The art of selling with game theory and the law of scarcity – Jon Gruden’s $100 Million contract and Russell Crowe

You always want what you can’t have…..

Jon Gruden is an ESPN analyst who just signed a 10 year $100 million contract to coach the Oakland Raiders of the NFL.  Since he has not coached in the NFL for 10 years, let’s take a minute and review Jon Gruden’s history.  He coached the Oakland Raiders for 4 years and went 38-26 and his team played in a grand total of four postseason games.   He then was hired by Tampa Bay where he coached for 7 years and went 57-55 and played in a total of five postseason games.  In his first year, he won the Super Bowl.  Many would argue that he won that Super Bowl with the prior coach’s (Tony Dungy) players.  Dungy has a better lifetime coaching record and led the Bucs to the playoffs in four of his six years.   After winning the Super Bowl in his first year, Gruden’s Bucs had a losing record over the next six years and he was fired in 2008.

In 2001, the movie “A Beautiful Mind” won best picture.  It was an incredible movie about mathematician John Nash, who also had schizophrenia.  In the movie, John Nash is played by Russell Crowe, who develops a world changing math theory based on an encounter with a woman that he and all his friends desire in a bar.   The theory is called “game theory” (also called governing dynamics or equilibrium theory).   He is with four friends and he concludes that if all four friends desire the same girl, they will block each other and no one will get the girl.  If they go for the girl and fail, her friends will feel like they are second choice.  If, however, they ignore the girl, and are willing to walk away from her, they will be able to secure a date with her friends.  I have seen a lot of revelations in bars, but none that allowed me to develop transformational math theory.

So what do Jon Gruden and Russell Crowe have to do with selling?

Sales is an underrated art and science.   In general, sales is defined as getting someone else to do something you want them to do.  Better yet, getting them to want what you want.  To accomplish that, sales people push, convince, cajole, persuade and ask for action.  It’s an aggressive exercise.  What happens sometimes is the more we push, the more the buyer pulls away.   In the Beautiful Mind Bar scene, if four guys approach one girl, they will block each other and none will win.  Think about your buyer if you are competing with three other competitors who basically have the same offering.  You are blocking each other in the buyers mind.   15 years ago, a friend of mine was interviewing for a job as Director of Sales.  There were a total of four candidates interviewing for the job and the other three had more experience and were better prepared for the role.   He called me and asked what to do.  I asked him, “are you saying that if you compete on their turf, with the standard evaluation criteria for the job, that you will lose”.  He said, “yes”.   I said, “then don’t.  Don’t compete on their turf.  Invent new turf.   Position yourself differently.  Position yourself as the high potential long shot with new ideas and fresh approach”.  He got the job.

Jon Gruden got fired.  Flat out fired for failure.   He left the coaching world and became a TV announcer and is actually pretty good at it.   The job with the Oakland Raiders became available and I am sure that many NFL coaches would love to have that job.   The problem is that they are all the same profile and going after the same job and they block each other in the mind of Al Davis the owner.  They are just noise to him.   Although he was with the Raiders 15 years ago, Jon Gruden is an outsider.   He’s different.   And what makes him attractive is that he didn’t chase.  He made himself “scarce”.  So now, a guy who was barely a .500 coach, who hasn’t coached in 10 years and had a losing record in the last six, is going to make more money than any coach in the NFL, including 30% more than Bill Belichek who has won 5 Super Bowls.   The last time Jon Gruden coached in the NFL, he was fired.  He was just hired to coach in the NFL for $100 million.  Well executed Jon Gruden.

Game theory and the Law of Scarcity applied

Why does the law of scarcity so effective in creating action?

  • Fear of loss is stronger than the joy of gain
  • Can’t fall behind the competition, even if they are wrong
  • If I can’t get it, it must be good. In a study (cited below) children were asked to choose from a selection of candy bars.  They were told that the only rule was they couldn’t have one particular candy bar.  Which one do you think the kids wanted most?

Sales people try a lot of things to close the deal.  These are different versions of game theory and scarcity

  • Buy now or the price goes up
  • I’m only allowed to sell to a few customers
  • Buy now, we are running low on stock
  • We are the only game in town and your competition will have it if you don’t act
  • The list of techniques is too long to list…….

Great sales people with unique products can and should leverage these strategies, but there are considerations that need to be accounted for in order to do so effectively, and with high integrity

  • If you are a commodity, admit it and find a way to be different. If you can’t differentiate your product in any way, you will be competing on price and only price and that is no fun for anyone.  And if you try to apply the laws of scarcity to a true commodity, you will lose every time and look a little foolish.  There is always a way to differentiate, find it.
  • If you are unique, own it and find a way to be scarce. Don’t sell to everyone.   Be willing to walk away.  Be willing to charge a higher price, better terms.  Offer a different value add, but don’t lose your scarcity
  • If you are not willing to walk away, be careful, bluffing can be dangerous. If you act like you have a unique product and try to apply laws of scarcity to your product, but are really a commodity, your customers will fry you.   At some point your “me too” status will be discovered and you will never sell to those customers again.
  • Have a plan as how to present your scarcity. Why can’t you do everything your customer wants?  Why can’t you lower your price?  Why can’t you sell as much as they want to buy?  Why can’t you sell it to them immediately?  If you are going to employ one of these laws of scarcity, you need to be able to articulate the “why”.

Selling is about creating desired value.  Value is both inherent and perceived and both are real.   The inherent value is what your product or service delivers for the customer.   The perceived value is the result of how you position it.  If you can find a way to simultaneous create so much inherent value that when you apply the scarcity techniques to your offering, the perceived value grows exponentially, as does your odds of closing the deal.

Sell on……but not too hard.  Sometimes you need to be willing to walk away.

Enjoy the article below “The rule of scarcity—how to get anyone to take immediate action”