To influence you can either inspire or manipulate

I’d like to share with you a recent holiday experience. Perhaps you have been through something similar. If you have I would love to hear from you.

It was 9:00am and I couldn’t stop yawning. It was far too early to be doing this on holiday. Like many other tourists, we picked up the brochure and bought the tour. We paid only EUR41 each for an all-day boat trip to the Isle of Capri.

Our tour guide introduced himself and explained why it was very important that we listened to him. He wanted to avoid any misunderstandings, especially on the boat’s departure time from the island. He told us stories about how families got left behind and had to pay for expensive overnight hotel rooms and water taxis back home.

His aim was to make sure that we saw the best of the island. If we stuck with him we would have an authentic experience, avoid the tourist traps and see the best views the island had to offer.

We would have six hours to explore the island when we arrived. He explained that there was a public bus service that could take us up to see the town of Capri and its famous square. Although these buses were infrequent and often crowded, he assured us that we would have plenty of time to make this trip.

Furthermore, if we organised our time wisely, we could even catch an onward bus to see Anacapri and see its spectacular views of the island. However, he warned that we wouldn’t have a lot of time to do this and there was a danger we could miss the boat.

He then paused and smiled. As a surprise he had personally gone out of his way to organise a private bus. It would be waiting for us when we arrived. That day we were going to see both the town of Capri and Anacapri comfortably without the stress of catching public buses. Furthermore, it would only cost EUR20 each.

It was very kind of him, but I couldn’t help but feel just a little bit deceived.

I understood what was going on. This tour company faces fierce competition from competitors. The only way they can compete is on price. Therefore, they maximise the number of people they can get on the boat by slashing the price of the tickets. Once the boat has sailed out to sea, they conveniently mention the bus problem and the EUR20 solution. In the end, everyone has to pay up because it’s the only way you can complete the tour.

It’s an obvious example where a business puts profits ahead of the customer’s experience. Many companies actually do this. Have you ever booked a Ryanair flight and then after all the added expenses wished you booked British Airways? Ryanair still manages to get people to fly again because it’s just a little bit cheaper, but they don’t inspire much loyalty.

In Simon Sinek’s book ‘Start with Why’ he explains “that there are only two ways to influence human behavior: you can manipulate it or you can inspire it”.

Let’s start with manipulation. It’s highly effective. Many companies do it by dropping prices or running promotions to entice customers to buy. For most people there is nothing wrong with this. The line seems to be crossed when scare tactics, peer pressure and false promises are used.

My boat tour experience was manipulation through price-cutting with a little bit of fear that we could miss the boat back. It actually worked very well. As far as I know the tour operator got EUR61 from every person on that boat. What was even more impressive is that the following evening when I was in Sorrento, I found a similar boat tour with buses included and even a trip to the Isle of Capri’s famous blue cave thrown in for only EUR55.

Although a little annoying, the experience did get me thinking: can a company use price and promotional manipulation to sustain their business? On the face it, the answer is yes.

I remember working for Boots Opticians when I was 16 years old and they always ran a promotion: ‘buy one get one free’, ‘half price on selected frames’ and ‘free prescription sunglasses’. Their only means of competing was on price and running promotions, and they are still in business today.

However, it’s not ideal. For instance, if all you can offer are low prices, then your competitors can undercut you, leaving you out of business. If you can only attract customers using promotions, then you have little brand value. Your only attractive feature is being cheap, which means your margins are going to be rubbish. In the end your business is left in a very vulnerable position with very little safety if times get tough because your customers are not loyal.

The truth is that inspiring your customers is far more profitable – take Apple for example. In Carmine Gallo’s book ‘The Apple Experience’ he explains the great customer loyalty that Apple enjoys. Good branding, effective marketing and stylish design are often attributed to Apple’s success. However, it is the overall experience customers have with Apple that inspires its army of devoted evangelical customers.

I remember years ago I drop my iPhone 3G and cracked the back cover. I went to the Apple store and I discovered that my one-year warrantee expired the day before. However, it wouldn’t have been much use anyway because the warrantee didn’t cover accidental damage. So what did the man at the Apple store do for me? He gave me a brand new iPhone.

Technically, this was not in line with Apple’s one-year warrantee. Nevertheless, he gave me a new iPhone because he thought it was the ‘right thing’ to do. And this isn’t an isolated incident because many customers have had similar experiences.

The reason for this is that Apple’s employees are encouraged to ‘enrich the lives’ of their customers and the experiences these customers have in store. Sometimes this means its employees need to break the rules.

According to Carmine Gallo, the average Apple store make USD6 billion in quarterly revenue, USD4,700 in sales per square foot and 22,000 visitors a week. These statistics are insane. No other enterprise in the world is that profitable.

While Apple clearly lost a few pennies replacing my iPhone, I’ve spent a considerable amount of money since on Apple products. It’s not necessarily the design or sleek marketing that works for me. I personally prefer Windows over Mac OSX hands down, but right now I’m typing on a Mac. I just love the way Apple has treated me all these years.

Simon Sinek explains that companies that explain why they do what they do are more likely to inspire loyalty from customers. For example, Apple’s reason is that it wants to enrich people’s lives. Everything it does, no matter how bold, reflects its core purpose and values, and people buy into it.

It’s a point nicely illustrated in Jim Collin and Jerry Porras book, ‘Built to Last’: a compilation of a lifetime’s worth of research that empirically studies the successful habits of great enduring companies. The book offers observations on what they consider to be ‘visionary companies’ versus the actions and performance of less inspiring ‘comparison companies’.

What’s interesting is that visionary companies understand their core purpose and are often able to adapt and evolve when needed. They describe how these companies set ‘big hairy audacious goals’ without compromising on what they believe. Sometimes this means following their heart and doing the ‘right thing’. It’s a case of following your beliefs and if the profits follow, then you were right. It not just following the profits – a failing many CEOs make.

I ran this idea past my mother, who was on holiday with us and happens to be a retired clinical pharmacist. The visionary company in question was Merck and its comparison rival was Pfizer – both large pharmaceutical companies.

To give you an understanding of what Merck is about, in 1935 CEO George Merck II said that his company was ‘genuinely inspired by the ideals of advancement in medical science, and to the service of humanity’.

Fifty-six years later and Merck’s CEO Ray Vagelos sang the same tune: “…our business success means victory against disease and help to humankind”.

Merck is a company that gave Mectizan away for free to cure river-blindness in over a million people living in the third-world. These patients couldn’t afford the treatment and nor could their governments, so they gave it away at a huge cost.

Years earlier after World War II, Merck brought streptomycin to Japan to eliminate tuberculosis. Unsurprisingly, Merck is now the largest American pharmaceutical company in Japan.

Pfizer appears to have taken a different approach during this same period. Around the time of George Merck II, Pfizer’s former president John McKeen famously said, “So far as it is humanly possible…we aim to get profit out of everything we do”.

Unsurprisingly, my mother was quite blunt on what she thought about Pfizer’s profit-maximising strategies. And I don’t blame her one bit. These companies have no other purpose than the pursuit of profit because they lack an inner soul. They don’t inspire who they serve and they command little loyalty.

Now going back to my holiday, I actually enjoyed my visit to the Isle of Capri. The issue with the boat tour was only mildly irritating. I found the incident quite amusing and it got me thinking about these issues I’ve just discussed.

In this instance, the tour company might not care once everyone leaves the boat, but they should. In this digital age most of us have taken to social media. I’m doing it right now with this article. Websites like Trip Advisor provide a very powerful tool for tourists. They tell us about their experiences and recommendations. And, these can make or break a business.

I actually shook the tour guide’s hand and thanked him when I left the boat. I had some good reasons to. Firstly, it inspired me to write this article. And secondly, apart from this annoying bus issue, he was a good host.

His parting piece of advice to us before we left was to see the Amalfi coast. Apparently it’s even more spectacular than the Isle of Capri. And, there was a boat leaving the next day at 9:00am if we were interested.

The next day we woke up late, followed his advice and caught the public bus. He was right – the Amalfi coast is spectacular.