A truly fascinating concept I’ve just been introduced to is critical to a rep’s success. Prospect Theory was uncovered in 1979 by two psychologists keen to explain economic decision making (Daniel Kahneman & Amos Tversky). Their findings were simply that people are less likely to do something that allows for potential gain, yet more likely to get into gear if that something means stemming losses.
Plenty of examples abound. The most common appear to revolve around gamblers and share traders. Gamblers are inclined against cutting their losses and will continue to take ever greater risk to get back to even, and tend to cut and run when just into profit. Share dealers sell quick when a stock goes into the black, yet seem to hold on to shares that have dived into the red.
Another neat insight concerns a study of New York taxi drivers as shown on the BBC science show Horizon (12 Feb 08). They seem to have a target for what they must earn in a day. On a ‘fast’ day, they make their target fares early, then go home. But on a slow day, they stay out till all hours trying to reach their number. When logically, they’d be better off staying out longer on the fast day.
Not only does Prospect Theory suggest we’re more focused on ameliorating losses, some studies apparently suggest that losses hurt more than gains satisfy, twice as much in fact.
The implications of this are seismic for the seller. Notice my title for this blog. I would have normally written something akin to ‘open up more doors with…’. I chose instead to use a negative. The theory goes that more readers will therefore tuck in.
My personal repping at present is focused on how I can help lead a sales team to a prosperous land of milk and honey. I shall now be altering my pitches. From today, I’ll start to talk about the impact of all the time they’re chucking away, needlessly wasting, and all the sales opportunities that are going begging, lost forever.
It kind of goes against all that I’ve ever learned. I’m a very positive person, never resting on bad vibes. Yet the facts are compelling, and suggest a new approach will keep me from losing sales. (see what I did there…!)