Imagine a suitcase that you have packed for a winter vacation. Maybe you have crammed it full of sweatpants, long underwear, woollen socks, and boots. Throw in a good book or two and maybe a gift for relatives, and you are ready to go! You rush out the door, get into the car, and drive off.

As you cruise down the motorway to the airport, questions inevitably pop up. Did we lock the doors? Yes. Did we adjust the thermostat? Yes. Then comes the question that has everyone in the car baffled and panicked as you think ahead to the check-in counter: how much does your suitcase weigh?

We (Gaby and Kai) occasionally conduct an experiment along those lines with one of our own personal suitcases. We ask people to guess how much the suitcase weighs, without the benefit of using a scale. The range of numbers that people come up with is endlessly fascinating. Rarely does anyone get the answer correct, and even rarer is the person who does so with confidence.

There is a biological and neuroscientific reason why nobody can reliably guess the weight of a suitcase. People have a hard time estimating weights because our brains lack internal meters for them. Humans do not think in absolute terms. We do not come equipped with natural thermometers, scales, clocks, ways to measure long distances, ways to measure value, or ways to quantify success. We are hard-wired for a qualitative world of relative relationships. The meanings we assign to numbers are illusions, because we are quantifying things that have not been quantified for most of our species’ existence.

The concept at work here is called relativity. That is not relativity in the sense of Albert Einstein's famous physics theory, but rather in the sense of how our brain perceives the world for us and assesses the threats in it. It applies to weights and temperatures. That reminds us of an anecdote about how to convert a Fahrenheit temperature to one in Celsius.

‘Forget all that arithmetic and formulas’, an experienced fisherman once told us. ‘It's really easy. If you have 50 degrees Fahrenheit, that's 10 Celsius. Then 70 degrees is 20 Celsius, and 90 degrees is 30 Celsius.’

Informed that his maths was always off by a few degrees – and got worse as the temperature rose – he smiled and responded: ‘Without a thermometer, can you honestly tell me the difference between 68 and 70 degrees? Didn't think so.’

For System 1, the important thing is not the information as such, but the variation or degree of contrast between two pieces of information. Biologically speaking – for humans anyway – the difference between 68 and 70 degrees is meaningless. It is a totally artificial ‘System 2’ way of making sense of the world. System 1 only needs to know when it gets too warm to be comfortable, or so hot that you need to flee the fire.

Situation 4.1 looks at some aspects of negotiations where relativity exerts a strong and direct influence on the potential outcomes.

Relativity and prices: Shifting perception through anchoring

Let's get back to the suitcase experiment, but with a twist. Now we tell people that the suitcase weighs 25 pounds, and then give people another object to guess the weight of. Their estimates of the weight of that second object are much better than their estimates of the suitcase's weight in the absence of other information. People can detect noticeable differences in weight. With enough information, they can triangulate or home-in on an unknown weight with some accuracy. If we give people two objects whose weights are only slightly different, however, the likelihood is high that the person lifting them will perceive no difference at all.

But are you ready for another twist?

If we tell people that the suitcase weighs 30 pounds, and not 25 pounds, people will scale their numbers accordingly! They base their entire perceptions of weight on whatever number we give them. As long as that number is plausible – for example, we would never say 50 or 100 pounds for a 20-pound suitcase – the experiment works, and people accept our reference point at face value. System 1 dominates this exercise, because it is faster than System 2.

Assigning numbers in this manner is known as anchoring. In a business context, an anchor is a reference number that someone artificially yet purposefully sets to bias perception. Anchors constitute the reference set of information – usually numbers – that allows someone to quantify and scale a relative relationship (hot versus cold, heavy versus light, important versus unimportant). In that way, anchors facilitate decision making.

Think of anchoring this way: the first number cited in any discussion will have a strong influence on the last number cited in that same discussion.

The power of anchoring holds true in virtually any context, from casual conversations to the most complex sales negotiation. It is so essential to human psychology that more than 100,000 scientific articles deal with this phenomenon. The next two examples will demonstrate how anchoring influenced the responses of experiment participants and the level of charitable donations in a national appeal during an economic downturn.

Speaking of experiments, let's try one. On a piece of scrap paper, right down the last two digits of your mobile phone number, then put your local currency sign in front of it. If your phone number ends in 45 and you live in the United States, you would write $45. Now ask yourself whether the amount of money you wrote down is too much to pay for a box of Belgian chocolates. If your answer is ‘yes’, write down how much you would truly be willing to pay.

The concept of anchoring would imply that the first number you wrote down will influence both your initial assessment of how much the chocolates were worth as well as your personal willingness to pay. That influence occurs even though the last two digits of your phone number have nothing at all to do with the price of a box of Belgian chocolates. If that makes you sceptical or curious, read on.

The behavioural economist Dan Ariely once conducted a similar experiment together with MIT professor Drazen Prelec and Carnegie Mellon professor George Loewenstein. They asked 55 students to write down the last two digits of their social security numbers, express them in dollars, and then write that amount down next to six different products, including a cordless keyboard and mouse, a box of Belgian chocolates, and two bottles of wine.¹ They then asked the students whether they would pay that amount for the product, and then asked them to bid on each item. In other words, they asked for each student's maximum willingness to pay.

Ariely's analysis of the bids showed a clear correlation between the maximum willingness to pay and the last two digits of the student's social security number. In general, the higher the last two digits were, the higher the student's bid, independent of the product!

In 2015, the Singapore After Care Association (SACA) knew it would face some headwinds for its annual fundraising drive centred around its jubilee gala dinner to celebrate its 60th anniversary. To improve its odds, SACA sent out three different fundraising letters. One was its standard appeal. The second one used an additional tagline: ‘We, here at SACA, would like to thank you for supporting our work in assisting ex-offenders and their families!’ The third one used an alternate tagline: ‘For a donation of $5,000, your company can make a difference in the lives of ex-offenders and their families.’ Each letter went out to a group of 200 potential donors.²

Which letter do you think had the greatest effect? As you might expect by now, the third letter with the anchor proved to be the most successful, but the difference was impressive. That letter brought in 98% of the money that the SACA raised. The average donation was $7,150, and 43% of the donations exceeded $10,000.

These anecdotes all reaffirm the persistent power of anchoring. They also show the power of the illusion of price. Nothing at all – whether it is a car, a service, a meal, a coffee mug, or a speech – has an intrinsic, fixed value. The ‘value’ we attach to any product or service is both artificial and malleable. Whoever exercises the power in a negotiation can stretch and shape that number to serve whatever purposes they want. The only major limiting factors are the quality and credibility of the story and the reasoning ability of the buyer. The salesperson's aim is to keep System 1 engaged and flowing and keep System 2 functions at bay so that the buyer does not think of challenging the story.

The outcome of every negotiation is influenced, if not decided, by the price anchor. If the sales team doesn't decide on the scale and calibrate it, the buyers will, and that puts them in charge of the Invisible Game as well as the Visible Game. On the other hand, every time you open your mouth and utter the first number in a discussion, you are setting an anchor. That's why numbers you state need to be planned and purposeful. Anchors must be set by design, not by accident.

Anchoring requires discipline, situational awareness, and the courage to move first, as Situation 4.2 shows.

What have we learned in Part I?

Behavioural economics, psychology, and neuroscience tell us that sales are won or lost on illusions. Thus, all business success and all profitability depend on how well you master the illusions of sales instead of letting them master you. In that regard, how can you become a better illusionist?

This is not science for science's sake. It is applying science to have more impact. The key to becoming a better illusionist is literally all in your brain, which works on two tracks: the quick intuitive System 1 and the slower analytical System 2. Think of System 1 as our untapped natural form of machine learning that we have had within ourselves all along. It improves as it gets more patterns and data to work with. That is what makes System 1 a powerful tool. But without the influence of System 2 – and reading this book is a System 2 process – your System 1 is prone to generate illusions and leave you vulnerable to uncertainty in a changing world.

The concepts we have introduced so far should give you greater confidence that you can gain an edge and improve your sales performance. The data side is important (that is our System 2) but mastering System 1 is also equally important for successful selling.

System 1 has ensured the survival of our species, but it is a double-edged sword. It does a massive amount of processing for us, but we still need to impose judgment on it. That is why we are still cavepeople despite the designer clothes. If salespeople fail to recognize System 1's abilities to serve as a trustworthy early-warning system and a powerful autopilot, they become vulnerable to the illusions of stability and success. On the other hand, when salespeople expand their comfort zones by continually seeking new experiences, they build a highly attuned, very responsive System 1 with powerful situational awareness.

The business world has focused so much on data science and information technology (IT) at the expense of what happens on the psychological side, which is just as hard a science as the others and can also have a greater impact. This area has been underinvested and hasn't had the huge emphasis that data science and IT have enjoyed.

To wrap up Part I, we would also like you to look at that piece of paper we asked you to prepare at the end of the Introduction. Knowing what you know now, based on what you have read in Part I, what would you do differently? And what would you continue to do, but with more confidence? Take your time before proceeding with Part II.

By now you may have identified some of your own nuggets of conventional wisdom that need replacement or revision. Feel free to jot those down and make your own set of sticky notes.