The Straight Line Theory

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The Wolf of Wall Street movie captured a lot of attention world wide, and I watched it more than once, which rarely happens to other films. I was intrigued to know what exactly was Jordan Belfort doing to persuade people to buy stocks they might haven’t otherwise bought. It took some effort to find information on his selling approach because it is a copyrighted system, “The Straight Line Theory” that he is actually selling and is providing courses to improve salesmen performance worldwide.

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Yet what I came across reminded me of different marketing fundamentals that are well known to many, but first let me explain how I understood “The Straight Line Theory”.

From what I learned, Jordan Belfort sees the selling process as a line from opening the sales pitch until closing it with a sale. It starts by gathering intelligence and information on what the customer needs, what are his or her problems and what is he or she looking for.

It is also important to build a rapport with the customer with communication skills that would help in getting the information from them. The selling process in Mr. Belfort’s theory is also about building trust. The salesman has to show that he or she as a sales person, the company that he or she is representing, and the product or service they are selling, are trustworthy.

Also, right before the sell ends, two things have to be set in the minds of the customer. First it is important to reduce the “action threshold”, which I understood as the costs that the customer has to bare to make the purchase. Second is to  increase the “pain threshold”, which I understood as the negative consequences that the customer will face in case he or she does not make the purchase.

Of course that is all in theory, all the practical and technical approaches in applying this theory, I assume, are available in Mr. Belfort’s lectures. From what I have gathered however, I can see the theory is connected to the following marketing principals:

  • Market research: Marketing starts by identifying customers’ needs and wants which could done with a marketing research.
  • Relationship marketing: Forging connections and relationships is of paramount importance for a continuous marketing success.
  • Customer trust: Building trust insures customer retention and lesser likelihood of them switching to competitors’ offerings by raising brand loyalty.
  • Customer perceived value: To ensure customer satisfaction it is important to make them believe that the value they are getting from making the purchase is higher than than the costs they had to bare. The following diagram illustrates the costs and the benefits that a customer might get:

cpv


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Diagram 1 Source

Diagram 2 Source

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