Building Trust and Influence in the Private Equity Sector
You’ve experienced this again and again. As a potential investor or when raising capital or even as an entrepreneur seeking funding. You’re at a seminar, networking, hustling, seeking to close a deal, on a sales call, in an email, leaning against a bar or in a more formal environment.
You ask for something. Prematurely.
The other side goes cold. You’ve blown it.
So why do some of us do it? Repeatedly. When we know that personally and historically it does not lead to a productive outcome. Simply because building trust takes time and we have targets to hit. Yet I also have encountered people who wish to build trust yet don’t know how to! “It’s a little touchy feely kind of thing.” Well is there a quantified and scientific system available for you to use? There is.
The “Six Principles of Persuasion” by Robert Cialdini PhD, Professor Emeritus of Psychology and Marketing at Arizona State University. The “Six Principles of Persuasion” first received global recognition in Cialdini’s seminal book “Influence: Science and Practice”. Cialdini distilled years of research and experimental studies with salespeople, fundraisers, marketers, into a systematic framework on trust development and influence. So please use these new Jedi Mind Tricks for the forces of good! The Six Principles are:
We generally like to return favours and feel ill at ease if we are indebted to someone. So how can you utilise this principle? By providing a free audit, a case study of your work or a new business connection. There is a caveat, it has to be high value and relevant. Personalised and unexpected for best results. In return the other party will be more “available” to your requests.
2. Commitment and Consistency
Involve the other person early in the mandate or fundraising round. Acknowledge their views. Try to get a commitment early in the process. In written word. Email will do. Keep in consistent contact with stakeholders. Again, be relevant and always escalate your intent. Perhaps even provide a trial for your service, incremental commitments before the final big YES.
3. Social Proof
People are reassured when they see similar and familiar “others” involved. Testimonials on social media, videos of industry heavy hitters on websites and endorsements on blogs will all aid you in building consensus for your objectives. Get someone of repute and respect to walk you across a room, all eyes will be on you. Your credibility raised.
A continuation of the Social Proof Principle. We like those people that offer positive and encouraging words. Acknowledge our efforts and results. Ask relevant questions and use active listening skills. Really listen. Mirror the other person’s mood, stance and speech. Cooperate. Take the time to build the relationship. There is no substitute for that.
Job titles help. So does what you wear. The quality of your business cards. Even the brand of your pen. All can add authority. Become a “maven” in your industry. Someone that understands a niche and is a thought leader in the field. Is known for championing it. Impact Investing in the agriculture sector in Java, Indonesia anyone? Partner up with a more qualified or recognisable authority for even more influence.
Anything is more attractive when availability is limited or there is a deadline. Perhaps early LPs get favourable terms. What is unique about your product, company, team, fund, your investment vehicle? Why have only a select few been contacted with this rare opportunity? Using the scarcity principle can be very powerful, yet timing is crucial to add drama and urgency. So there you have it. I use these principles to create positive results. Practically every day. Another word of warning. People can smell a phoney a mile away. So…. Focus on the other person’s need, develop your sense of presence and build a marketing infrastructure to spread your influence. This stuff works.