Do People Really Decide or Simply Compare?


Attend our efficiency-focused professional sales training and you’ll hear me say over and over, “Most people don’t make decisions. They make comparisons. And it’s up to you to frame the comparison properly.”

Dan Ariely, an internationally renowned behavioral economist and author of two New York Times bestselling books, Predictably Irrational and The Upside of Irrationality, has done extensive research on how people make decisions. In his TED Talk called, “Are we in control of our own decisions?” he presents several examples of decision-making scenarios that clearly demonstrate how significantly a selection can be swayed by the context and arrangement of possible choices. This eye-opener is one of several featured videos in our Efficiency Sales Professional™ Certificate Boot Camp, and if you haven’t viewed it already, I recommend you do so.

There are countless examples of how this concept of “decision vs. comparison” plays out in the context of getting efficiency projects approved.

Let’s start with the simplest case. Assume your prospect asks, “What’s the payback period?” and you respond, “Three years.” What comparison is that prospect making in his mind? “Well, I have my money in my pocket now, and it feels comforting having access to that capital. If I do the investment you’re proposing, I’ll have to wait three years to get my money back. Uh, no thanks.”

But what if the prospect had asked, “What’s the Return on Investment (ROI)?” You respond, “33 percent.” Now what comparison is the prospect making in his head? “Wow, I just returned from my bank and noticed that they were paying 3 percent on a 36-month CD. This investment is eleven times that.” Now, there is an inherent fallacy in comparing the ROI of an expense-reducing capital project with the rate of return on a federally insured CD; however, plenty of decision-makers feel totally comfortable using such “apples and kiwi” comparisons when making decisions.

I’ll give you an even crazier example. Years ago, I was presenting a project to a prospect. He asked me, somewhat accusingly, “What’s the payback?” As soon as I responded, “3.2 years,” he started shaking his head wildly as if he were being attacked by a swarm of angry bees! “No way. We don’t do any projects around here with paybacks over three years. I’m sorry. We just don’t do it.” At that point, I responded with a softening statement, the conjunction “and” (not “but”), and what I call a “pattern interrupt.”

I said, “John, I understand. And, I think what you’ll find more interesting is that this investment sports a Return on Investment of more than 30 percent per year.” As soon as he heard “30 percent” his eyes widened. He leaned forward and said, “Now that’s a figure that would make my capital budgeting folks warm and cozy. Tell me more.”

Yes, that really happened. All the more proof that people don’t make decisions. They make comparisons. And efficiency sales professionals know that it is their responsibility to frame the comparison to make it obvious that saying “yes” to your project is the most rational (or predictably irrational) thing that your prospect can do.

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By (Mark Jewell, CEO of Selling Energy | | | sales tips |
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