Ghosts in the Machine | These are Lazy & Truthy Ghosts

28 min readFeb 18, 2020

53% of customer loyalty is driven by the individual salesperson[1].

More than any other factor, the personal connection between buyers and sellers is what drives the sustainability and longevity of professional relationships. Naturally, professional decision makers take many factors into account when making a purchasing decision. They care about features, advantages and benefits. They care about speed and certainty of execution. They care about price. They care about brand reputation. They care about all these things and countless others, but the most important factor in selecting and sticking with a provider, especially as products and services become less differentiated, is the individual connection they have with a salesperson.

Establishing and building solid relationships with your prospects and customers is the most important part of a salesperson’s job. Yet, many sales systems either take the fundamentals of relationship building for granted or neglect them all together. Instead, these systems focus on other aspects of the sales cycle, like uncovering needs, competitive positioning, story-telling, value creation, negotiating, pipeline management, and so on. Many of these systems are exceptional in articulating critical aspects of the sales cycle, and many of the best practices they teach are leveraged in this process. However, implementing a sales system without providing guidance on how to go about actually connecting with prospects and customers is akin to building a house without a foundation.

Establishing relationships is about connecting. Your ability to establish an individual connection with your prospects and customers is determined by your understanding of those ghosts in the machine that have the greatest impact on relationship building. These are the ghosts that give definition to what the things we think and how we see the world. Salespeople attempting to establish and build relationships without an appreciation for these unconscious biases handicap their ability to connect with their prospects and customers and will be met with active and persistent resistance.

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How does one go about building a professional relationship that will generate sustained loyalty over the long-term? In short, before you do anything else, you simply make a friend.

Most social friendships develop naturally, without any kind of concentrated effort or practice; you simply click with someone or you don’t. In the world of professional friendships you usually don’t have that luxury; you need to be a bit more deliberate in your professional friendship building efforts.

Putting that rather large difference to the size, making professional friends isn’t fundamentally different than making social friends. Your social friends, those people that you choose to spend your free time with, are the people in your life that are easy to be around and those that understand and appreciate you. You do well to approach networking (aka making professional friends) firmly anchored to this understanding of friendship.

When you are making professional friends it is important that you understand how the human mind gathers and presents information. Fortunately, the machinations of the human mind’s information gathering functions are universal. The things we think and believe are not necessarily those things that are most reasoned or logical. Rather, thoughts and beliefs are usually tied to the information that is most easily accessed in our minds.

Critical thinking takes a lot of effort and life is filled with uncertainty. If we tried to spend the time and energy to rationally dissect every issue we are confronted with, to critique every belief we held about the world, we would be overwhelmed. As such, our minds have developed information gathering short-cuts that allow us to get through the day while saving our mental energy for only the most mission critical decision-making. These short-cuts (aka ghosts) reflect our inherent and deeply ingrained laziness. Understanding their impact on the decision-making process will enable you to present yourself in ways that are more readily accepted, ways that more easily processed, thereby deepening your relationships with your prospects and customers.

In turn, you must approach the sales process with an appreciation for perspective. While our minds gather information in universal ways, people experience life through the filter of their own, unique individual lens. Your prospects and customers are likely to perceive the world differently than you do. It is vital that you learn to appreciate their perspective.

Contrary to popular opinion, people don’t prioritize what’s “true”. People prioritize what they perceive to be true. Perception ghosts in our mental machinery provide the veneer of truthiness[2] and dictate how will feel about any given experience or circumstance. If you demonstrate an understanding and appreciation for their perspective, your prospects and customers will let down their guard and open up to you, which will help you better understand the things that are most important to them. Strong relationships are built on this level of listening and understanding.

These are the Lazy & Truthy Ghosts, and your ability to establish relationships is dependent on them.

Take the Path of Least Resistance

“Be water, my friend.” -Bruce Lee

The human mind is nothing if not persistently lazy.

Moving from the status quo of a known vendor to the uncertainty of a new vendor is hard. Properly vetting a new vendor and rallying a critical mass of internal stakeholders to support a change takes time and energy that is better saved for future use on more important decisions. Accordingly, your prospects and customers will seek out ways to minimize the amount of time and energy they need to spend dealing with sales people. In other words, they will be proactively lazy in responding to you. In doing so, they are instinctually adhering to one of nature’s most powerful forces: the path of least resistance.

Seeking the path of least resistance is baked into the very fabric of our universe. Newton’s 1st Law of Motion sums it up: “An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.” Because we are objects in the universe, we, too, are driven by this fundamental law of nature to stay on our current course, driven at the quantum level to follow the path of least resistance.

Breakout Box: Law of Least Effort

In Thinking, Fast and Slow, Danny Kahneman writes of “A general ‘law of least effort’ [that] applies to cognitive as well as physical exertion. The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action. In the economy of action, effort is a cost, and the acquisition of skill is driven by the balance of benefits and costs. Laziness is built deep into our nature.”

Our miraculous, advanced mental abilities come at a cost. That cost is the energy required to concentrate and focus our attention, and that energy is a limited resource. When given a choice among options, we choose the least demanding so that our energy is conserved for if and when we may need it in the future. Human beings do this because it has proven to be an evolutionarily successful strategy. So powerful is the Law of Least Effort that it is deterministic human behavior, which is to say it is predictive of what people will do.

The better we come to understand ourselves and the universe we live in, the clearer it becomes that the Law of Least Effort is ordained by the very creator him/herself:

The Principle of Least Action dictates the flow of water and electricity
The Principle of Least Effort governs Information-seeking
Wild wolves became domesticated dogs because it was the easier path to food.
The study of linguistics calls it Zipf’s Law
Spiritual guru Deepak Chopra named it one of his seven founding laws.
And so on…

In the context of the sales process, the takeaway regarding the effect the Law of Least Effort has on decision-making is that people don’t necessarily prioritize what’s right or rational. Instead, people react to what’s most readily accessible in their mind.

Key Concept: Availability

Renowned psychologist and best-selling author Robert Cialdini has this to say about how our minds gather information: “The brain’s operations arise fundamentally and inescapably from raw associations. Just as amino acids can be called the building blocks of life, associations can be called the building blocks of thought.”

Put into layman’s terms, people don’t think about the best course of action, they think about the one that is already associated in their mind with the topic at hand. These associations are the foundation of our second key behavioral concept: Availability.

Our good friend Danny Kahneman (he will be referred to a lot throughout this process) coined the phrase “fast & frugal” to describe the way our minds work when it comes to making decisions. Like Cialdini, Kahneman also recognizes the importance of associations as foundational to human thought, going a bit further in fleshing out the idea. In Kahneman’s view, the human mind is basically an association machine, with mental associations linking ideas together. Over time, these pre-linked ideas, these thought patterns, become deeply set grooves and establish what we think of as normal. As such, the importance of ideas is judged by the ease with which they come to mind.

According to Kahneman, our associations machines have evolved two separate systems for processing the stimulation we receive from the environment. System 1 is our autopilot function, streamlining day-to-day decision-making by leveraging what’s readily available in our mind, such as pre-linked associations. System 2, our rational-thought mode, is only engaged when thinking becomes harder. We use System 2 when a pre-linked association isn’t readily available and we actually have to stop and think about it.

Breakout Box: System 1 & System 2

Based on the Law of Least Effort, we are biased towards thought patterns that make it easier for our association machines to run smoothly. Therefore, we have a preference those ideas that confirm rather than conflict with our pre-linked associations. This is known as confirmation bias and it is one of the main mechanisms System 1 uses in being “fast & frugal” in processing information (more on that later).

System 1 operates automatically and quickly, with little or no effort.

System 1 thinking is instinctive and emotional.
System 1 success is measured by the coherence of the story created; the greater the coherence the more overconfident System 1 is in its story.
System 1 is prone to biases and systematic errors; it’s where the ghosts in the machine reside.
System 1 only thinks about now and has no sense of voluntary control.

System 2 allocates attention to effortful mental activities, including complex computations.

System 2 thinking is deliberative and logical.
System 2 is the conscious, reasoning self that has beliefs, makes choices, and decides what to think about/do.
System 2 has the ability to counter System 1 biases.
System 2 considers the future and is in charge of self-control.

When things are going smoothly, System 1 runs the show and System 2 rests in standby mode. When System 1 runs into trouble, System 2 is mobilized, shifting our thought process into a more analytical mode.

System 2 is mobilized when a question arises for which System 1 does not offer an easily confirmed answer.
Instinctual feelings turn into beliefs and impulses turn into voluntary actions when unconfirmed ideas from System 1 are endorsed by System 2 (unfortunately, System 2 usually acts as an apologist for System 1, rather than a critic).

In short, System 1 is our knee-jerk reaction and System 2 is when stop ourselves and really think about it.

The majority of our focus in this process is on System 1 thinking (that’s where the ghosts live). We will turn our attention to System 2 a bit later on, when we do a deep dive into how salespeople can make thinking hard easier.

When establishing and building relationships with new professional friends, the System 1 thinking you will encounter engages an especially powerful Availability ghost: Representativeness.

Representativeness

At the risk of oversimplifying, Representativeness works like a mental “if-then” function. System 1 looks out at the world, scanning for and processing a variety of sensory information. In doing so, it runs the sensory information gathered through a relatively simple filter: “If” something looks/feels/smells/tastes/sounds like X, “then” it probably is X.

Our “if-then” function has been refined through millions of years of evolutionary pressure to be extremely efficient at categorizing the world around us. So much so, that strangers make assumptions regarding your trustworthiness, intelligence & leadership ability within seconds of meeting you.

There are three versions of this ghostly “if-then” function worth your consideration:

Stereotyping: People hold over-generalized beliefs about people and things; “Judge the book by its cover”.

Although this may be one of the more generally recognized ghosts in the machine, stereotyping is in desperate need of new PR team. There are many stereotypes that are flat-out despicable (e.g. Racism, Sexism, Classism, etc.), but the mental act of stereotyping is deeply ingrained in our System 1 thinking because it is a wildly successful evolutionary strategy.

Over the course of hundreds of thousands of years, mankind learned to triangulate limited pieces of sensory information in making critical, often split-second life & death decisions. For example, when our ancient ancestors were foraging for food, they learned to recognize what poisonous plants looked, smelled, and tasted like. When they came across a new, unrecognized thing that looked, smelled, or tasted like those known poisonous things, our ancestors simply avoided it as though it were the poisonous thing and lived to see another day. This strategy carries false positive risk, but we are far better off missing out on something edible a few times than we are being dead. The same goes for our interactions with other human beings. Our ancestors needed to be able to determine if a stranger in the distance was a friend or foe by making split-second assumptions based on what they looked, sounded and smelled like.

Although modern humans rarely find themselves in life & death situations anymore, the stereotyping process, and the association cascade it initiates, still dictates the impressions we make about the people we cross paths with. The lesson for the salesperson striving to establish and build relationships is that your prospects and customers will judge you based on their initial impressions of you. Will your impression be that of a friend or foe?

In-Group Bias: People that look and sound like we do are worthy of preferential treatment; “Us vs. Them”.

People and groups instinctively prefer and more quickly accept those who look and sound like they do, in even the most trivial of ways. The In-Group Bias ghost simultaneously drives preferential treatment of those in the “In-Group” and prejudicial treatment of those in the “Out-Group”. This ghost also works in the opposite direction, guiding individuals to self-select into certain neighborhoods, churches, schools, extra-curricular activities, etc., that align with their view of themselves.

As a salesperson, if you are interested in accelerating the relationship building process and be warmly embraced by your prospects and customers, there are two tactics that will leverage the In-Group Bias to your benefit: 1) Dress like they do, and 2) Do the things they do; swim in the same professional & social pools. Of course, these are superficial recommendations and you should always represent who you are with sincerity. But when you are making your first impressions, tipping your cap to their chosen professional uniform and industry-specific lingo is just another way of demonstrating that you are interested in what they do.

Authority Bias: People tend to attribute more value and greater accuracy to the opinion of an authority figure; “You know he’s a doctor because he’s wearing that long white coat”.

For millennia, accepted systems of authority have allowed the development of the sophisticated societal structures (e.g. production of resources, division of labor, trade, etc.) that have, in turn, enabled our modern society to thrive. Without accepted systems of authority, modern society would collapse into varying levels of relative anarchy. As a result, thousands of years of social training has ingrained a deference to authority in our System 1 thinking. People are motivated from birth to view those in positions of authority as deserving of their position, leading to acceptance of their opinions and decisions.

The Authority Bias punchline for the professional salesperson: Present yourself to your prospects and customers as an expert, as an authority. Don’t “fake it until you make it”; you’ll end up fake or exposed. Do it authentically and be yourself, whatever that means for you. Your sincere communication of industry insight and knowledge will convince your prospect to see you as an authority, valuing and actively seeking out your opinion.

Representativeness is one of the most powerful ghosts in the machine. We are slaves to the law of least effort and our association machines provide readily available pre-linked associations, which means we will always make our initial impressions of people based on direction from the representativeness ghost. There is no way around it. But there are ways to work with it.

Take responsibility for the representative associations your prospects and customers will make of you and put your best foot forward. Help them see a version of you that makes it as easy as possible to accept and open up to you, including they ways in which you express yourself and move your body.

Tool of the Trade: Matching & Mirroring

Most famously practiced by Tony Robbins, Neuro-Linguistic Programming (NLP) is broadly-defined as a psychological approach to personal development. The NLP program bills itself as The Science of Success and The Art of Communication. Although the former provides some wonderfully applicable insights for the sales process, it’s the latter that has the most to offer when managing the representativeness associations that prospects and customers will make of you.

One of the primary tenets of NLP’s Art of Communication is that the meaning of communication is the response you get. The program argues that body language and tonality expressed are most important terms of generating a response, which is supported by research done by Albert Mehrabian at UCLA in the 1960s that only 7% of communication is verbal, while body language and tonality account for 55% & 38% respectively.

Given this lens of communication, Matching & Mirroring are highlighted as effective rapport building techniques. According to NLP, rapport is established when we are able to speak the same language as someone else, and to speak the same language is mostly to match and mirror the body language and tonality of another person. These two “languages” are more important than the actual content of the conversation.

Matching — Generally expressing yourself in the same way as another person
Mirroring — To move in-sync with another person, as though you were a mirror reflection of them (acting classes play a “mirroring” game as an intentional way to bring awareness to body movement and to get in-sync with the other actors)

There are 4 body language communication cues to pay attention to and match and mirror:

Posture — Are they standing or sitting, stiff or relaxed, etc.?
Gestures — Are they minimal in their physical movement or are they expressive and active?
Facial Expressions — Do they emphasize their points with their whole face or do they maintain a poker-face?
Energy Level — Are they bouncing off the walls or do they

There are 2 tonality communication cues to pay attention to and match and mirror:

Tone/Inflection — Are they monotone or does their pitch cycle up and down?
Speech Rate — Do they talk fast or slow?

We naturally and unconsciously match and mirror the people we feel comfortable with, and we are most physically and tonally in-sync with our closest friends. Therefore, if you are interested in establishing and building rapport with your prospects and customers, pay attention to their body language and tonality cues and adjust towards them. Do not superficially mimic or imitate them. This is not about trickery or hypnosis. Rather, it’s listening and adjusting to more than just the words that are exchanged.

Bonus: Mere-Exposure Effect

“63% of consumers need to hear company claims three to five times before they actually believe it.” (Edelman Trust Barometer)

The Mere-Exposure Effect is a psychological phenomenon by which people tend to develop a preference for things merely because they are familiar with them. If you’ve ever seen a commercial enough times to have inadvertently memorized the jingle, you are familiar with this phenomenon. Advertisers leverage the mere-exposure effect to keep their brands and products top-of-mind for consumers, often doing so to great unconscious effect.

The mere-exposure effect is why you need to build and maintain consistent marketing and business development efforts. By simply making yourself familiar to a prospect or customer through repetitive “exposure” over time, you will begin to create a new default in their mind, one that perceives you as a known and trustworthy entity. Their growing familiarity is one more factor moving the needle in the direction of giving you a real shot at winning their business.

Be a Good Listener

“We have two ears and one mouth so that we can listen twice as much as we speak.” -Epictetus

Most people, most of the time, see the world revolving around them. We see ourselves as stars in a movie, and we feel as though life’s spotlight is constantly shining down on us (There’s even a bias for that: The Spotlight Effect). And, just like most actual movie stars, we are eager to discuss our movie with others, eager to share all the amazing details of our wonderful biopic masterpiece. As a salesperson, all you have to do is provide your prospects and customers with the opportunity to share with you. Unfortunately, most salespeople assume the opposite is true.

Most salespeople assume that people want or need to hear about all the incredible value that they are missing out on, all the wonderful things the salesperson could do for them. People hear Alec Baldwin’s character in Glengarry Glen Ross challenge the sales team to “Always Be Closing” and assume that being a slick talker what sales is all about. But it’s not about you.

“Only 13% of customers believe a sales person can understand their needs” (per Josiane Feigon)

You may think you have a tremendous value proposition that would be a perfect fit, but if you don’t understand the specific things that are important to your prospect or customer, you don’t really know. You can only know if your value proposition is a good fit AFTER you understand all those specific things that your prospect or customer cares about. Without that understanding, you’re just throwing things against the wall and hoping something sticks.

In the early stages of relationship building, put away your pitch and just focus on the person in front of you. Actively listen to their story, their interests, their opinions, etc. Don’t just hear and record the words they say. Allow what they choose to share guide your responses and questions, don’t just wait for your next turn to talk. Show your them that you are sincerely interested. Strive to see the world through their eyes.

You don’t have to be an expert and you don’t have to know everything about your prospect’s or customer’s role. Beyond demonstrating a high-level understanding of what someone does, it’s often better to not know everything and let curiosity be your guide. People don’t necessarily like experts. People like people who show an interest in what they think and do, people who seek to understand them. Feeling understood will lower your prospect’s guard, which will free them to open up and trust you, which will empower you to help them.

The only way to understand someone is to listen to them. Therefore, sales fundamentally begins with listening. Most people are surprised to learn that the best salespeople are not the best talkers; the best salespeople are the best listeners.

Although this truth flies under the radar in many sales process methodologies, it has been known for a long time.

Dale Carnegie published How to Win Friends and Influence People in 1936, and among his “Six Ways to Make People Like You” he highlights “Be a good listener. Encourage others to talk about themselves” as #4.
Habit #5 of Stephen Covey’s 1989 self-help masterpiece, 7 Habits of Highly Effective People, is “Seek First to Understand. Then to Be Understood”.

These are two of the most highly regarded, best-selling, and most effective self-help books ever published, thanks in large part to the way they clearly illuminate many of life’s truisms, like the importance of listening.

When you’re first getting to know someone else, what you think, no matter how insightful or brilliant, doesn’t matter until you are able to demonstrate that you understand and appreciate what they think. When you are trying to develop a relationship and establish trust, you need to let go of your pitch. You need to let go of trying to “sell” your prospects and customers. Instead, you need to take their perspective. You need to put yourself in their shoes. Learn to see the world through someone else’s eyes and you will find their perception of your value skyrocket.

Key Concept: Framing

There are very few things in life that are black or white in an objective sense. Most of life is spent in a fog of grey, without the benefit of clear, objective guidance regarding the right and wrong courses of action. Instead, each individual knows what’s black & white or right & wrong for them, relative to their view of the world. Hence the saying “perception is reality”.

Perceptual Control Theory — a compelling counter-theory to the broadly-accepted linear relationship between external stimuli and behavior — argues that behavior is a means of controlling perception, not a simple reaction to external stimuli. Just like the cruise control function in your car or the automatic thermostat in your home, our behavior is an attempt to regulate the world based on how we perceive it. We don’t simply react to external stimuli, we want to keep life on an even-keel and react in ways that are proportionate to the difference between our perception and reality.

If you set the cruise control in your car for 65 mph and start climbing a hill the engine will work harder in order to maintain the 65 mph cruising speed. If you set the thermostat in your home for 70 and the temperature outside drops into the 30s, your air-heating system will work harder in order to maintain the 70 degree temperature. Similarly, if you perceive danger in a situation, you will work harder to mitigate the perceived risk (i.e. slowing down, double-checking, being more aware of your surroundings, etc.). On the other hand, if you perceive safety and routine in a situation, your current behavior matches the reality you perceive and no change will be made; you’re already operating at cruise control. Perhaps “perception is reality” is even truer than we know.

To perceive something is to see it in a particular way. That “particular way” is framed by the beliefs and experiences of the perceiver. The frame determines how the situation is interpreted, which dictates the response to whatever is on the other side of the frame. To see the world as your prospects and customers do, you have put down your frame of the world and look through theirs. This is the core premise of our first behavioral science concept: Framing.

Appreciating the power and effect of framing is critical throughout the sales process, but it is especially important in the earliest stages of relationship development. Let’s unpack the two Framing ghosts that have the strongest influence your relationship development efforts: Fairness & Loss Aversion.

Fairness

Human beings are far more similar than we are different. While each individual is unique, there are a few core beliefs held by all people that compose a universal frame through which humanity views the world. In global surveys, people consistently highlight things like happiness, good health, time spent with family, and safety as paramount in life. Additionally, and perhaps above all else, people expect to be treated fairly.

Expectations of fairness are ancient and deeply ingrained in the human psyche. Fairness is so socially important that it was codified ~4,000 years ago in the Code of Hammurabi, humanity’s first set of societal laws. Fairness has been one of the principal teachings of the world’s religions for millennia, usually appearing as a version of the Golden Rule: Do unto others as you would have them do unto you. Today, Fairness retains so much importance that it has been rebranded as the Universal Ethic of Reciprocity.

Breakout Box: Universal Ethic of Reciprocity

William von Hippel’s The Social Leap, published in 2018, re-introduces the concept of Fairness in the context of Homo Sapiens’ broader evolution. His primary argument, a version of the social brain hypothesis, is as follows:

Once upon a time, our ancient ancestors left or were forced out of the relatively cozy environment of the East African forests and on to the savannah.
In the wide-open and unforgiving plains of the savannah, our predecessors were left exposed and greatly in danger of being eaten by a variety of predatory mammals that were much larger, faster and stronger.
Recognizing their weakness as individuals, these pre-human chimpanzees learned to huddle together for safety, which was unnecessary when they were just forest-dwelling monkeys.
Living in closer quarters and being more intimately connected with one another drove these primates to develop larger brains that would enable them to manage the unique complexity of social challenges they faced.
This is what von Hippel calls “the social leap”.

The argument is compelling. If you chose to subscribe to it, two things quickly rise to the surface as critically important:

Cooperation becomes a moral imperative.
Freeriding becomes the greatest challenge for the group dynamic.

If cooperation becomes the most moral thing a person can do, the most immoral thing one can do is share in the benefits of cooperation without contributing a fair share. Lying, cheating and stealing are reviled across cultures because each is viewed as being uncooperative, and therefore unfair:

The liar deceives others to their own benefit
The cheater accomplishes by leeching off the work of others
The thief takes from another what they did not earn themselves.

So serious was the issue to our ancestors that liars, cheats and thieves were threatened with ostracism from the group, which was effectively a death sentence. The life-and-death tension between cooperation and freeriding underpins moral authority of Fairness, otherwise known as the Universal Ethic of Reciprocity.

The Fairness ghost in our mental machine is powerful and ever-present. When a person considers a situation or circumstance to be unfair, they are haunted by the ghost of Fairness, making it difficult to consider anything else until the injustice has been corrected. Treating your prospects and customers fairly, doing to them as you would have them do to you, are basic table stakes in building relationships. Disregard the importance of fairness at your own peril, for the mere perception of unfairness is enough blunt your relationship building efforts.

In the spirit of perspective and being a good listener, let’s behaviorally tweak the Golden Rule. Rather than “Do to others how YOU would have them to do unto you”, strive to “Do unto others as THEY would have you do unto them”. This slight tweak will nudge you to embrace the view through their frame, increasing the likelihood that you will be perceived by your prospects and customers as a good listener, understanding of their circumstances, and, ultimately, fair. All of which will increase the odds that you will be given the opportunity to present your value proposition to a receptive audience.

Loss Aversion

In general, people behave in ways that minimize their losses. More specifically, people tend to prefer avoiding losses to acquiring equivalent gains. For example, it is better to not lose $1,000 than to it is to win $1,000. Some studies suggest that losses are twice as powerful as gains in our mental calculus. This is a key insight of seminal work done by Amos Tversky and Daniel Kahneman on Prospect Theory, which we will dig into a bit later in our Decision-Making discussion.

Most American football fans are at least passively aware of this phenomenon thanks to the never-ending debate about going for it on 4th down. For the uninitiated, the rules of the game stipulate that you get 4 tries, or downs, to move the ball forward 10 yards. However, if you don’t like the way things have worked out after the first three, you may punt the ball away on the fourth, which gives your opponent a more difficult starting position for their turn.

The risk of going for it on 4th down and not punting, the thing teams are loss averse to, is turning the ball over. If you go for it but don’t make it to the 10-yard marker the other team gets the ball wherever they stop you, giving them a significantly better starting position and increase the odds they will score, which is exactly what you don’t want. On the other hand, if you go for it on 4th down and make it, you are rewarded with a new set of downs, thereby increasing your chances of scoring, which is exactly what you want. It’s a pretty straight-forward risk/reward situation, and it’s one that teams consistently get wrong for fear of loss.

Historically, going for it on 4th down was strictly reserved for desperate situations, such as playing from behind with the time running out. Conventional wisdom is that it’s almost always better to punt, increasing the chances that your defense will stop the other team, which will give your offense another chance to score. Better to be safe than sorry, right? Wrong.

Cal-Berkeley economist David Romer, in his paper Do Firms Maximize? Evidence from Pro Football, analyzed >1,000 4th down situations and, based on projected field position and the probability of maximizing your scoring chances (aka winning), found that 89.8% of the time teams should have gone for it, they chose to punt instead. Thanks to the power and persistence of Loss Aversion, football teams are making-decisions that actively hurt their chances of winning. Talk about irrational!

In Thinking, Fast and Slow, his best-selling behavioral science masterpiece, Kahneman writes, “The concept of loss aversion is certainly the most significant contribution of psychology to behavioral economics.” High praise from one of behavior science’s founding fathers. Given Loss Aversion’s elevated standing among behavioral ghosts and its profound effect on decision-making, there are two realted ghosts worth considering:

Regret Aversion[3]: When making decisions under conditions of uncertainty, people often anticipate feeling of regret, fearing that their decision will be less than optimal, and incorporate their desire to eliminate or reduce this possibility in their ultimate choice.

Therefore, in working with prospects, lean towards a focus on ways to prevent current losses when comparing your product with an incumbent (aka the status quo). On the other hand, in working with current customers, reinforce the “optimal” aspect(s) of working with you, as well as the relative losses that may be incurred in switching to another provider.

Sunk Cost Fallacy: People tend to continue supporting past investments in money/effort/time with future investments of money/effort/time; this is what it means to “throw good money after bad”.

A sunk cost is a cost that has already been incurred and cannot be recovered should not be relevant to decisions about future investments, so say rational choice theory and traditional economics. For Homo Economicus (a mythical figure driven only by rationality), only future costs are relevant to decision-making; sunk costs are irrelevant. However, real life Homo Sapiens very much care about sunk costs, as anyone that has attended an event they were no longer interested in simply because they had already paid for the ticket will attest. People don’t like to “cut their losses”, which is equivalent to acknowledging a poor or wrong decision.

Before you launch in to a pitch regarding the relative benefits and/or loses of switching providers you’d better have a good understanding of the sunk costs your prospect or customer may be hesitant to abandon.

As these ghosts illustrate, the way options or ideas are framed is critically important. Presenting your value proposition as a way to realize a gain or a way to prevent a loss will have a profound effect on how it is received. Choose wisely.

The concept of Loss Aversion is not without its detractors[4], but that debate is not material to this discussion. In the context of the sales process, the important point is that the decision makers you will be selling to and working with will fall somewhere on the loss aversion spectrum. Your job is to listen to them and figure out their sensitivity to loss. Once you have a handle on where they fall on the loss aversion spectrum, you’ll be able to frame your value proposition in a way that best matches their unique frame of the world, mitigating the effects of loss aversion on their consideration of your value proposition. The Buyer Type Chart that immediately follows this section a fantastic tool that will help you do this.

Tool of the Trade: Buyer Type Chart

If you are focused on the person in front of you, appreciating the impact Fairness & Loss Aversion have on their perception of the world, a picture of the type of person you are speaking with will begin to come into focus. One of the best tools at your disposal in bringing further clarity to this picture is the Buyer Type Chart, which is based on research done in the 1940s by Neal Gross & Bryce Ryan on the adoption of newly developed hybrid seed corn among Iowa farmers.

In their work, Gross & Ryan identified five types of adopters (aka buyers). These five types have withstood the test of time and remain as relevant to the sales process today as they were all those years ago in Iowa. In this chart, we’ve overlaid each type with high-level guidance that will help frame your value proposition to optimally speak to the buyer sitting in front of you. Although this guidance is more art that science, we are confident that this chart is a powerful resource that will help you speak in terms that will resonate with your prospects and customers.

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To use the chart, think of the “What They Want” column as a proxy for where that type of individual lands on the Loss Aversion spectrum; Laggards are the most loss averse and Innovators are the least. Pay attention to the way your prospect or customer talks about what they like or want in a product or service. What key words are they using? Do they speak of “solving problems”? Or are they more interested in being on the “cutting edge”? These cues will indicate their place on the loss aversion spectrum and tell you which type of buyer you are working with. Once you identify their type, simply move from left to right in the chart for guidance regarding What They Buy and What You Should Sell. Simple.

This is not a magic trick and there is no promise of guaranteed success if you use this chart. Instead, consistent application of the high-level insights provided by this chart will increase the odds that you deliver messages your prospects and customers are receptive to, which will increase the odds that you are able to build a stronger relationship with them and move the sales process along.

One more nugget of buyer type insight: Subsequent analysis of Gross & Ryan’s work provides directional support to the relative concentrations of each type:

~68% of buyers are evenly split between the Early Majority & Late Majority
~30% are evenly split between Laggards and Early Adopter categories; a mere
~2% recognized as Innovators

Which means that most of your time will be spend with either with folks in the Early or Late Majority, so make sure your referrals are strong and your ROI metrics are sharp!

Bonus: Reactive Devaluation

When a proposal, idea or opinion originates from an antagonist it is immediately devalued. This is known as Reactive Devaluation (the Semmelweis Reflex and Backfire Effect are different versions of the same). Make no mistake, early in your relationships with prospects and customers, you are an antagonist.

As a salesperson, you are attempting to affect change and stand in opposition to the current status quo, which is exactly what it means to antagonize. As such, your prospects and customers will instinctually discount all the valuable things you share about your product or service until they no longer see you as an antagonist. Reactive devaluation is yet another reason why you must focus the spotlight on your prospects and customers first, actively listening to them, understanding what makes them tick, and earning their trust until they no longer see you as an antagonist. Once you’ve gained their trust, only then will all the incredible value you have to offer be properly appreciated.

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Leveraging a behavioral science framework helps us establish and build better relationships by tuning into the ways your prospects and customers will instinctually respond to you, especially when you’re first getting to know one another. Don’t make the mistake of leading with logic and reason in an attempt to win them over. Instead, use the insights provided — Take the Path of Least Resistance & Be a Good Listener — to help mitigate the influence of the ghosts in the machine and help your prospects and customers to open up to you. In time you will feel yourself migrating past superficial meetings to a place where prospects and customers are actively engaging you. This is exactly where you want to be.

Now that we know how to better connect with people, let’s talk about changing.

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[1] Per 2015 Corporate Executive Board analysis of 4,960 business to business customer; Challenger Workshop Presentation

[2] Truthiness: (noun, informal): the quality of seeming or being felt to be true, even if not necessarily true; Origin: Early 19th century, coined in the modern sense by the US humorist Stephen Colbert.

[3] For the millennials in the audience, FOMO (Fear of Missing Out) is a derivative of regret aversion. FOMO is basically anticipation of the regret you will feel for having been left out of something, based on the fear that you may have somehow made a less than optimal decision that led to your exclusion.

[4] Critics suggest that loss aversion findings have been over-interpreted, highlighting studies that show overweighting of large losses, but little to no weighting for small losses. Some also claim that people are maximizing time averages, not expected value. This discussion assumes decisions that are based on purchases and investments that are significant enough to cross the “large” threshold, thereby negating the first critique. The second is an intellectual point that is lost deep in the academic weeds of ergodicity and probability. Go here if you want to read more.