When the Biggest Risk is Playing it Safe
This is probably not news — certainly not to me in my other life as a recreational tennis player: most of us hate losing more than we take satisfaction in winning or potential gain. If I leave the court with a decisive 2 set win, I’ll spend the next 24 hours playing the best points in my head…then move on with my life. If I’m on the losing end, it becomes an all-consuming obsession, eating at me like a rolling toxic heartburn. For days.
Clearly I’m not alone. The psychologists Daniel Kahneman and Amos Tversky demonstrated the intensity of “loss aversion” with an exercise involving a coin toss. “In my classes, I say: ‘I’m going to toss a coin, and if it’s tails, you lose $10,” said Kahneman. “How much would you have to gain on winning in order for this gamble to be acceptable to you?’
“People want more than $20 before it is acceptable. And now I’ve been doing the same thing with executives or very rich people, asking about tossing a coin and losing $10,000 if it’s tails. And they want $20,000 before they’ll take the gamble.”
In business, loss aversion is perhaps most evident — and powerful — in the embrace of the status quo. Change, any kind and any degree, is risky. This is one of the biggest challenges a salesperson must overcome.
“Customers are most likely to rethink their current course or reset pre-established buying criteria only when given a reason,” says Brent Adamson, principal executive advisor at Gartner. “Sales reps who provide more than the benefits of taking action, but also the cost of inaction, are likely to drive a customer to make that kind of change.” (From Challenger™ Sales Reps MotivateCustomers to Buy, by Jordan Bryan)
The sales rep needs to spell out the drawbacks of maintaining the status quo. This reminds me of an exchange I had with the CEO of a company we were pitching. We were looking to use their underlying technology to develop a new type of employee engagement platform, which was pretty far afield from the intended use.
“We must consider the opportunity costs,” he countered, after he indulged the spiel.
“With respect,” I responded, unable to stop myself, “I suggest you consider the costs of not pursuing this opportunity.”
Bryan’s article lays out several very sensible rules of the road in engaging a potential customer:
- Establish credibility with buyer.
- Reframe buyer’s understanding of their problem to capture their attention. (Note: this is particularly effective with newer companies that feel misunderstood. Demonstrate that you “get it” and you’re an instant ally.)
- Quantify the cost of inaction to build urgency and momentum for action.
- Make the sale personal by having the buyer emotionally feel the problem with the status quo.
- Propose a solution that addresses the underlying cause of the problem.
- Share your solution and unique capabilities after the buyer feels the problem and effectiveness of a solution.
We bake these principles into our white papers, collaterals and campaigns. Facts support, but spelling out the short-sightedness of continued inaction creates a strong emotional imperative to do something. Averting loss doesn’t automatically mean playing it safe — it’s the sales rep’s job to convince the customer that to avoid missing out is the safe play.
Charles Epstein, BackBone President. For more, visit www.backboneinc.com.