Whenever my wife and I visit London’s Greenwich market, I always order the same thing from the same stall -- samosa chaat. There are over 20 pop-up food vendors showcasing amazing foods from around the world and catering to every diet. But if I pick another vendor, I just know it won’t be as good as my go-to dish. My fear of consuming an unsatisfying meal far outweighs the potential delight from discovering a new thing.
Does that thinking sound familiar? It should. It’s a classic bias called loss aversion.
Shortcuts are the enemy.
Your brain uses biases to make decision-making easier. While they may be a great toolkit for reducing decision fatigue, more often than not they get in the way of our best interests. We think we make rational decisions, but as this University of Chicago study shows, “people systematically fail to predict or choose what maximizes their happiness.”
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The same pitfalls affect your prospects and can derail your sales efforts. So what can you do to circumvent the cognitive biases and behaviors that affect your prospect’s buying decision?
Take charge of the anchor.
People fixate on the first number or information offered -- the “anchor” -- when making decisions. Amos Tversky and Daniel Kahneman unveiled the anchoring bias in 1973. Employing a wheel of fortune machine that stopped at 10 or 65, they found that these numbers affected the participants’ answers to an unrelated question.
To avoid discounting your value, you should open price negotiations so you can set the anchor with your fees. Otherwise, you run the risk of getting anchored to a much lower price from the prospect.
Repetition, repetition, repetition.
The availability heuristic is at work when judgments are made based on what immediately springs to mind, rather than on a complete picture incorporating all available evidence. According to Nobel Laureate Daniel Kahneman, “the bias is due to the retrievability of instances”. In my Mindful Sales Training business, one of my clients selling software as a service (SAAS) had a prospect with little technical knowledge. Said prospect based her initial decision on what was immediately available to her -- an IT manager with an aversion to SAAS solutions.
To keep this bias from derailing the buying process, make it simple for your prospect to recall how and why your services will benefit them. Use repetition, case studies and stories. Ensure influencers in the decision making process are informed by giving them easy-to-read independent studies emphasizing the value of your services.
Use testimonials to leverage the bandwagon effect.
Have you seen clumps of people walking around in strange patterns with their faces glued to their phones? When people see a new product or idea that’s taken off -- like Pokemon Go -- they want to join in, especially if they see people they admire participating. It stems from a deep desire to be a part of something and the fear of missing out.
To get prospects on board with your idea, mention happy customers, respected partners, collaborators and any media attention you’ve gained while communicating the value of your service. Also, identify how trending topics can be associated with your product or service. But don’t stay too long on the bandwagon; they tend to fizzle out.
Get prospects talking.
Another common bias is confirmation bias; prospects will recall or interpret information in a way that confirms their perceptions and existing beliefs. This is why first impressions are so critical... and why you don't ever want a complaint to be the first thing you say to someone. Confirmation bias affects how your buyers remember you or your product when you’re not around. If their bias slants towards opposing your services, they could miss a great opportunity to solve their problems.
Help challenge their assumptions by asking questions instead of going into pitch mode. When they talk, as opposed to you talking, it amplifies their recall. Again, use independent data, stories and evidence to support the value you offer.
With perceptual contrast, prospects evaluate decisions by contrasting two items. Real estate agents often use this tactic when they show you a shabby property before showing your their “real" offering. By comparison, the second property appears to have superior quality.
In my interview with Steve Martin, the co-author of "The Small BIG: Small Changes that Spark Big Influence," says entrepreneurs mistakenly send proposals offering their quote in isolation. Instead, create a tiered fee above your quote -- with added value -- to make your quote feel reasonable.
Accentuate the positive
When making decisions and evaluating outcomes, humans exhibit loss aversion, preferring to avoid losses over acquiring equivalent gains. Put another way, the satisfaction of finding a $50 bill is less than the disappointment of losing a $50 bill. It has been well documented that investors would rather throw good money after bad than cut their losses.
When you talk about your products, focus on the gains your prospects will enjoy as a result of doing business with you.
Ask, don't tell.
Reactance is the reason why my five-year-old nephew keeps banging on the keyboard when I tell him to stop. Nobody likes being told what to do; in fact, people have a strong desire to fight back or do the exact opposite of what you tell them, to preserve their freedom of choice.
In a sales situation, “telling” prospects the best course of action could cause them to retreat. Instead, build rapport and trust with prospects before trying to point them in a direction. Use questions to help them understand the value they will gain from your services.
Next time you meet with a prospect or client, be mindful of these biases your prospect might hold. They’re there for protection, so be respectful, be understanding, and above all, focus on serving and solving problems.