We’ve discussed cognitive science’s impact on the sales process before, but what about its impact on how to close a sales pitch and deal effectively? That’s right, whether you like it or not, you’re just as susceptible to those little gremlins called cognitive biases as everyone else. We all have them, we’re rarely aware of them, and we can absolutely guarantee at least one of them is holding you back.
Without further ado, let’s dive into some common cognitive biases, how they may be preventing you from hitting your number, and what you can do to overcome them.
Ambiguity Effect
Everyone likes a sure thing, right? That’s why most people choose fixed rate mortgages—even though they may ultimately spend more—and “safe” stocks like Disney or Berkshire Hathaway—even though they may provide lower returns than “riskier” alternatives. That’s the ambiguity effect in play. Humans don’t like ambiguity, and in ambiguous situations, we tend to gravitate toward things we know and avoid things we don’t. As a former Secretary of Defense famously said:
“[T]here are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”
How It’s Hurting You
The ambiguity effect can hurt sellers in a variety of ways. Consider the following scenarios, for example:
- Is a lead from a company that you know little about worth pursuing, or should you spend your time chasing a household name instead? In the absence of additional information, most sellers will choose the household name, even if it means a longer sales cycle and lower margins.
- Are you spending time with the right stakeholder, or just a stakeholder who seems like your biggest fan? The person who seems to love what you’re selling may not be the decision-maker, but it seems like she’s your biggest advocate internally, so she gets the lion’s share of your attention.
- Do your pitches relay the features you know most about and can speak most capably to? Do you avoid bringing up additional features or service offerings for fear of questions you might not have immediate answers to?
What To Do About It
If one or more of the points above sound familiar, congratulations—you’re a victim of the ambiguity effect. It’s easy to see why: We like “known knowns,” and those “unknown unknowns” can be downright scary. But to overcome that fear and improve your performance, you simply need to seek out additional information. That can be as simple as asking your SDR to do some research on a seemingly questionable lead or scouring your network for a former employee who can give you insight into who the real decision maker is. Any time you find yourself gravitating toward the safety of a known thing, that should be your cue to challenge yourself to get more information. Your bottom line will thank you.
Clustering Illusion
Todd’s killing it. Todd’s on fire. Todd’s closed six deals this month, so we should give him the best new leads, right?
If you said yes, you’re a victim of the clustering illusion. Central to the hot hand fallacy that’s pervasive in sports, the clustering illusion happens when we choose to see random events as non-random. If you examined Todd’s close rate over the course of the quarter or year, he’d probably be on par with the rest of your team. In that one month, sure, it seemed like he had the mojo, but in reality, his close rate was merely within the boundaries of chance.
How It’s Hurting You
Falling prey to the clustering illusion poses the biggest danger when we modify our behavior based outcomes that seemed within our control, but were really the results of chance.
When Todd’s got the hot hand, your sellers will probably copy his approach, even if it doesn’t match their personal selling styles. That can have negative effects across the team.
Likewise, when you’ve got the hot hand, you may feel tempted to engage in a little magical thinking, like getting coffee from the same place at the same time as you did when you were hot or wearing the same shoes you were wearing to every pitch meeting. And when your close rate inevitably dips, you’ll likely look to shake things up so you can get the hot hand back. These behaviors can damage your ability to close because they take you away from tactics you know and trust in search of something that will “get your mojo back”. Therefore, carefully think about how to close a sales pitch.
What To Do About It
Todd didn’t suddenly get more mojo, and yours never left. Todd’s mojo just spiked momentarily within the boundaries of chance, and yours likely will too, given time. Don’t change what you’re doing to chase after momentarily performance blips. Stay the course and keep doing what you know is proven to work.
If Todd keeps the hot hand for a year, though, he’s probably doing something right. Take him for a drink and pick his brain.
Automation Bias
Your prospecting tool tells you Sharon is the VP of IT at your prospect’s organization. You’ve emailed her three times, and you shared some pretty juicy info you’d expect her to jump at, but no luck. She’s not responding to the voicemails you left, either. One of your SDRs thinks she heard Sharon left recently, but what does she know? Your tool says she’s the VP, and your team pays good money for this thing. It’s probably way more accurate than some SDR.
But it’s not. Your SDR was right. Sharon left two months ago, and you’ve been chasing your tail—all because you engaged in automation bias. That’s the phenomenon by which we trust machines, even when contradictory evidence is present and correct.
How It’s Hurting You
Anyone who’s used Microsoft Word’s spelling and grammar tool knows that machines aren’t always right. Your suite of sales tools—impressive though they may be—are equally fallible.
Prospecting tools are great, and they’re right more often than they’re wrong—but they do get it wrong from time to time. And even when they’re right, you can’t rely on title alone to identify decision-makers and influencers.
What To Do About It
First, stop uncritically trusting machines without verifying their output. Machines are good, in some cases very good, but they’re still machines. They’re only as good as the data they receive, and that data is far from flawless. You still need a human to validate all that handy information and confirm that it’s indeed correct and actionable. A former employee of your prospect’s organization within your network, for example, would be ideal for demystifying the data your tools provide. In short, your tools are a starting point when prospecting, not the final word. Ask a human, and you’ll avoid situations like the one above.
Sunk-Cost Fallacy
“This deal doesn’t feel like it’s going to happen,” you think to yourself. “All the red flags are there, but we’re almost to the contract stage, so I might as well pursue it. After all, I spent all this time on it already, so I should at least see it through.”
Sound familiar? Of course it does. It’s also the sunk-cost fallacy at play. Also known as “escalation of commitment,” it’s the fallacy of increasing investment in a decision based solely on what you’ve already spent so far, despite there being clear indications that it’s not worth it.
How It’s Hurting You
For sellers with million-dollar quotas, the cost of a lost pursuit is $218,000. Think about that for a second. When you spend all that time pursuing a deal—a deal that every fiber of your being tells you you’re not going to land—you’re costing your organization nearly a quarter million dollars. To say nothing, of course, of your time and quota.
Instead of continuing to chase dead-end deals just because you’re already chasing then, why not pull the rip cord and save yourself the time—and save your organization the cash?
What To Do About It
Listen to your gut, and trust the data your team has collected from previous at-bats. If a client shows interest but their industry, size, department, or budget sets red flags waving, don’t be afraid to walk away. The fact that you’ve already invested time and energy into a deal is no reason to continue investing when everything else tells you to hit the road.
Representativeness Heuristic
The Acme Consolidated Bank of Boston should be stodgy. It’s a bank, after all, and finserv institutions usually have formal cultures, lots of bureaucracy, cautious strategic visions, and a metric ton of legacy systems that don’t talk to each other. Heck, even the name sounds stodgy. So you plan your pitch accordingly—and you get laughed out of the room.
That’s because you engaged in the representativeness heuristic, a mental shortcut we use to categorize people and things in uncertain situations. Here’s an example: If you’re told to go talk to Ted in IT, you probably imagine him being rather quiet, a little awkward, and maybe not the most social guy, despite knowing nothing about him aside from the department he works in. That’s because you’re using your experience with other IT dudes to reduce the ambiguity around who Ted really is.
You can see where this is going right?
How It’s Hurting You
Without inside knowledge of a company’s culture, needs, and even their tech stack, you’re bound to make assumptions based on past experiences of how to close a sales pitch. Often, they’ll be correct. Sometimes, however, they won’t be—and you don’t get a second chance at a first pitch.
What To Do About It
Like all the other phenomena listed here, the first—and perhaps the hardest—thing to do is to catch yourself in the act. If you can recognize when you’re using the representativeness heuristic, however, you should be able to take a step back and identify what knowledge gaps you’re using it to fill. In the case of a prospect’s organization, make a list of what you do know and what you’re assuming. Then consider where you can go to replace those assumptions with facts. It may be the company’s blog, recent press releases, or people in your network who either work there or recently left. Any resource you can use to fill in your knowledge gaps is better than making unconscious associations—and getting subsequently skewered for it.
Executive Insights on How to Close a Sales Pitch
We all engage in cognitive biases, and they can have far-reaching effects on almost all aspects of our lives. In the case of enterprise sales, they can make or break a deal—or a career. That’s why it’s important for sellers to understand how their own brains may be working against them and develop strategies for overcoming biases. These five cognitive biases are among the most common in sales, and we’ve laid out what they are, why they happen, and what you can do about them.
