Mar 18, 2024
Have you ever wondered why customers or prospects won’t change?
You might have a better solution, but the decision maker is still reluctant. In this episode, Paul discusses some of the psychological forces that impact your customer’s or prospect’s decision making process.
Show Notes
Paul answers an interesting question: Why won’t customers change?
“Well, we’re going to answer that question today and take a look at some of the deeper psychology behind this question and there’s three things we’re going to focus on: The Status Quo Bias, Loss Aversion, and the Endowment Effect, alright?”
Paul uncovers how these biases impact customer decision making, and most importantly, he provides some tips and ideas to overcome these biases.
“So, first things first; let’s talk about loss aversion and how it relates to change. Loss aversion basically means that losses loom larger than gains.” Customers will focus more on what they have to give up versus what they gain anytime a change takes place.
People like to stick with what they know. Customers like familiarity. They like to stick with what they know and what they trust.
“So, if you’re talking to a prospect or a customer and trying to displace a competitor, define the concept or idea you’re selling and then draw a parallel to how they’re already buying into this concept or idea.”
The Endowment Effect is the tendency for people to place higher value on the things that they own versus the things they don’t own.
“If anyone’s ever tried to sell their home, for example, you meet with the realtor and then you tell the realtor, ‘Here is what I think my house is worth.’ But the realtor tells you what it’s actually worth. We place a higher value on it because we own it.
“So, again, yes, it is a challenge when customers don’t want to change. This podcast, hopefully, gave you a couple of ideas on how you can help inspire change, alright? Just to recap, remember, with Loss Aversion, whatever they give up is going to loom larger than what they gain, so, you’ve got to show 1.5 to 2.5 times of gain compared to what they have to give up to attain it.
When we talk about the Status Quo Bias, be able to explain how your ideas and concepts are familiar to them already. Draw a parallel to another area of their business.
And then, the final thing we talked about is the Endowment Effect. People place a higher value on the ideas that are their own, versus your ideas. So, somehow, try to convince and plant your idea in that customer’s mind.”
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