Why do car dealers still put sticker prices on car windows when we all know that “Dealer Invoice” is not what the dealer actually paid and MSRP is just an artificially inflated number? It would stand to reason that if we recognize this obvious sales tactic, it won’t work … but it does. In fact, experiments show that even a randomly generated price has a direct influence on what we are willing to pay for an item, even when we know that the price was randomly generated. This phenomenon, called the anchoring effect by social physiologists, suggests that we have a common human tendency to use the first available piece of information to make a decision. The initial information is the anchor and provides our brains with a mental shortcut when considering a decision, such as what a reasonable price is for a specific product or service.
The Anchoring Effect In Action
In 2006, Drazen Prelec and Dan Ariely of MIT conducted research to test just how influenced we are by an initial anchor price, even if we know that the price is completely disconnected from the value of the item we are buying. In the experiment, Prelec and Ariely auctioned off everyday items, such as a bottle of wine, a trackball, and a textbook, to their students. Before students could bid on an item, however, they were asked to write down the last two digits of their own social security » Continue Reading.
Competing against an incumbent provider is one of the more challenging sales situations that we encounter. The existing account holder likely has a stronger relationship with the client, first-hand knowledge of the client’s business, and enjoys the benefit of being a known entity. Remarkably, even with mediocre performance, an incumbent can be difficult to unseat, and a lot of the reason why is attributed to psychology. There are a few neuroscience concepts that give us some insights as to why customers hold on so tightly and how a challenger might loosen the grip.
Loss aversion is the simple idea that the fear of losing something is much stronger than the joy of gaining something — in fact, it is about twice as strong, according to research. In a competitive sales environment, that means that the value proposition of a challenger needs to be significantly stronger than that of the incumbent if the challenger hopes to win the business. Loss aversion is how even relatively weak providers maintain accounts. So why is our fear of loss so strong?
It is human nature to overvalue what we already own; this is called the endowment effect. It is evident when people are reluctant to part with something they own for its cash equivalent, or if the amount that people are willing to pay for something is lower than what people are willing to accept when selling it (Kahneman, Knetsch, & Thaler, » Continue Reading.
In Sales, we hear them all the time — objections from our customers that just don’t make a lot of rational sense… not to us, anyway. We don’t say it out loud, but we’re thinking, “What? Where did that objection come from?”
The irrational objection is one of the tougher challenges in Sales because we know that there is something deeper that the customer is not comfortable sharing. Also, the customer may not be fully aware of some of his/her deeper drivers. Since the sale will not progress until we resolve the objection, we need to discover what is causing the objection — but how?
Our brains — ergo, our customers’ brains — are wired with biases that cause errors in judgment. Because we may not be aware of these cognitive biases, even skilled questioning may not reveal them. During the sales dialogue, we need to identify and understand biases and get good at using “debiasing” techniques to move the conversation forward.
The Status Quo Bias
The status quo bias is at the root of many irrational objections. It’s really simple to understand — our brains don’t like change. Essentially, we have a preference for things to remain the same until the status quo becomes too uncomfortable to accept. This bias is a powerful and normal reaction for us in response to anything new and » Continue Reading.
Move over, baby boomers. You too, Gen Xers. In 2015, millennials became the largest segment of the American workforce, with more than one in three workers being from this generation. Figuring out how to train a multigenerational sales team presents unique challenges for sales leaders, but understanding the difference between generational learning styles will help you be more effective.
There have always been differences in age and experience levels across sales organizations, from recent graduates to those nearing retirement. This presents a business imperative and an opportunity to identify the differences and similarities in learning and communication styles and the implications for coaching and training a multigenerational sales team.
Understanding the Learning Styles of Generations in the Workforce
These days, there can be up to four generations in the workforce. Connecting and communicating successfully across this generational spectrum can strain the ability of sales leaders and those in Learning and Development. The starting point is knowing your audience:
1. Traditionalists (those born before 1945): Generally speaking, most workers in this generation are strongly committed to their organizations. They value teamwork, collaboration, and the development of interpersonal skills. Their learning style is commensurate with these characteristics: they like teamwork and collaboration in the classroom.
2. Baby boomers (born between 1946 and 1964): Boomers tend to be very competitive and are success-driven. They look for professional growth, are receptive to change, and consider training to be one » Continue Reading.
Proficiency using many different selling techniques is a desired objective. It denotes competence, expertise, know-how, and mastery. An over reliance on certain selling techniques can lead sales professionals into traps that sabotage relationships with clients. In this series of posts, I will share four -proficiency traps and how to avoid them. The first was The Technical Trap; the second, The Execution Trap; the third, “The Networking Trap; and this fourth and final trap involves the problem with incumbency mindsets.
A Good Offense can be the Best Defense in Winning Renewal Business
No matter how entrenched sales professionals become in a client organization, at some point they are likely to face competition for renewals. The trap is in taking an incumbency mindset to defend the business as-is instead of forming a fresh deal strategy that is better positioned to win.
When sellers think like incumbents, they want to defend the relationship and preserve everything the way it currently stands. They justify why they should be retained, based on factors such as their long-standing relationship, past excellent service, or the higher costs of transitioning to a competitor.
The problem with this selling technique is its defensive posture. What the situation requires — and what competitors will do — is take the offensive. As an incumbent, we should ask ourselves: What can we » Continue Reading.
Your Client Network May Not be as Strong as You Think
Proficiency in sales is a desired objective for individuals interested in building their professional selling skills. It denotes competence, expertise, know-how, and mastery. Yet, certain proficiencies can lead sales professionals into traps that sabotage relationships with clients. In this series of posts, I will share four proficiency traps and how to avoid them. The first was The Technical Trap; the second, The Execution Trap; and this third involves networking within the client organization.
Your Professional Selling Skills Can Be Improved by Focusing on Constant Networking
Sales professionals are usually quite good at building a network of relationships within client organizations. The trap they fall into, however, is taking these networks for granted. They fail to track how the structure, politics, or budget priorities change over time, and they overlook relationships that should be cultivated with other influential stakeholders.
Some buyer-seller relationships have been so longstanding that sales professionals begin to feel a little too secure. They may have earned trusted advisor status with key stakeholders and built a large network of contacts at different levels. This is all good — until it isn’t.
Few, if any, client organizations are static. Change can be fast or slow; come in spurts or be ongoing. In an increasingly challenging sales environment, change is to be expected and anticipated. » Continue Reading.
When you are thinking about developing your selling skills you might focus on your ability to demonstrate execution proficiency. This sales proficiency is a desired objective for anyone who wants to improve their ability to build client relationships. The ability to execute against client requests denotes competence, expertise, know-how, and mastery. Yet, providing an immediate “yes” to all client requests can sometimes lead sales professionals into a trap that winds up sabotaging relationships with clients. In this post I explore the sales trap that involves excellent execution. To learn more about other common sales traps, check out this article on The Technical Trap.
Your Selling Skills Should Be Built on more than Execution
Sales professionals who build client relationships based on responding to their requests with outstanding performance can find themselves in an execution trap.
Consider this scenario:
You have a legacy program or solution in place, and because you have such a solid relationship with the client, he/she asks you to do something else. You are such a known entity that he/she feels comfortable making this request, and you respond by doing what is asked. What could possibly be the problem here?
The trap is that your strong client relationship gets diluted every time you immediately say yes. When you simply do what the client asks, you become just another order-taker. Instead of seeing great value in your ability to execute with excellence, » Continue Reading.
Improve Your Sales Skills by Avoiding Over Reliance on Technical Expertise
The ability to demonstrate technical proficiency is a desired objective for anyone who wants to improve their sales skills. It denotes competence, expertise, know-how, and mastery. Yet, certain proficiencies can lead sales professionals into traps that sabotage relationships with clients. In this series of posts, I will share four sales proficiency traps and how to employ alternative sales skills to avoid them. The first trap involves an over reliance on technical expertise. To learn about other traps to avoid, check out this article about the dangers of always saying yes.
Your Sales Skills Should Be Built on more than Technical Expertise
Sales professionals who possess superior technical expertise can easily fall into the trap of making this the focal point of relationships with clients. In doing so, they tend to overlook the strategic, organizational, and personal value they could be providing.
As soon as a client need is identified, these technically savvy sellers jump straight to solutions. They talk about themselves, their company, and their expertise to solve the problem. The dialogue becomes focused on the seller, not the buyer, so the client is less engaged. The scope of the solution discussed is limited to the initial need uncovered.
Improve Your Sales Skills by Employing Strategic Dialogue
To avoid this trap, a more strategic dialogue approach can be implemented — one that frames client needs » Continue Reading.