a sale.
Why do I say “usually” and not “always?”
Certainly, we’ve seen times when the promise is so ridiculously large that it has the opposite impact. Trust levels plummet again, credibility goes out the window, and the sale is lost. Still, if you’ve ever had a hard time convincing a client that you need a BIG, CREDIBLE PROMISE to make your sales pitch complete… maybe this research will help you coax him or her over the line.
(And believe me, all kinds of clients will want to toe that line. For the sake of humility. The sake of modesty. Fear of lawyers. Whatever reason. But you’ve got to push them to make an offer prospects want to hear. It’s your best chance at sales success).
How big should that promise be, exactly? Big enough.