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THE CHARISMA ECONOMY

Think sales is about the economics of
supply and demand, price and
convenience? Then read on, because
you can be replaced
By Jonathan Kay

Georges Azzam has thick black hair and an

olive complexion. His nails are neat. His
handshake is firm. For the past seven years,
he has been a salesman, just one of the
entire site million now working in Canada. Azzam, 34, currently peddles printing
services for Montreal-based Albert Sales. But after talking with him, you
get the sense he'd be happy and successful selling just about anything.
The expensive suit, the intense eye contact, the locker-room conversation
topics (sports, women, sports) - all of them mark him as officer material in CEO OF THE YEAR
the salesmen's brigade. CEO SCORECARD 2001
REFLECTED GLORY
Dealing with customers, he tells me, "can't always be about business. THAT OLD BLACK
Sometimes I look around the client's office and I see a golf plaque or a MAGIC
CASE STUDY: AIR
football picture - and I talk about that. Or I see a photograph: 'Oh, that's a
CANADA
cute kid!' Let them open up. There are times we don't even talk about
business at all. I just leave them my card and tell them to call me if they
need anything. Price is almost always the number-one factor for the buyer.
But once you develop a relationship, even if your price is a little high, the
customers will want to find a reason to stay with you. Sometimes a
customer will be using a supplier because he's cheap, even though they
don't like him. Then someone like me comes along and they'll say, 'This is
my chance to switch.'"

Azzam's experiences are difficult to square with classical microeconomics.

In textbooks, the process whereby seller and buyer arrive at a price is
explained with slanted lines representing supply and demand. The place
where the two quantities converge is infinitely small - a dot without length,
area or volume. But this model, as salesmen will tell you, is wrong. In fact,
their commissions depend on its wrongness.

What can matter more than price, sellers say, are elements that
economists don't take into consideration when preparing their tables and
charts: a slick presentation, a row of clean teeth, a crisp set of overheads,
a well-timed joke. These are just some of the tools salespeople use to
dilate the pinprick dot where supply meets demand to create a zone of
price-quantity free-for-all in which buyers' decisions are based more on
style and persuasion than substance and product. If we were to chart this
zone and overlay it on the intersection of the economist's two hairline
rules, we'd end up with something that would look like a wide, blobby ink
stain. What happens inside this area is what I call the charisma economy.

According to last decade's futurists, the charisma economy - the economy

of Glengarry Glen Ross, of deals made over drinks, of relationships
nurtured in skyboxes at sporting events - should have fizzled by now. As
the Internet, the greatest bargain-hunting instrument ever conceived,
turned every B2B transaction into a ruthless reverse auction, transaction
costs like Georges Azzam were all going to be shipped off to work at the
Dairy Queen.

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But, like the paperless office, the Azzam-less office did not materialize.
"What I've found is that salespeople who do nothing more than offer
convenience or price do get replaced by the Internet," says Howard
Stevens, adjunct professor at Columbia Business School and co-author of
Selling the Wheel: Choosing the Best Way to Sell for You, Your Company,
Your Customers. "Professional salespeople, on the other hand - people
who add value to their clients' operations - simply find the Internet reduces
the time they have to spend on mundane transactional activities and
allows them more time to build relationships, solve problems and become
involved in the customer's business."

In fact, trends in business may actually be expanding the charisma

economy's GDP. In recent decades, corporate hierarchies have flattened.
Workers come and go, as do, often, whole departments. Intra-corporate
communication has gone up markedly. But so has intra-corporate
competition, as managers and project leaders squabble for attention, funds
and personnel in an increasingly fluid environment. A more competitive
corporate culture has made salesmen of us all.

Earlier this year, my effort to explore the charisma economy's amorphous

territory led me to Barry Snetsinger of Rogen Canada Inc. His firm is part
of Rogen International Ltd., a 33-year-old Australian-based company that,
according to its literature, is "a global business-communication consultancy
that creates persuasive communicators."

Snetsinger is an ex-adman. For two decades, he

created advertisements for products such as
Labatt Blue, Pepsi-Cola, Colgate toothpaste and
Chiclets gum. He was good. In 1977, his team won
a Clio award - the ad industry equivalent of an
Oscar - for his work with Philadelphia Cream
Cheese. But despite his success, he found he
enjoyed dealing with people more than ad copy. A
56-year-old with a youthful air and an extroverted
personality, he excelled at the sales pitch - the industry ritual in which
agencies put teams of executives and their overhead projectors in front of
prospective clients.

Seeking a company where he could concentrate on his forte, he helped

start up Rogen Canada in 1994. When businesses need help with a
high-stakes presentation, his phone rings. Governments, too. This year, he
coached the City of Toronto in its bid for the Olympics. Snetsinger's
mission is broadly defined: he helps his clients convince other people to
become their clients. He qualifies, therefore, as one of the charisma
economy's meta-operators.

A few months ago, Snetsinger let me accompany him to the Toronto offices
of the Young & Rubicam advertising agency. It was a Wednesday. On the
coming Monday, five Y&R officials would travel to Prince Edward Island to
compete for the island's tourism account in a presentation battle with four
other agencies. "The account is worth about $5 million a year," says
Snetsinger. "That's not a lot. But this is an account with enormous creative
potential. You can really show off your talent. It's not like selling soap or
toothpaste."

Snetsinger and I are led into a small conference room where the Y&R
people will be rehearsing portions of their pitch. I meet Susan Murray, a
43-year-old senior vice-president.

"Have you got a sense of the space?" Snetsinger asks following

pleasantries. "It's awful," Murray says, passing around a photo of a drab
24-foot-by-27-foot conference room with white walls and no windows. "But

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we can configure it any way we like." Snetsinger studies the image for a
moment, then recommends that they arrange rectangular tables in the
shape of a capital T - with P.E.I.'s deputy tourism minister and his
entourage seated along the top segment, and the Y&R team deployed on
either side of the main axis. This way, Snetsinger explains, the target
bureaucrats - the "decision-makers" and "key influencers," as Rogen
describes them in his materials - will have a direct view.

Snetsinger also expresses concern about the quick speaker rotation

Murray has planned. He generally prefers that people speak for more than
a few minutes at a time - so that they are able to build a rapport with the
audience before surrendering the floor. "We'll see how it goes in
rehearsal," he says. "I want to make sure our people don't look like
gophers popping out of their holes as they get up to speak."

The Y&R people then begin rehearsing individual speaking segments.

Murray, who is scheduled to open and close the pitch, displays a
PowerPoint graphic that announces the overall theme: Making a Good
Thing Better. "Good Thing" refers to the fact Y&R has owned the P.E.I.
tourism account for the past six years.

"This is a certificate sent from the former Governor-General of Canada in

recognition of a marriage that lasted 60 years," says Murray, holding aloft a
framed letter addressed to her grandparents. "Do you know anyone who
has been married 60 years?

"These days, it seems we live in a world of disposable relationships. Pick

up a People magazine and you can read all about Tom and Nicole or any
number of other celebrities that have been married for 10 minutes or less.
So long-lasting partnerships are something rare and something to be
celebrated. This certificate was presented to Doris and Elmer Leach to
commemorate their 60th wedding anniversary. They were married during
the Great Depression and didn't part until Elmer died seven years ago at
the age of 85. Doris says her family wasn't especially thrilled when she
decided to marry Elmer. They thought that a catch like Doris could find
someone who was smarter, richer and better-looking than Elmer Leach.
But Doris, who has always known her own mind, decided to marry Elmer
anyway. Their life wasn't always easy, but they knew they had a good thing
going and it just kept getting better.

"We've been partners with Tourism P.E.I. for six years," Murray continues,
moving to complete the allegory. "And we want to keep the relationship
going. It's time for you to assess whether you can find a worthier partner.
Like Doris' parents, I'm sure there are people who think they can find
someone smarter, richer and better-looking - or, in business terms, an
agency that will be more knowledgeable, more innovative and make P.E.I.
more attractive to potential visitors.... We're here today to say that we think
we've got a good thing going, and we're going to make it even better."

Murray then introduces a rocking video clip documenting Y&R's role in

promoting P.E.I. tourism. "We've talked about making a good thing better,"
she says. "Now let's take a look at a few good things!"

Snetsinger is impressed. He's a strong believer in what he refers to as "the

creative opening" - a memorable touch that ropes people in. "It's quite
powerful," he says. "It needs to be tightened up a little. But otherwise, I
think it's great. It might even make some of them cry."

A few days later, I find myself in Rogen's own conference room at the
company's Yonge Street headquarters in Toronto. Snetsinger has offered
to let me attend one of his firm's "presentation skills" seminars. The
courses are taught at several different levels. I elected to participate in one
program that lasts three days and costs $1,900.

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The eight paying attendees, whom I've given

pseudonyms, sitting around the table introduce
themselves. Though not all are salespeople per
se, everyone has a job that is connected to sales
in some way. Kevin, a goateed twentysomething
with "I'd rather be skateboarding" written across
his face, is marketing director for a trendy, youth-
targeted clothing company. Tanya, a tall, friendly
woman with a burbling verbal style, works for a
telecom company and is a part-time fitness instructor. She tells the room
she does inside sales but expects to be assigned outside duties in the
future. "I won't have time to fart around [as I do now]," Tanya informs us. "I
have to learn to get straight to the point." Sam, a compact man with
conservative clothes and manners, works for a company that sells
investment services to medical professionals. "Two weeks ago, I got in
front of an audience to deliver [a presentation]," he says. "But I got
nervous. And then I blew it."

When it's my turn, I tell everyone that I need help with my media
appearances. I say "um" too much. And I pad my conversation with filler
words such as "basically" and "frankly." I also tend to slouch. After one of
my recent appearances on the CBC debate show counterSpin, an amateur
media critic opined on his website that "Mr. J. Kay [sits] on set
hunched-over like Boris Karloff, creeping people out with his sinister profile
and druel [sic]."

To get us started, our instructor, a 33-year-old brunette named Yvonne

Tam, splits the group into pairs and leads us through an eye-contact drill.
For three minutes, we are required to silently stare into our partner's eyes.
As Tam's stopwatch ticks off the long seconds, I can hear the sound of
muffled, self-conscious giggles from other parts of the room - as well as
the occasional spasm from my own partner. For my part, I find the exercise
unnerving. Eyes are windows into the soul, and three minutes is a long
time to keep the shutters open.

In between rounds, Tam impresses upon us the importance of this painful

exercise. "What are the adjectives we'd use to describe people who have
bad eye contact?" she asks. She uses a felt-tip marker to write the words
"indecisive" and "insincere" on a large pad. On another sheet, she
describes the impression good eye contact leaves: "confident," "honest,"
"credible" and "competent." Of course, you can get too much of a good
thing. Under the heading "Too much eye contact," she lists "intimidating"
and (more accurately) "spooky."

After lunch, we give mock presentations. Tanya speaks about nutrition.

Several people, including Kevin and Sam, use the opportunity to give stock
promotional presentations from their real-life jobs. I talk about a news story
I had been writing. After each person speaks, Tam goes around the room
and asks each of us to say one thing that we liked about the presentation
and one suggestion "for next time."

These earnest beginners were a far cry from the professionals I observed
at Y&R. Public speaking, like tennis, golf and makeup application, is a
game of mistakes. All it takes is a single annoying habit to distract your
audience. In my case, the speech was coherent enough. But I had trouble
keeping still. To defuse nervous energy, I started rocking forward and
backward as I spoke - gripping the podium hard as if to prevent myself
from accelerating uncontrollably in one direction or the other. Most others
were just as rough. Kevin delivered a speech about his company's clothing
line in an uninspired monotone that reminded me of a high school student
reading a hastily scrawled report on his summer vacation. Tanya was lively

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but incoherent; Sam was well-practised but dry. Daphne, a colleague of

Tanya, read us an eye-glazing concatenation of clichés whose conclusion,
as far as I could tell, was that the project of "creating a life full of harmony
and growth" is similar, in some opaque metaphorical way, to baking a loaf
of bread.

This was just the first day of a three-day seminar, however. As the weight
of constructive criticism was felt, the quality of presentations got better.
People started to smile, enunciate and take their eyes up from their notes.
Kevin in particular made a welcome conversion to polytonality. The effect
was striking. His company's "Spoogee" T-shirts and "Tantrum" pants
suddenly sounded phat.

According to Rogen, the aim of the presentation-skills program is to teach

participants "how to plan, prepare and deliver winning business
presentations to team members, colleagues, clients and potential clients."
But the skills I learned were broader than this description suggests. Like
the eye-contact drill, much of the material related to mastering the general
interpersonal skills and persuasion techniques that lubricate the interaction
between buyer and seller.

In one particularly useful lesson, Tam taught us to classify buying agents

and other decision-makers into six different personality categories. Among
them are:

1. The "politician": waffles on issues while seeking the most popular

choice within his organization. How do you sell to this type? Tout
the advantages of your service or product by reference to the
preferences of the buying agent's colleagues and superiors.
2. The "introvert": doesn't like being the centre of attention or
participating in animated social interaction. How do you sell to this
type? Build trust gradually and avoid even the hint of aggressive
sales tactics.
3. The "ego-tripper": loves attention, constantly interrupts you to
demonstrate his expertise. How do you sell to this type? Stroke his
pride and never challenge.

Tam then invited us to think of people who best typified each category. It
was a sort of business-world analogue to astrology, and everyone
(particularly the women, I noticed) had fun organizing their friends and
colleagues by sign.

Although such abstract exercises are popular, Tam says the real value of
the course comes in the exercises. "The most popular [part is] when we
get people up on their feet to do the delivery skills exercises," she says.
"These are the things that push people out of their comfort zones. You
make them maintain eye contact. You make them deliver [a short
presentation] without saying 'um' 500 times. They like it."

My own impression was that the course produces results. I don't slouch
any more. (Tam videotaped us. I really did look a little like Boris Karloff.)
Plus, I'm giving people more eye contact. A lot more. To the point of
spookiness, my wife has lately complained.

Kevin agrees: "Now, when I'm speaking to my sales team, my point comes
through totally clear. It's 'Guys, [you] have to sell more stuff.' I'm making a
lot more eye contact and getting better results. I'm a lot more
self-assured," he adds. "And that gives the whole sales team confidence."

But does that confidence translate into economic results? How much do
eye contact and 'um'-free presentations really help a salesman's bottom
line? To find out, I interviewed dozens of well-respected academics and
business consultants. To my surprise, very few of them had any idea.

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Self-described sales experts typically give advice in

the form of hazy slogans too broad to be analyzed
empirically. In his list of "20 activities the top 2% of
sales performers do well," for instance, Bill Blades, a
U.S.-based sales consultant, includes exhortations to
"work harder on yourself than you do for your
employer," "give more of yourself to your clients and
employer than anyone else does," "think of and for
clients at all times" and so forth. Blades is a great believer in the charisma
economy. "If you listen to most salespeople who get rejected, you would
think that almost always [the problem] is price," he told me. "But [price] is
less than 10% of the buyer's total decision as to whether they are going to
leave the current vendor and go with someone else."

Yet that 10% is just a number Blades made up. He could not back it up
with any sort of proof. And, in Blades' defence, neither could the other
industry professionals I spoke with who rattled off similar statistics.

I also had difficulty finding an academic who had systematically analyzed

the effect of interpersonal persuasion techniques on economic decisions.
At institutions such as Harvard and the University of Toronto, experts in
marketing, psychology, sociology and microeconomics passed me from
one department to the next. The query did not fall quite in their zone of
expertise they would tell me - try Prof. So-and-so across campus. In
several cases, I was directed to economists who study what is often
described as "irrational" economic behaviour. Matthew Rabin of the
University of California at Berkeley, for instance, has written about
rationality-distorting phenomena such as altruism, loss aversion and
revenge. Yet his research says little about the charisma economy. And
when I asked him to comment on the subject, he declined.

Historically, most of the research that has been done in the area is narrow
- and is generally limited to easily quantifiable independent variables. In a
famous 1972 article, "What Is Beautiful Is Good," for instance, three U.S.
researchers demonstrated that attractive individuals are assumed to
possess socially desirable personality traits. A 1979 University of Toronto
study found that "attractive individuals may be more persuasive than
unattractive persons." A 1990 study published in the Journal of Social
Behavior and Personality reached the unsurprising conclusion that test
subjects were more likely to hire a well-groomed job applicant than a
poorly groomed applicant with the same qualifications.

I did, however, have some success in finding a few indicators that show
how big the charisma economy has become. Business schmoozing costs,
for example, are in the hundreds of billions of dollars. According to
Canadian Department of Finance data, corporations alone spent about $2
billion on meal and entertainment expenses.

A big portion of the charisma economy GDP originates with golf, a

$35-billion industry in the U.S. alone. According to David Kaufman, a
10-year member of the Canadian Professional Golfer's Association and
executive director of Magna Golf Club in Aurora, Ont., between 10% and
20% of all golf played at what he calls "medium to high-end" courses is
played for business purposes. "Typically, weekday golf at these facilities is
largely business, since most businessmen can't justify leaving the office to
play unless there is some purpose," says Kaufman. "The key to the
business experience is not the golf - it's the opportunity to spend five-plus
hours with an individual who would normally be too busy to schedule even
30 minutes' worth of office time. People use that time to foster a
relationship of trust and friendship that can later be translated into tangible
business."

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And, of course, there are the unmeasurable billions Canadian

entrepreneurs and salespeople spend in order to look good, smell good
and otherwise come across to customers as successful and charismatic.
For men, this often means dropping $1,000 on a suit at Harry Rosen. For
women, it means buying cosmetics at MAC instead of Shoppers Drug
Mart. Dry cleaners are part of the charisma economy. So are shoeshine
boys.

"When I have an interview with a client, I wear my best suit and make sure
I'm clean-groomed," says Georges Azzam, the printing services salesman.
"Often, buyers look me up and down. They don't try to hide it. One
customer fixated on my watch. Sometimes it's the tie. Cars are important,
too. My [previous] boss used to say, 'Try to get yourself a nice car. You
never know when you'll have to take a customer to lunch.'

"One of my customers told me he was impressed when [another] sales rep

came in with a Mercedes," Azzam adds. "[He] thought, 'This guy must be
doing well.' He had gold rings, took him to fancy restaurants. The guy
bought $100,000 worth of printing [services] from him. You figure, 'If this
guy is doing that well, maybe I should stick with him.'"

After weeks of fruitless interviews, I finally came across an academic

whose research went straight to the heart of the charisma economy. His
name is Robert B. Cialdini, a psychology professor at Arizona State
University. His research goal is "to find out how to get people to say 'Yes'
without changing the merits of what we have to offer them.

"I started to study the influence [and] persuasion process out of

self-defence," he says. "I always found myself in the position of buying
things I didn't truly value. I was donating to causes that I didn't know about.
I asked myself, 'How could this be? What is it about the psychology of
certain situations that makes me want these things?'"

So Cialdini went undercover. To learn the methods of door-to-door

salesmen, he answered job advertisements and presented himself as a
sales trainee. He also, among other things, infiltrated a portrait
photography studio. Cialdini's observations and conclusions, summarized
in Influence: Science and Practice, comprise the closest thing anyone -
either in the academic or the business world - has come to a Grand Unified
Theory of the psychology of persuasion.

"Courses like those they give you at [Rogen] are useful in the sense of
providing tips as to how to comport oneself, how to talk [to clients] and so
forth," he says. "But I think they are missing a lot of the deeper psychology
associated with persuasion and influence. These programs teach you how
to communicate and project confidence. But what I talk about is more
systematic."

According to Cialdini, the science of persuasion revolves around six

principles. These are not the "be all you can be" aphorisms of Blades and
other sales gurus, but empirical and predictive rules that guide human
behaviour. They are: reciprocation, consistency, social proof, liking,
authority and scarcity.

"Take reciprocation," he says. "If I create a sense of obligation in you,

you're significantly more likely to want to say yes to a request that I would
make of you subsequently. The American Disabled Veterans organization,
for example, sends out solicitations for donations to their cause. And if
they just send out their standard appeal, they get about an 18% success
rate. But if they add in the envelope a little set of gummed personal
address labels," an unsolicited gift, in other words, "the donation rate goes
up to 35%. They haven't changed the merits of donating to the veterans.

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But they've created a psychological context in which people prefer to say

yes to whatever request comes along."

"Or let's say I'm a market researcher and I'm trying to get you to fill out a
questionnaire. I'll be more successful if I give you a five-dollar bill up front
in the mailing itself than if I offer to give you five times that amount after
you complete it. We feel obligated by the receipt of a gift to say yes to the
person we owe. But we don't feel obligated by the promise of payment
after the fact."

In Influence: Science and Practice, Cialdini heaps on dozens of other

examples to illustrate the principle of reciprocation. He cites, for instance,
the example of waiters who increase their tips by leaving complimentary
mints for customers. Cialdini's most memorable example, however, is
related to his observations of the Hare Krishna Society. In Influence, he
describes a typical solicitation:

"An airport visitor - a businessman - is hurriedly walking along.... The

Krishna solicitor steps in front of him and hands him a flower. The man,
reacting with surprise, takes it. Almost immediately, he tries to give it back,
saying he does not want the flower. The Krishna member responds that it
is a gift... however, a donation to further the Society's good works would be
appreciated.... There is visible conflict on the businessman's face. Should
he keep the flower and walk away without giving anything in return, or
should he yield to the pressure of the deeply ingrained reciprocity rule and
provide contribution?... It's no use; he cannot disengage. With a nod of
resignation, he fishes in his pocket and comes up with a dollar or two that
is graciously accepted. Now he can walk away freely, and he does, 'gift' in
hand, until he encounters a waste container - where he throws the flower,
with force."

In following chapters, Cialdini provides examples that demonstrate other

persuasion principles. A section on "social proof" posits that "we determine
what is correct by finding out what other people think is correct," and cites
the example of nightclub owners who keep people waiting in line behind a
velvet rope even when there's plenty of space inside. A section on
"authority" argues that people will often blindly follow the example of
people who create the impression of leadership and expertise. He cites a
study that found three and a half times as many pedestrians waiting at a
red light will follow the example of a jaywalker if he is wearing a suit and
tie.

Is Cialdini on to something? I think so. It was while reading his book that all
the disconnected bits of data I had picked up from Barry Snetsinger,
Yvonne Tam and the various sales industry experts I had spoken with
clicked into a logical whole. Reading the chapter on "reciprocation" made
me understand why Georges Azzam's boss took his clients out to fancy
restaurants. And the section on "social proof" put his remark about driving
a fancy car - "if this guy is doing that well, maybe I should stick with him" -
in context. Susan Murray's "sticking together" stunt was a classic appeal to
a phenomenon Cialdini calls "consistency." As for Rogen's presentation
skills course, one way to see it is as one long exercise in learning how to
create an air of "authority."

"There is much more to persuasion than just the art of it," says Cialdini.
"There are fundamental laws of human behaviour. It's not that corporations
don't work at training their managers, salespeople and marketers in
various techniques. It's that they typically approach the process as a kind
of art. The problem with art, though, is that only artists are any good at it.
The rest of us duffers would benefit from a systematic understanding of
how the influence process works. And that's what I think people and
corporations underutilize. Quite simply, there is a science to getting people

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to say yes."

Based on anecdotal evidence of my own collection, I am inclined to

agree. In recent months, I have been putting what I have learned into
practice - making more eye contact, trying to keep my ums in check and
taking more care in my selection of clothing, barber and cologne. At the
office, I have also embarked on a (formerly) covert manipulation campaign
modelled after Robert Cialdini's lessons on "reciprocation." A few hours
before asking my section editor for a four-day Labour Day weekend, I
brought her a Starbucks Latte. Before Thanksgiving, I tried the same trick
with a Wendy's combo. (Investing in the charisma economy, I found out,
can be dirt cheap.) Did the freebies provide me any advantage? I don't
know, but I scored both times. With Christmas and New Year's coming up,
I've got more trips to the mall scheduled.

As for my demeanour on television, I have had less success. Sitting in the

studio before taping begins, I go through all the tips Yvonne Tam gave me.
Yet once the cameras begin to roll, I invariably become absorbed in the cut
and thrust of debate. My body begins to slither this way and that. Every
once in a while - after a particularly vicious denunciation of welfare moms
or anti-globalization protestors, for instance - I emit an evil cackle.

"Watching [last] evening's edition of counterSpin, I noticed that... Kay's

eyes have a habit of roving and at times rolling, with the pupils of his eyes
describing figure-8s as he tracks the discussion," wrote an Alberta viewer
named Orest Slepokura to counterSpin producers following a recent
appearance on the show. "Invariably, the camera will catch him in the act
and focus on this... causing him to look ever slightly disoriented. Try and
avoid this in future."

"Mind you, in fairness to counterSpin," the writer continued, "this

unfortunate impression would be entirely avoided were Kay to sit up, sport
a necktie and focus resolutely on cue cards in his lap instead of affecting a
lounging pose. Otherwise set out a lawn chair for him. Thank you for your
attention in this matter."
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