By Darrin Fleming, Partner, ValuePros.io
As a sales leader or salesperson, you’ve likely encountered buyers who seem to make irrational economic decisions, despite your best efforts to guide them toward a rational choice. Understanding the principles of Behavioral Economics can help you navigate these challenging situations and ultimately close more deals.
Recognizing the Two Modes of Decision-Making
Nobel Laureate economist Daniel Kahneman’s book, “Thinking, Fast and Slow,” introduces two primary modes of decision-making:
- System 1: Instinctual, emotional, and quick decisions
- System 2: Analytical, deliberate, and logical decisions, but slower
Your buyers may be relying too heavily on System 1 decisions, leading to irrational choices that don’t align with their goals.
The Dangers of System 1 Decisions for Your Buyers
When your buyers rely on System 1 decisions, they may:
- Ignore contradictory data: System 1 decisions rely solely on known information and experience
- Be swayed by emotions: Choices are highly susceptible to emotions and overconfidence
- Make poor choices: Quick decisions can harm their organization in the long run
Guiding Your Buyers Toward System 2 Decisions
To help your buyers make sound decisions, encourage them to:
- Step back and slow down
- Make choices based on thorough research, analysis, and evaluation
- Invest time to ensure significant business decisions benefit their company
Leveraging Your Buyer's Internal Checks and Balances
Many businesses have implemented checks and balances to ensure important choices are made using a System 2 framework. You can use these to your advantage:
- Approval processes: Help your buyer build a strong case for approval
- Cost-justification requirements: Provide data and analysis to support the investment
- Economic evaluators: Work with evaluators to demonstrate the value of your solution
- Buying committees: Engage with all stakeholders to address their concerns
Using Value-Based Selling to Support System 2 Decisions
Value-based selling processes and tools can help you guide your buyers toward making critical economic analyses and justifications needed for sound System 2 decisions. This approach:
- Facilitates the creation of a strong business case
- Helps secure approval to move forward with a purchase
- Complements emotional buy-in and functional requirements
Becoming a Trusted Advisor
By understanding the lessons of Behavioral Economics and employing value-based selling techniques, you can:
- Navigate the complexities of your buyer’s irrational economic choices
- Help your buyers make better decisions that drive their organization’s success
- Adopt a System 2 approach and leverage the right tools and processes
As you guide your buyers toward making sound, rational choices, you’ll build trust and establish yourself as a valuable partner in their decision-making process. By helping your buyers overcome irrational decision making, you’ll not only close more deals but also build lasting relationships that will benefit both your buyers and your own business for years to come.
Next Step
To discuss your unique situation and take this conversation further, please Schedule Time With Me or connect with me on LinkedIn.