We’re at it again with more behavioral science concepts. This time talking about how each comes into play in the sales process. Doug and Jess cover present bias, projection bias, regret aversion, information avoidance, and the zero price effect.
- [RevOps Show] Episode 47: RevOps & Behavioral Science - 3 Key Principles that Effect Business Processes
- [RevOps Show] Episode 68: The Behavioral Science Behind Decision Making - Insights from 6 Psychological Concepts
Pre-Show Banter: It’s been requested that Doug throw in more dad jokes to the show, and he does just that followed by a hard eyeroll from Jess. (We all secretly think she enjoys the jokes, too.) Doug’s birthday was also coming up and he declared that the following week would be used to celebrate.
This episode gets into applying behavioral science concepts to the sales process. Jess wants to examine how these concepts play a role in sales conversations while also broadening it beyond sales into general business areas.
The behavioral science concepts explored today include:
- Present bias
- Projection bias
- Regret aversion
- Information avoidance
- The zero price effect
All five of these concepts are unseen factors that impact behavior, so they’re happening whether we’re aware of them or not. It’s important to keep them at the forefront of our minds so they don’t negatively impact our behavior.
Present bias is where individuals tend to prioritize immediate rewards and gratification over long-term goals or consequences. This affects decision-making and judgment as people tend to focus on the present moment and disregard future implications. Present bias can lead to impulsive and short-sighted decision-making because people are geared to choose instant gratification over delayed rewards.
In business, present bias can lead to:
- Poor financial planning
- Overreliance on short-term results
- Neglect of long-term strategies and investments
To mitigate present bias, it’s important to consider both short-term and long-term consequences when making decisions and to actively plan and prioritize long-term goals. Another way to mitigate present bias is by creating external incentives, breaking goals into smaller, manageable tasks, and increasing awareness of the bias itself.
Projection bias is the tendency to assume that our current preferences, desires, and beliefs will remain the same in the future. This causes us to overestimate the stability of our preferences and underestimate the potential for change. Again this bias can lead to poor decision making and a lack of adaptation to new situations.
For businesses, projection bias can influence our expectations of growth, success, and the impact of solving certain problems. As complex adaptive systems, organizations are constantly changing and projection bias can hinder our ability to adapt effectively.
To mitigate projection bias, it’s important to regularly reevaluate our assumptions and beliefs and to consider the potential for change. Also, framing the discussion in terms of where the buyer is now and what they’ll lose by not moving forward can help overcome projection bias.
Regret aversion is the fear of being wrong or making the wrong choice. It’s something that everyone deals with on a regular basis. For Lift, we see this a lot with customers signing off on our work. This aversion comes as a result of present bias and projection bias, as people tend to focus on the short-term consequences and project those into the future.
Regret aversion can prevent people from taking risks and making changes that could lead to positive outcomes. It’s a natural defense mechanism that has helped humans survive by avoiding dangerous or harmful situations; however, it can also hinder growth by keeping people stuck in their comfort zones.
To combat regret aversion it’s important to reframe decisions as experiments and focus on learning rather than success or failure.
This is also why at Lift we went from “hate to lose” to “play to win” so that we reframe the focus of what we’re doing.
If you want to see the biggest impact of regret aversion in life - it’s called FOMO.
This concept is the least impactful to Doug. As long as you don’t check your emails, nothing bad has happened.
Information avoidance is avoiding relevant information. We don’t like when information goes against what we know. Even after you have the information there’s one more step that humans take to bring about information avoidance. Forget it. It’s a coping/defense mechanism.
This damages our decision making and prevents us from making decisions. It’s like getting an annual physical. We all hate it because we feel fine now and the only thing that can happen is we’re going to learn something that’s going to make us feel worse. But if you don’t know, it doesn’t exist.
Ignorance is bliss.
You have to take control of the information and not overload people with information. If you build more context, you’ll get more traction. You also have to coordinate with your team on what’s going on in the landscape you’re in to make everything more digestible.
Zero Price Effect
The zero price effect refers to the fact that when something is offered for free, people are more likely to want it, even if they wouldn’t want it if they had to pay for it. A great example of this is a free donut on National Donut Day and people waiting in line for hours for a free donut, even if they could come back the next day and buy it.
This is related to regret where people don’t want to miss out on something that is being offered for free. This is usually utilized in trade shows and promotional events where freebies and swag are given out to attract people and generate interest.
- The way you frame things is important.
- Connect what you’re doing to the here and now if you’re presenting change.
- Make sure you have context and don’t lose the plot.
- Be coordinated when presenting information - change comes when the pain of changing is less than the pain of not changing.
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