Photo by foxypar4

Frontline, Mediacorp’s Channel 8 current affairs program, ran a report last Friday on how people were conned into buying speakers sold by van driving salesmen. I was actually approached, not once, but twice a couple of months back!

Their approach was identical to the one narrated on the show. These salesmen would approach people in carparks or along the road and tell them that they have extra sets of ‘premium home entertainment systems’ selling at fire-sale prices, showing a fancy brochure with the cost of a couple of thousand dollars. They would complain of their ‘evil’ boss and claim that he would benefit if they don’t sell it themselves. They just want some money for drinks. They also claim to have just sold a set to a uncle who ‘have an eye for bargain’. In my case, they even showed their ICs claiming that they won’t cheat a fellow Singaporean. What an irony…

A report in the 19th Jan 09 issue of The Straits Times gave an account of how some wine sellers are resorting to selling ‘expensive’ wines using ’scantily-clad women’ in carparks. Again, tales are spun to gain credibility.

A few common sales tactics are used. 1st of all, these people will attempt to anchor the victims to a high cost for their goods. Anchoring is one of the common Behavioral Finance traits that people exhibit. The victims will be anchored to the supposedly high cost of the goods when they show you the brochures or quote you a price. In this way, when they propose to offer you the goods at a much lower price, the victims will have the impression that they are getting a super deal. In actual fact, the goods are not worth that kind of price at all.

Another common tactic is to ‘do a fast one’ or close the deal fast. Make the victim buy on the spot to deprive them the time to think logically. Pressure them into thinking that they are missing out on a great deal if they don’t buy on the spot.

These tactics are not new and should sound familiar. Quite often, you can find such tactics in investment or insurance sales. In investment sales, where the common thing to do is to promote the ‘hot’ fund which has a superb short term performance, the victim is anchored to that good recent performance. These sales people need no encouragement to tout the returns. When anchored, the investors will have an expectation that they will also get that kind of high returns. Read more…