Stuck
How do we overcome the customer’s status quo?
Losing to the status quo is actually one of two possible reasons a deal can be lost to inaction. A second one is more challenging obstacle that remains even after the status quo has been defeated: the customer’s own inability to make a decision.
Customer’s indecision is driven by a separate and distinct psychological effect called the omission bias, which is the customer’s desire to avoid making a mistake. Customers are much less worried about missing out than they are about messing up.
Nearly 87 percent of sales opportunities contain either moderate or high levels of indecision.
Overcoming status quo is about dialing up the fear of not purchasing, overcoming indecision is about dialing down the fear of purchasing.
There are four unique behaviors that high performers use for navigating and overcoming customer indecision. The JOLT method is purpose-built for overcoming customer indecision.
The Inaction Paradox
It is indecision that accounts for more losses than the status quo. Only 44 percent of deals that end up lost to inaction are due to the customer’s preference for status quo. 56 percent of the time, the customer is unwilling to or unable to make a decision and commit.
The “principal of energy conservation” is hardwired into all animals, including humans. We are wired to choose the path of least resistance in any activity, choosing to minimize energy expenditure whenever possible.
The omission bias derives from a concept psychologists refer to as “loss aversion”, also known as prospect theory. Kahneman and Tversky found out that customers are two to three times more likely to make a decision that enables them to avoid loss than they are to make a decision that enables them to realize a gain. People hate losing much more than they like winning.
People actually feel more regret when bad things results from their actions as opposed to when bad things happen as a result of their inactions.
Errors of commission are concrete. Errors of omission, on the other hand, are abstract and more difficult for the customer to measure and observe. Errors of commission are personal in a way that errors of omission are not. Everybody is culpable when it comes to sticking with the status quo, but somebody is personally responsible for changing it.
The three purchasing “errors of commission:
- Valuation problem.
- Lack of information.
- Outcome uncertainty.
Customers are: worried about choosing the wrong option, concerned that they haven’t done enough homework or fearing they won’t get what they are paying for.
A big part of the challenge for salespeople – and one of the main reasons indecision has gone unrecognized for so long – is that it is difficult for a salesperson to detect in a conversion. Unlike the status quo. Indecision is rarely discussed in open conversation. It’s rooted in personal fears.
Win rates goes down when indecision goes up. 45-55 percent win rate for low level of indecision. 20 percent win rate for moderate level of indecision. Only 5 percent win rate for high level of indecision.
While it is good practice to build intent by showing the customer that the pain of same is worse than the pain of change, once the status quo is defeated and purchase intent is established, the calculus flips. To get from intent to action, the seller must now overcome omission bias. How will they succeed with your solution. Proving to the customer that they won’t fail by purchasing your solution.
The JOLT Effect
The salespeople today need to be equipped with two playbooks, not just one.
If the playbook for beating the status quo is predicated on dialing up the fear of not purchasing, the playbook for overcoming customer indecision is about dialing down the fear of purchasing.
The playbook for overcoming customer indecision is called “the JOLT method”.
- The first behavior is judging the indecision. High performers qualify opportunities based on externally observable criteria, but also on customer’s own ability to make decisions. Through a combination of indecision-focused diagnosis, active listening and careful observation.
- The second behavior is to offer your recommendation. High performers know that customer who are indecisive are looking for guidance, not more choice.
- The third behavior is limiting the exploration.
- The fourth behavior is to take risk off the table.
The JOLT method:
- Judge the indecision.
- Offer your recommendation.
- Limit the exploration.
- Take risk off the table.
Only 7 percent of sales calls showed a high level of JOLT skill demonstration.
Judge the Indecision
The journey between the verbal commitment and the signed agreement, between selection and transaction, between “I want to” and “I did”, can be a slog.
First we need to understand which of the three reasons – valuation problem, lack of information or outcome uncertainty, is the reason for customer indecision.
Valuation problem can be detected by thinking about speed with which customer accepts different options, does he continue to press on differences between different solutions, does he openly express confusion about which options to choose, does he gets distracted by new features.
Lack of information can be detected when customer frequently asks for additional information, does he delaying due to collecting more information, does he say that he is overwhelmed by information or he expresses concern about being in the dark.
Outcome uncertainty can be detected if customers ask for ROI projection, if they had previous investments where they were burned, if they are talking about big risk with investment, if they ask for guarantees or assurance or they express skepticism about outcome achievability.
Then we need to estimate the depth of customer indecision. The Indecisiveness Scale is a tool developed in 1993 by randy Frost and Deanna Shows and has become the gold standard for assessing indecision.
Today customers do a fair amount of search on their own. What high performers look for is the amount of information the customer requires to feel confident and the way they seek that information. The second factor they are estimating is if a customer is comfortable with ambiguity or if they are doing a lot of backtracking.
Indecision is a decision-making dysfunction. Christopher Anderson is talking about two different decision-making approaches. The first he calls compensatory selection and it is a tendency to weigh and trade off different criteria against one another. The other one is noncompensatory selection approach. In this approach, certain criteria are considered in more of a binary way – either they’re critical or they aren’t and if something is critical, any option that doesn’t have it is eliminated.
In 1956, Herbert Simon introduced the idea that there are fundamentally two types of people when it comes to making decisions: satisficers and maximizers. Satisficers are fine with good enough. Maximiziers don’t accept good enough. The research shows that maximizers actually make better decisions, but, despite this, they end up being less happy with their decisions.
Being maximizer leads one to perpetually second-guess one’s decisions and make comparisons with others whom one perceives to have made better decisions. Most behavioral economists agree that there is no such thing as a pure maximizer simply because it’s impossible for a person to consume and process all of the information about every option available before making a decision.
There are two different types of delay: procrastination and decision avoidance.
Joseph Ferrari explains that everyone procrastinates, but that not everyone is a procrastinator. Eric Rassin argues that there are several reasons people procrastinate: they are insecure about their capacity to complete them, they shift activities because they like or need deadline pressure to perform at their best.
When a customer procrastinates, they still intend to act even though they are temporarily putting it off. Decision avoidance has no such intention. A decision avoider delays for one reason: so as not to have to make a decision.
The psychological research on indecision also points to a number of external factors – whether based on time or the perceived importance of the decision.
The four dimensions of indecisiveness high performers look for: how the customer consumes information, how the customer makes trade-off, whether the customer is content with good enough and the way in which the customer is delaying their decision.
Offer Your Recommendation
When we face an abundance of choices, we end up not liberated but, in fact, frozen in place by our own indecision.
While the early stage of the sale might be largely about convincing the customer how to avoid loss that stems from their inactions, the back half of the sale is all about how to avoid loss that stems from their action.
The solution, then, isn’t to eliminate choices altogether for customers: it’s to know when it’s time to shrink the consideration set in order to drive the customer toward a decision. High performers will eliminate options by making a recommendation to the customer about what they should buy.
Two skills are important for this approach: the first is called proactive guidance and the second is advocacy – personal recommendations.
It is important that seller is capable of understanding when probing questions can be contraproductive and they should switch to proactive guidance and advocacy.
Limit the Exploration
How much information is enough for a customer to make a decision? A good rule of thumb is the P = 40 to 70 rule. The concept was coined by general Colin Powell. P stands for the probability of success and the numbers indicate the percentage of information acquired. Once the information is in the 40 to 70 range, go with your gut. Making decision with less than 40 percent of the information required is just guessing, and waiting until you have more than 70 percent is just delaying.
Three skills to limit the exploration: owning the flow of information, anticipating needs and objections, and practicing radical candor.
To control the flow of information sellers should improve their subject matter expertise. Our customers aren’t looking for us to teach them how to do their jobs, they’re looking for us to help them be smart consumers of a technology they don’t know much about.
69 percent of sales calls contained some form of customer-stated objection. This is particularly true in the simple, transactional sales calls. In the complex sales, objections tend to come up later in the sales process.
Radical candor is a term coined by former Apple and Google executive Kim Scott. Four engagements styles based on how direct is your communication and how much do you care for yourself or others. Radical candor is direct and caring for others. Other three styles are: ruinous empathy (caring for others, silent), manipulative insincerity (silent and caring for yourself), obnoxious aggression (direct and caring for yourself).
High performers use radical candor.
Contrary to popular belief – and what is typically taught in sales training – high performers actually do more of the talking than the customer. In the research won deals included sellers talking for 58 percent. Lost deals only 52 percent. High performers are also very comfortable interrupting the customer and talking over them. What is happening is what linguists refer to as cooperative overlapping. The term was coined by Deborah Tannen. It could be compared to enthusiastic leadership or participatory listenership.
Listening is important in sales, but if you want to close a deal, engagement is actually more important. Indecisive customers need an active, engaged conversation with a salesperson to get them over the hump.
There is limited downtime in a high-performer sales conversation. There is a point of diminishing returns when it comes to silence time. No silence time (less than 8 percent of the call) and too much silence time (more than 30 percent of the call) result in lower conversion rates. The optimal amount is between 8 and 17 percent.
A high-performer conversation is neither a lecture nor an interrogation.
The Risk Off the Table
Every buyer has experienced being burned by a vendor or a too-good-to-be-true product description that over-promised and underdelivered.
It wasn’t until the 1970s that FUD (fear, uncertainty, doubt) really became a commonly used technique in sales. IBM salespeople are probably first credited with using FUD to combat an upstart competitor, Amdahl Corporation.
There are four distinct flavors of FUD that sellers tend to use when relitigating the status quo: urgency, scarcity, wallowing and isolation.
Wallowing is making customer stew in their own discomfort or discontent with the status quo.
There are three key techniques that high-performing sellers use to de-risk the purchase decisions. The first is setting expectations (realistic ones). The second is offering downside risk protection (creating step by step implementation plans, offering purchase insurance, or creative contracting to lower perceived risk on important elements). The third one is starting smaller.
Becoming a Buyer’s Agent
When faced with so many options and overwhelmed by the fear of making a costly mistake, today’s customers increasingly seek the help of an expert who can help them navigate different options and ultimately instill confidence that the customer is going to have a great experience.
The customer may understand why they buy but still require a lot of help with what to buy, how to buy, and even when to buy.
The high performer know the customer’s indecision is less a function of something they did as sellers and much more a function of who customers are as people.
Here we can talk about the principal-agent problem or the agency dilemma. The principal-agent problem is when one person (the agent) is able to make a decision on behalf of another (the principal), but an incentive misalignment or conflict of interest causes the principal to believe that the agent is making decisions that benefit only themselves. This problem typically arises when there is information asymmetry between the agent and the principal.
The agency dilemma is very present in seller-customer relationship.
One technique to overcome the agency dilemma is suggesting to the customer not to overbuy where they don’t need to. Another one is to offer positive feedback on competitor’s offer. Another one is to admit what your product still can’t do. And a small one is to admit that you don’t have an answer.
There is nothing more central to being a salesperson than asking for the sale. In the study, reps actually asked the customers for the business only 46 percent of the time.
Beyond Win Rates: JOLT-ing Customer Loyalty
Loyalty has two dimensions: on the one hand, there is the stickiness of the product or brand and on the other axis is the effort of the experience. The best place to be is in the upper right corner, where companies deliver compelling, differentiated, and sticky product and brand experiences and deliver a low-effort customer experience.
People often reevaluate their decision after it’s been made – it is called post-decision dysfunction. Eric Rassin talks about three types of it: worrying, checking, and decision instability.
Increased customer effort makes a seller’s job much more difficult in converting sales.
The research team at Tethr developed a measurement for the effort a customer perceives in a service interaction based on the raw conversational data. TEI – the Tethr index.
Pain reduction is a very personal activity. Sellers are rewarded for at least trying.
How Much is Indecision Costing You?
How a sales organization can determine whether it has customer indecision problem.
In the CRM you have your sales data. Company must first determine what is an acceptable “lost to inaction” rate. The average percentage is between 40 to 60 percent. But number should be significantly lower. The other consideration is establishing sales cycle times by deal type and customer segment. Another way is to check the interaction frequency. Healthy deals have higher interaction frequency.
Customer saying no due to better option is not the same as customer saying yes but still doesn’t buy. This is not a product market fit, a messaging fit or sales process execution problem, this is seller skill problem.
Three different approaches companies can use to get a handle on the current state of JOLT skills among their salespeople: manual call auditing, customer surveys, and conversation intelligence.
Conversation intelligence platforms are still not in the technology stacks of majority of the companies – only 26 percent have them according to Aberdeen. And the companies that have them are not happy with ROI. Some reasons: difficulty extracting insights, inability to effectively action against insights, and prohibitive TCO.
Applying JOLT in Different Sales Environment
All salespeople, in some form or another, sell change.
Customer indecision is a universal human problem that all sellers must figure out how to navigate.
The first thing great JOLT sellers do is make sure the inbound caller is in fact a viable buyer. The very fact they call is a sign of purchase intent. 60-75 percent express that intent in the beginning of the call.
Initial customer engagement typically begins far before the salesperson gets involved.
A demo feels more like a presentation than a conversation.
Salespeople selling more complex solutions are often guilty of excessive probing and diagnosis.
Building the JOLT-Capable Sales Force
Top-tier opportunities can be handled exclusively by the most tenured sellers. Smaller, transactional purchases can be handled by less-experienced teams.
You need to screen for the right profile. Each long list of candidates should have some non-salespeople as options. Former customers are immediately seen as subject matter experts by prospective customers.
