Human beings make a lot of decisions—up to 35,000 each day. If you’re trying to influence a “decision-maker” at a B2B company, they may be making even more decisions than that. If we had to use our conscious mind for each one, we’d curl up into a fetal position, completely overwhelmed by the mental load of making choices.
That’s where the subconscious brain comes in. It handles 99 percent of decisions; it also does the groundwork on the remaining one percent before handing off the relay baton to the conscious brain.
The subconscious processes information at lightning speed, using past experience and rules to govern decisions. It can even override the conscious brain, which is why people in a focus group may express one intention and then do something entirely different in real life.
These mental shortcuts are called heuristics; errors in these shortcuts result in cognitive biases.
Why Cognitive Biases Matter
“Cognitive bias is a systematic error in thinking, affecting how we process information, perceive others, and make decisions. It can lead to irrational thoughts or judgments and is often based on our perceptions, memories, or individual and societal beliefs.” - Simply Psychology
Think about it—how often do you make decisions without even going through a conscious process? For instance, when learning to drive, you must think about every decision you’re making—how to hold the steering wheel, whether to accelerate or brake, and when to use your turn signal. It’s stressful and tiring. However, once you’re used to driving, those small decisions are almost all made automatically.
Similarly, when a customer has committed to a buying decision, 99% of the mental work has already been done. That means even conscious decisions are heavily affected by the subconscious.
If you understand common biases and adjust for them, you can sell more effectively. Without that knowledge, you’ll be trying to affect the conscious mind without considering the role the subconscious—and all its errors—plays in decision-making.
While you can’t completely overcome these biases, ignoring them will cause you to lose sales and money. The good news is that you can adjust your marketing and sales tactics to give you an advantage.
Seven Cognitive Biases
Anchoring Bias
People rely heavily on the first piece of information (aka the "anchor") they receive when making decisions. Even if they later discover that the first data point was an outlier, most consumers will continue to use it as a reference point.
For example, if you walk onto a car lot looking for a reliable vehicle, the salesperson might first walk you past the high-priced luxury cars in the front, making you worry that you won’t be able to find anything good for the $30k you budgeted. When he walks you to the back of the lot, those $40k cars feel like a bargain. You’re willing to spend more than you budgeted because the anchoring bias has reframed your sense of a reasonable price range.
Behavioral scientist Melina Palmer explains anchoring’s effect on pricing using the example of Snickers’ end cap displays in grocery stores. Sales increased by a whopping 38 percent when end caps said “Snickers bars, buy 18 for your freezer” instead of “Snickers bars, buy them for your freezer.”
Mars Inc., which owns Snickers, didn’t expect that people would actually buy 18 bars, but that number served as an anchor for consumers, spurring the question, “How many Snickers should I buy?”
In contrast, Palmer explains, the signs using the generic term “them" merely prompt the question, “Should I buy a Snickers or not?”
In this example, introducing an anchor shifts the question. The consumer now sees it as a given that they will purchase at least one Snickers; their internal debate is about the quantity they’ll take home.
If you’re in sales and marketing, anchoring is a valuable way to influence the subconscious brain to enhance the value perception of your offerings.
Confirmation Bias
People seek out information that confirms their existing beliefs or opinions, whether positive or negative. This leads them to ignore information that contradicts those beliefs.
Confirmation bias is also very useful for customer retention. Marketers and salespeople can help boost brand loyalty and customer retention by confirming the customer made good decisions. After all, no one wants to feel buyer’s remorse, especially for expensive or significant purchases.
For example, Apple products are renowned for their sleek design and even their packaging reinforces a premium customer experience, making people feel as though they got their money’s worth.
Companies can leverage positive confirmation bias to increase post-purchase retention. Mailchimp gives users a virtual high-five for every successful campaign launched. Similarly, Fitbit congratulates users for hitting fitness milestones. Both these companies use positive confirmation bias to generate customer satisfaction and retention.
Availability Heuristic
The Decision Lab defines the availability heuristic as “our tendency to use information that comes to mind quickly and easily when making decisions.”
Daniel Kahneman’s work shows that our brains are lazy when making decisions. We love to take shortcuts, and one of the most common shortcuts is to mistake readily available information for good information.
Repetition is one way to increase awareness. Studies show that exposure to an ad 10-20 times increases one's positivity toward a brand. That’s true even if one finds the ad annoying at first! The annoyance fades, but the brand awareness remains.
While most companies don’t have the ad budgets of Nike, Apple, or Kars4Kids, you can take advantage of the availability heuristic in other ways. For example, you can show up via multichannel models leveraging content, email, social, and other methods.
Another way to show up is when your prospects have a problem and search the internet for a solution. Getting their wheels turning, so to speak, can make your company memorable even if you don’t have an unlimited marketing budget.
Bandwagon Effect
If all your friends tell you about a movie they saw—even if critics panned it and it’s doing poorly—you’re more likely to buy tickets to that film the next time you head to the theater. That’s the bandwagon effect at work.
Everyone has wanted to buy or do something because it was deemed “cool” or otherwise desirable or got rave reviews. That’s why marketers and salespeople can use the bandwagon effect to their advantage in many ways.
Customer testimonials, reviews, influencer endorsements, and statistics sharing are all examples of this heuristic. Savvy use of the bandwagon effect can leverage the power of social proof and increase sales.
Loss Aversion
A study at the University of Pennsylvania set a daily step goal of 7,000 for participants. They were split into three groups: gain incentives (a gift for reaching the goal), a lottery incentive (entry into a lottery), and loss incentives (a small amount of previously given money taken away for missing the goal). The study discovered that those in the loss incentive group were 10% more likely to reach their step count.
The tendency for people to do more to avoid experiencing the loss of something than they’ll do to gain benefits is loss aversion.
In their book The Jolt Effect, Matthew Dixon and Ted McKenna share how sales organizations' lack of understanding of this bias costs them millions of dollars. Traditional sales highlight how customers will be better off buying what the seller sells. What this mistakes is that buyers are far more likely to take the action they perceive is the least likely to fail, than the one that may produce the best outcome. Check out our interview with Matt Dixon here.
To learn more about the role of indecision in the sales process and how to overcome it, check out The RevOps Show interview with Matt Dixon, best-selling author of The Challenger Sale and The Jolt Effect.
Sunk Cost Fallacy
Sunk cost is closely tied to loss aversion; once you’ve committed time or money to an undertaking, you feel a sense of loss when you abandon it. That’s true even if abandonment is clearly in your best interest.
How can marketers and salespeople adjust to take advantage of the sunk cost fallacy?
Paying for a good or service makes people likely to use it. Sunk cost strongly affects upselling, particularly for subscription services.
A Wharton study suggests that simply being a member of a program boosts upselling. Amazon is a master at this. Members of their Prime service make 2-4x more purchases per month than non-members do, even when controlling for other factors.
The takeaway? If your product or service struggles with customer retention or upselling, consider whether a subscription and/or member model could work for you.
Status Quo Bias
Many salespeople think they have to outdo their competitors to make a sale—but in reality, your biggest “competitor” is the status quo, even when it’s not performing to standards.
To adjust for status quo bias, clearly frame the opportunity costs they’ll experience by sticking with the status quo. You should also be careful to avoid overwhelming your prospects with choices.
Research shows that offering too many choices leads to decision paralysis, paradoxically reinforcing the status quo. Use loss aversion to show the prospects what they’re missing out on regarding opportunity costs—and keep the number of choices reasonable.
How You Can Use Cognitive Biases to Sell More
Sales success means being skilled at influencing decision-making—and understanding cognitive bias is crucial if you want to influence customer decisions. These biases affect sales, whether acknowledged or not, so why not use them to your advantage?
Customers don’t always (or even usually) make rational decisions, so you must be able to adjust to overcome resistance. You'll see greater sales success once you understand and adjust for cognitive bias.
Key Takeaways:
- Focus on brand presence: Be present (via various channels) at key moments of customer exploration and evaluation.
- Use behavioral science, including cognitive biases, to make your proposition compelling.
- Realize the status quo is your biggest competitor.
- When framing your offers, remember loss is a bigger motivator than gain.
