How Small Mistakes Can Boost Your Credibility

“Let me tell you about a mistake I made”

Richard expanded on his advice:

You’re correct that you were getting buying signals – right until you went for a high-pressure close. You should have told the couple ‘I recognize that this is an important decision for you. If you’d like to take a few days to think about it and then schedule a time to meet again, that would be fine, or if you’re ready to go ahead now, that would be fine too.’ That way, people don’t feel that you’re trying to railroad them into a purchase decision, and you come across as concerned about their situation rather than just trying to go for a quick sale.

Then Richard highlighted another area where Philip could improve. During the meeting, Philip had delivered a rehearsed anecdote about how he had helped another family put insurance in place that helped them keep their home after the main breadwinner got into an accident. Here’s what Richard had to say about that:

If I was a prospect listening to you tell that story, my BS detector would go off. Even if it’s true, it doesn’t sound real. When you talk about insurance, people are already feeling lots of stress. Your job is to reduce stress, not increase it.

When I’m talking to potential clients, I tell them that the most important thing is to ensure that they have the right insurance for their needs. I sometimes tell prospects that early on in my career I allowed one couple to buy more insurance than they could really afford. As a result the premiums became too much of a burden and they ended up cancelling the policy entirely, so that they didn’t have the protection that they needed. I tell people that I learned from that mistake, and that my goal is to sell them the amount of insurance that they need and no more than that.

Philip went on to say that his conversation with Richard was a turning point in his career. From that meeting onward, he consciously pulled back on the pressure that he put on prospective clients and abandoned all the pressure-based closing techniques that he’d been taught. And Philip also began talking about what he’d learned working with people in situations similar to the prospects he was talking to, both in terms of what had worked as well as some small mistakes that he’d made. As a result, he found that he was more relaxed and that prospects were more relaxed as well, and more and more of the prospects he met became clients.

Why slight stumbles enhance credibility

What Philip had stumbled upon was something that psychologists call the pratfall effect, first identified by social psychologist Elliott Aronson. One of the preeminent psychologists of the last century, Aronson taught at the University of Texas, the University of Minnesota, Harvard and Stanford. While at Texas, he conducted research in which viewers saw a successful game show contestant spill a cup of coffee; afterwards, they rated that contestant as being more proficient than people who saw the same contestant without the coffee spill.

Aronson’s finding was that once someone has established expert credentials, a slight stumble humanizes them and makes them someone to whom people can more readily relate. This is the same reason that actress Jennifer Lawrence saw her popularity spike after she stumbled walking to the stage to collect an Oscar. That stumble made her more real and more human. Aronson pointed out two important conditions for the pratfall effect to work:

1. The individual who suffers the pratfall must be seen as possessing superior expertise. The same small blunder that enhances the credibility of someone seen as having expert credentials undermines the credibility of someone who is seen as mediocre.

2. The blunder must be relatively minor in nature and not jeopardize the individual’s credibility.

The persuasive power of uncertainty

This principle still applies today. In a 2011 interview on the Harvard Business Review website, Experts are More Persuasive When They’re Less Certain, Stanford Business School’s Zac Tormala discussed how a variation of the pratfall effect is alive and well. In several studies, advice from experts was more credible if those experts demonstrated some uncertainty on minor points. Restaurant reviews, for example, were more persuasive if reviewers identified one small thing that needed improvement such as how they were greeted when they arrived.

Along similar lines, Tormala suggested that CEOs’ talks at annual meetings would be more powerful if before reviewing the company’s accomplishments over the past 12 months they identified one or two minor things the company had gotten wrong and what they’d learned from that experience. Warren Buffett often uses this approach in his annual letters to shareholders; before highlighting the things that went well, he sometimes talks about minor mistakes.

Recently I heard an award-winning money manager begin a talk by highlighting the mistake he’d made in 2008 by underestimating the importance of liquidity and how that laid the foundation for his approach to managing money today. After the talk, advisors told me that by admitting to his mistake in 2008, the manager came across as more credible and persuasive.

My article, The Most Important Step to Convert Prospects, discussed how, when talking to prospective clients, your first goal is to build your credibility and your expert credentials. But once you’ve established those credentials, don’t hesitate to confess to small mistakes that you’ve learned from and that have helped shape your approach today. In an unexpected way, doing that can make you more credible and easier to relate to and more likeable and persuasive as a result.

Signs of the times

There were some other important insights from the conference that I attended in New Orleans. The Million Dollar Round Table (MDRT) has been around since 1927 but is going through some big changes:

1. Twenty years ago, MDRT was struggling with declining numbers, like many associations. This year they hit a record 9,700 attendees – primarily driven by those from Asia. This year there were 2,900 advisers from the US versus 2,800 from China. Next year the conference is in Vancouver and almost certainly they'll hit 10,000 registrations and China will have the most attendees. There were also big numbers from Korea, Japan, Philippines, Indonesia, Hong Kong and Japan. Out of 67 countries with advisers in attendance, the UK ranked 43rd in number of attendees and Canada 58th.

2. The Asian attendees looked to be on average at least 30 years younger than the traditional American attendees; in their 20s and 30s versus 50s, 60s and 70s. The traditional attendees were 90% male, the Asian attendees looked to be 70% female.

3. The level of energy and excitement among the Asian attendees was palpable. Many wore the same color – the conference was a sea of orange jackets (the color worn by attendees from China Life, with 50% market share in China)

4. Many of the Asian attendees spoke limited English, and the most important determinant of the number of attendees at a session was whether it had simultaneous translation. At some point in future, there will inevitably be some main platform sessions in Mandarin or Cantonese with translation into English.

5. And finally, the Coach store in the mall beside the convention center had to shut down four times because it ran out of inventory. There was a perpetual line of orange jackets snaking out the door and around the block. The reason became clear when I read in the Wall Street Journal on my flight back that luxury good sales in China are slumping because prices are 60% higher in China and Hong Kong than in Europe and the US.

My observations at MDRT speak to the fundamental shift taking place in many industries. In the meantime, click here to read more about Zac Tormala’s research.

Dan Richards conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written commentaries, go to www.danrichards.com or here for his videos.

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