Tuesday, June 7, 2011

Beware the Intoxication of Wins

Researchers from University of Pennsylvania have repeatedly documented that focusing on your retailing wins will tip the balance toward business success. That body of research is challenged in a book titled Smile or You Die: How Positive Thinking Fooled America and the World. Author Barbara Ehrenreich argues that overlooking the negative leads to catastrophic business and life decisions.
     The answer is to use educated optimism and avoid the intoxication of wins. Research findings from North Carolina State University and University of South Carolina give a rather literal interpretation to that advice.
     The researchers analyzed two sorts of outcomes for 271 collegiate and professional sporting events. Each event selected was a high-stakes basketball or football game, such as a playoff or a homecoming rivalry. The first sort of outcome they analyzed was how close the game turned out to be. The second sort of outcome was the number of automobile fatalities on the day of the game in the area where the game was played and in the hometown of the opposing team.
     The study’s finding? The closer the game, the higher the number of automobile fatalities, especially from accidents involving alcohol intoxication. But this finding was much more striking with winners’ hometowns. There was no evidence of a significant increase in traffic deaths in the hometowns of the losing teams.
     The researchers’ explanation? Winning a close game, even if it is a vicarious experience as a spectator, generates high levels of both testosterone and blood alcohol, interfering with sober judgment when driving.
     Bringing it back to the world of the retailer, winning in a negotiation can impair judgment. The most dangerous time to make purchases from a vendor is when you’re both very busy and very happy. Researchers at University of Hong Kong and National University of Singapore found that joyful customers don’t adequately evaluate all purchase alternatives. These customers tend to just select either the first alternative or the last alternative.
     When you’re in high spirits, stop to check that you’re not entering some zone of excessive optimism which includes mumbling, “A good retailer can sell anything to anybody.” Maybe the reason you’re really happy is that your store is bustling, which means you’re especially busy. Then an added danger in negotiating with the vendors is that you won’t take time to verify you are making good business decisions instead of only easy, time-saving ones.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more:
Survive Using Educated Optimism
Curb Your Enthusiasm About Economic Recovery
Check Your Optimism When Dealing with Vendors

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