FROM PURPOSE CHAPTER
Cognitive bias became my realm, more than any single area of behavioral studies. It was clear that understanding these mental mistakes was key for helping me take that next step in elevating my sales performance.
Influencing & improving has been my approach as long as I’ve been selling (win-win always); but acquiring insight explaining WHY people behave the way they do (i.e. irrational decisions), allows one to better identify these areas – and fix them.
Unfortunately, there’s nothing clear about cognitive bias – all occur unconsciously while running simultaneously in our mind. However, since biases are universal, learning the insights and combining them with experience in the field, provides a prime opportunity to gain significant competitive advantage.
Something I refer to as – EDGE.
Understanding the unconscious, in many ways, is grasping what other people are thinking. This, amongst other things, helps you predict buying behavior more accurately and adapt your approach according to the situation.
Selling is all about finding utilizing leverage, most of which will come from known knowledge (ex: experience, relationships, RFP info etc.)
If there’s a more effective edge than knowing what goes on inside the mind of the other side – than it would news to me.
Becoming conscious of the unconscious & acquiring leverage also play into another (unofficial) name for the TS approach – two steps ahead.
Ready to separate from the pack?
COPY/PASTE FROM PURPOUSE (Clean)
Breaking Bias
The reflective system handles all conscious functions, including current level of effort & focus of attention (ex: you reading this sentence).
The automatic system is the emotional side, which acts impulsively and operates without need for reflection (no focus required).
The latter drives decision-making, but the overall relationship between the two systems dictates our respective behavior for any particular situation.
Let’s see how our behavior was influenced with the two bat & ball experiments.
ORIGINAL FRAME
A bat & ball costs $1.10 in total; the bat costs $1.00 more than the ball.
How much does the ball cost?
RE-FRAME
A bat & ball cost a $1.10 in total; the bat costs $1.05.
How much does the ball cost
Speaking to the original frame, you knew the answer the first time – IF you paused to think; but the emotional side of your mind automatically evoked 10 cents. WHY?
You perceived the problem as simpler than it is & felt no need for reflection. In other words, upon first reading the puzzle, the mind didn’t check if RE-FRAMING would produce a different/better answer. But WHY?
Well, this is when things get a little more painful. The outcome is result and prime example of a heuristic – an unconscious procedure we use to make quick decisions.
(somewhat) Simply put, heuristics explain how the mind uses SHORTCUTS to find adequate answers using the knowledge available in our memory.
These answers are usually classified as “good enough” in our brain; but as we’ve come to find out – the answers are not always correct. OK, but WHY??
The brain’s choice to use the least amount of energy for each task.
If you paused and forced your mind to reflect upon first reading the bat & ball problem, you would have known the correct answer within a few seconds.
Since checking the reflective system means exerting more effort, the brain ignores if other alternatives produce a better answer; in turn, giving the green light to your initial gut reaction of 10 cents.
Bat & Ball Experiment
A bat & ball costs $1.10 in total; the bat costs $1.00 more than the ball.
The bat & ball experiement is only one example but this process occurs with every decision. Regardless, this all leads back to the importance of seeing the full scope of your situation. To no surprise, NOT seeing the full scope of a buying decision, will naturally lead to mistakes in decision-making, often resulting in, non-optimal outcomes.
You don’t know what you don’t know – neither does your target.
Always remember the wise words of Sean McGuire – not your fault.
While I wish I had good news to follow this up with and we can immediately get into combating these mistakes with sales process – the pain has quite subsided.
Law of least effort, the brains choice to use the least amount of energy as possible, associates with another common name.
Path of Least Resistance
If there are multiple ways to achieve the same goal, one’s preference will gravitate towards the least demanding course of action.
This reiterates a lot of what we’ve already covered, so we’re going to start bringing this back to selling. A couple call outs off the top: There are always multiple ways to achieve a goal. Buying a new solution is never the least demanding course of action.
Conclusion: Disadvantage. Salespeople.
We learned that pain and bad news is priority in the brain; this is a key insight in itself, but another big component behind that is pain points are often out of sight.
Our brain, in search of the path of least resistance, does everything it can to block-out bad news, as it requires more effort & energy to process.
Ignoring pain & negative situations is a primary result of cognitive bias. I mentioned how the framing effect is one bias of hundreds; included in the long list of mental mistakes are dozens of others feeding into our pain avoidance preference.
Many of these biases explain irrational decision-making in the financial sector. One example especially relevant to this context:
The Ostrich Effect: The tendency to avoid exposure to (financial) information that one fears may cause psychological discomfort (1).
All humans have an (unconscious) tendency to ignore information surrounding obvious, negative situations. For example: Not wanting to look at a credit card statement because you know it will be unpleasant.
The reasoning behind the ostrich effect is the same as what we’ve learned; bad news causes psychological discomfort, requiring more energy to process the information.
The unconscious pull one recieves to NOT view the information
Why Ostrich?
The name, first coined by Galai & Sade (2006) comes from the common (but false) legend that ostriches, to avoid danger – bury their heads in the sand.
By avoiding information that causes psychological discomfort, one fails to see the full scope.
Raise awareness and put the mind to work.
[AA1]Source: Thinking Fast & Slow / Kahneman
Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux
[AA2]CITATION:
PRINCIPLE OF LEAST EFFORT
Human Behavior and the Principle of Least Effort: An Introduction to Human Ecology. (2016). United States: Ravenio Books.
*Primary Source/Initial Learning: Thinking Fast & Slow (Kahneman)
[AA3]CITATION #1
Karlsson, Niklas; Loewenstein, George; Seppi, Duane (2009). "The ostrich effect: Selective attention to information" (PDF). Journal of Risk and Uncertainty. 38 (2): 95–115. doi:10.1007/s11166-009-9060-6. Archived from the original on 2016-03-16.
CITATION #2
Galai, Dan; Sade, Orly (2006). "The "Ostrich Effect" and the Relationship between the Liquidity and the Yields of Financial Assets". Journal of Business. 79 (5): 2741–2759. doi:10.1086/505250. JSTOR 10.1086/505250. SSRN 431180