What I learned from the mattress salesman

I have been spending more than my share of time with salesmen these days, and I’ve realized that I have a lot to learn from them. I learned something today as well, or rather saw a technique in action – which I had read about earlier. I accompanied a friend who wanted to buy a mattress, and he had a certain price range in mind.

We went to a nearby store, and the salesman told us something about how the mattresses were color coded and left us alone for about ten minutes or so. I don’t remember the color coding exactly, but I think the firm ones had a red band on them, soft ones had a green band on them, and then the in-between ones had a yellow band on them.

Learning from a mattress salesman

After a few minutes, he approached us and told us about this fancy machine they had which was attached to a mattress that made recommendations for you based on your body type.

He asked my friend to lie down on the mattress for about a couple of minutes or so, and the mattress was attached to a screen which showed his posture, and how different points in his body were exerting pressure on it. The salesman told us how the machine was connected to databases of leading universities doing sleep research, and had over 4 million records in its database.

After a few moments, the system made a recommendation and the mattress that it recommended was about ten times the price of what my friend was looking at!

The salesman asked him to lie down on the mattress and see how it feels. Sure enough, it felt great, and then the salesman started explaining how each body is different, and needs different types of mattresses. He asked my friend to lie on another expensive mattress and told him he wouldn’t like it, and that turned out to be true too.

Finally, my friend told him that this is all well and good, but he wants something that is way cheaper than what was being shown, and told him the top price he was looking at.

The sales-guy said that you really don’t have to buy this one – we just use this to run diagnostics, and based on its recommendation – I will get you something that is closer to your price range. He then showed us a few that were closer to the top price – some less, and some more than it.

After trying out a few – my friend picked out one that was much higher than the top price he was looking at, even when there were cheaper options that weren’t so bad.

As I thought about his experience on the ride back home, I realized that I had read about this technique somewhere, most probably in this book called Influence, but I am not really sure about it. What happened was that the sales-man showed us a top of the line thing, which then set an anchor price in our head, which was quite a big amount.  He didn’t actually talk about the price even once, but I am sure this amount was playing in our heads the entire time.

So now instead of the original budgeted price, this new figure which is much larger becomes a point of reference. So, when you look at other options, you start thinking about them with respect to the most expensive thing you saw, not the amount you originally had in your head. So, even something that is way higher than your top price doesn’t look all that bad, because it is so much less than the new anchor price in your head.

I thought this was quite an interesting experience, and a very effective technique as well. I’d like to hear if anyone else has any similar experience or other interesting stories about sales techniques.

Image by Heather

Car buying tips using the iPhone

Weakonomics had a post on the future of money, and it made me think about my recent car buying experience, and how different it would have been if I didn’t have the iPhone. Although I have written about car buying tips once earlier – I thought I’d write a post about my car buying experience specifically with respect to the iPhone.

The way I went about the whole exercise was to search cars around my area first. Cars.com is a great place to do that online, and it has got an app too. So I downloaded the cars.com app, and used it on my iPhone to browse cars.

One thing I noticed about Cars.com is that it doesn’t update as frequently as it should. You see several cars there which have already been sold, so it is always a good idea to call up the dealer and find out if something you liked is still available.

On the iPhone you can just tap the listed phone number, and it places the call for you. It saves you the trouble of keying in the numbers, and that was a big reason I used the app even when I had the computer handy (it is only now that I realize how lazy I have become).

If the car was still available – I usually used to make a note of it on Google Docs. I used to go online and update it from my phone itself.

Next up was figuring out the KBB value for which I used to go to their mobile site and although I am a little disappointed that they don’t have an app yet – the mobile site works fine too.

Once you get to the dealer’s – you see several cars that  you hadn’t checked out earlier, and it’s really useful to have the phone to go online and check the KBB value immediately.

On the Cars.com app – there are a few tools and one of them calculates monthly payments for you, and I used that quite a bit to see how much each car would cost per month.

Finally, when I did buy the car – I forgot my insurance papers and was able to go online on the phone and check the insurance number from there itself.

I used the Chase app to check my bank balance a couple of times, used the GEICO app after I bought the car, but I didn’t use these apps as much as the others.

As I think about it – the phone changed my car buying experience quite a bit, and made it easy too, but in all honesty, I think I would have bought the same car even if I didn’t have the phone. It made the process easy, but it didn’t do anything that I couldn’t do without it. I don’t have any insights to offer into the future of money, but if you have a smart-phone that can make life easier for you in a lot of ways. If you don’t have one – then you are probably just missing out convenience and nothing more.

NRI Interest Rates: NRE Rates

Update: After the rule changes in December 2011 – banks can set much higher rates for NRE deposits, and I’ve created a new post with the best NRE fixed deposit rates.

I got a comment about compiling a table for interest rates for NRIs. I thought I’d start off with NRE FD rates first, and then move on to other rates. So, here is a table with NRE FD rates as on 1st April 2010.

After compiling these results I noticed that almost all the banks offer the same interest rate. I suspect that the banks that show a different interest rate in the table below also offer the same interest rate as others, but have either not updated their pages, or I haven’t been able to find the correct interest rate. I will try and update this frequently, but for now keep in mind that these NRE Interest Rates were compiled on April 2010.


S.No. Bank Tenure

Interest Rate

1 Karur Vysya Bank 1 year to 2 years


2 City Union Bank 1 year and less than 3 years


3 Tamil Nadu Mercantile Bank 1 year – less than 2 years


4 Karnataka Bank 1 year to less than 2 years


5 Dena Bank  1 year only


6 State Bank of Travancore 1 year to less than 2 years


7 South Indian Bank 1 year to 2 years


8 Corporation Bank 1 year to less than 2 years


9 IDBI Bank 1 year 1 day – 10 years


10 J&K Bank 2 years to less than 5 years


11 Federal Bank  1 year only


12 Indian Bank 1 year to less than 3 years


13 Andhra Bank 1 year


14 Central Bank of India 1 year to less than 2 years


15 Vijaya Bank 1 year to less than 2 years


16 Bank of Baroda 1 year to less than 2 years


17 ICICI Bank 390 / 590 / 990 days


18 HDFC Bank 1 year 16 days


19 SBI
1 year – 10 years



Is the market that high?

One of the things about being a new couple is that we go out for lunches and dinners with other couples quite a bit now. This is a completely new thing, and something which I didn’t think I’d like that much, but it’s not that bad; actually I enjoy myself quite a bit.

On one such lunch, the conversation turned to the stock market, and our friend told me about his portfolio, how he bought close to the peak of the market, and how he expected to recover his money within six months or so. I asked him if he used a money management software that made this projection for him, and he said – this is just his hunch.

I think this is the first time in a long time I am listening to someone tell me that the market is going to go up in the next few months. I was wondering at that time if the market was so high that it inspired such a great deal of confidence in him.

I had forgotten all about it, but today I read a headline in Business Standard which said the market is poised to cross 5,400. It’s amazing how little things change, and how the cycle follows the same pattern every time. I was reminded of Peter Lynch and his cocktail theory, and if you haven’t read the post – I think you should go through it because you will be able to see the stages he talks about very easily around you, and it will help you in your investment process.

I am not here to say if the market will go up or down in the next few months – I have no clue – I just want to point out that there are cycles in the market, and that paying attention to them can save you a lot of heart-ache and money. Being optimistic is not bad, but be careful with your money – it’s your money after all.

How to find returns on SBI Mutual Funds?

I got a comment on the tracking SBI Mutual Fund NAV post about switching from one SBI plan to another, and finding out which one is good for you.

I must admit that I don’t know which SBI mutual fund is best for you, but I can point out a few resources that can help you make a decision.

The first one is a page from Value Research that will help you see a list of SBI Mutual Funds, their returns, and other details.

Here is how to get to that:

1. Go to the home page of Value Research Online.

2. Click on “Funds” on the top.

3. Look at “Search Tools” –> “Family Scan”  –> Choose AMC, and select “SBI” and click “Go” – on the right side of the page.

4. The page that comes up will have a little blue link on the top right which says: “Analyse Fund Family”. Click on that link.

5. On the page that comes up – you will see all the mutual funds offered by SBI, their category, Value Research rating, risk and volatility, return grade, 1 year return and expense ratios.

This data will give you a quick look at SBI has to offer, along with their returns. However, keep in mind that these are just past returns and that alone is not a good enough indicator on what to buy. This can be a good starting point for your research though.

The Value Research page is an excellent resource, but it doesn’t have description on what each fund is about. I did a post about this some time ago called SBI Mutual Fund.

You can go to that page and read brief descriptions about many of the mutual funds listed on the Value Research comparison, and that will give you an idea of what the funds are all about.

If you are interested in reading about specific SBI Mutual funds – I have covered a couple here earlier:

1. SBI Magnum Taxgain

2. SBI WISE Mutual Fund

At this point, this is all I can think of, anyone has any other ideas?

Friday Links April 2 2010

As we head over to the weekend, here are some great reads for you. Enjoy and have a good weekend.

Are Futures Simply Better? @ Capital Mind

The New Inner Circle of Steve Jobs @ Digital Inspiration

10 Golden Principles of Successful Web Apps @ A VC

Innovators become active experimenters @ HBR

Flow chart for email @ The Big Picture

Structured Notes start to overcome the Lehman taint @ Matthew Goldstein

Indo China Consumption Fund @ Value Research Online

Berkshire’s Investment in BYD @ Rational Walk

Financial Retirement Planning for a life expectancy of 100 @ The Digerati Life

I am not impressed with this frugal tip @ Indian Thoughts

Car buying tips

As I said yesterday – I am in the market to buy a car, and there are several lessons I learned in this process, which I thought I’d share with you in this post about car buying tips

There are a couple of things you should know before you start reading these tips. First is that we are in the market for a used car, and secondly – we don’t have a particular make or brand in mind. We just wanted to check out the options available and then take a decision.

Car buying tips
Car buying Tips

With that in mind, here are some car buying tips you could use.

1. Cars.com is a good resource for checking out car listings online: I have found cars.com to be the best place as far as initial screening is concerned. It is always handy to have an online resource to browse through car listings before you head out to the dealer and in my experience – cars.com is the best place to do that. You can search by make, model, year, location and price – and that gives you a good idea of the nearby options in your price range. It is a good idea to get a sense of the local tax rate and also add about $300 – $400 dealer documentation fee to the price because that is what you will have to pay in addition to the sticker price.

2. Check out the KBB value: I check the KBB value of a car after finding something I like. This usually helps in getting a perspective on how much the dealer is asking for with respect to the fair value, and is a natural next step for me. The thing to keep in mind about KBB values is that there are two types of values – Individual and Retail. Individual prices are lower than retail prices, and based on who you are buying the car from – you should look at individual or dealer KBB values. Another thing to keep in mind is that KBB values for retail cars assume excellent condition. So, if the car you check out is not in great shape – it should be priced lower than the excellent condition price.

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