Your buyers are exposed to countless products and solutions, each with their own value propositions and benefits. Choice can be difficult, and it’s not always what you expect that turns out to be the most effective approach.
Leveraging modern neuroscience and behavioral economics, we know that there are certain biases when it comes to choice and purchase decisions. These biases are ingrained in the old, evolutionary survival wiring of the brain, and can distort what would seem to be the most logical approach.
As a marketer, seller and value consultant, when you are trying to convince a buyer to choose your solution over others, knowing these biases can give you a significant edge. A guide to crafting your inspired value storytelling, and moreover, a hack into your buyer’s brain.
In order to get a buyer to take action and purchase your solution, you have to overcome a few biases. One such bias is Status Quo, the outsized preference for the current state (as is), or a preference to not undertake any action to change.
Under status quo bias, buyers amplify the cost and risk of change and substantially discount the benefits of abandoning the current less than ideal state for the better world projected in your solution. Even when benefits are 2 to 3x the perceived costs and risks, buyers often stick with “do nothing” rather than move forward with your reasonable proposal.
So what do you do to counter the status bias? Like most, you present and tally more benefits to make the gap between perceived cost and risk and value wider. The more features and benefits, the more valuable the buyer would determine your solution to be, and eventually you have demonstrated enough to bridge the “status-quo gap”. After all, if I give you $100, and then give you another $50, and then another $20, that’s $170 of goodness. In most of our daily experiences, more is indeed more. But when it comes to tallying the value of your solution in your presentations, proposals and business cases, more can actually turn out to be less …. Much less.
Less is More
It turns out that according to Niro Sivanathan of the London Business School, buyers don’t add up the value propositions and benefits presented to them. Instead, buyers AVERAGE the presented benefits. Faced with Frugalnomics, a tight economy where making a wrong decision can cost you your job, this Less is More bias is amplified more than ever.
Our typical response to status quo bias, me included, of presenting ever more points of advantage and benefits can have the exact opposite effect than what we intended. Rather than overcome status quo bias with an “everything and the kitchen sink” approach, you actually DILUTE the perceived value of your solution because of the Less is More bias.
Under the spell of this bias, the benefits that are presented to the buyer are only as good as the weakest link. Presenting $100 and $50 and $20 of value does not add up to the $170 we think it should. Instead, the buyer averages the benefits, perceiving $56 of value, NOT $170. Think about this bias and the difference in perceived value in your buyer’s brain!
These findings have significant implications for value consultants, sales and product marketing. Presenting too many benefits can actually DECREASE the perceived value of a solution, while focusing on one, two or three strong value propositions can increase the likelihood of a successful sale.
To illustrate this, let’s consider a typical scenario, where a seller is pitching a new software solution to a potential buyer. The seller is proud of their solution and wants to assure the buyer has ample evidence to make the decision confidently. The seller works with a value consultant, to tally and present likely benefits such as improved efficiency, cost savings, enhanced security, and ease of use. The team tallies up all the tangible outcomes to prove that the benefits indeed outweigh the investment costs and risks (to clear the status quo hurdle), with proposed annual benefits of:
- $150,000 in productivity improvements from additional automation, AI and ML and from ease of use / better adoption
- $50,000 in cost avoidance by retiring legacy solutions that helped initially, but don’t address all of what can be done to automate and streamline processes.
- $30,000 in risk avoidance by eliminating current system outages and downtime
- $75,000 in risk avoidance by boosting security and helping prevent potential data breaches
- $350,000 in business growth benefits, helping to improve customer experiences and improve customer lifetime value.
A total of $655,000 in annual benefits is presented versus a proposed $50,000 in average annual investments. The ROI appears substantial, a net $12 for every $1 invested, more than the typical 3x to 4x needed to overcome the Status Quo bias, however, the Less is More bias results in a completely different buyer perspective.
Under the Less is More bias, the buyer’s brain doesn’t process each benefit separately. Instead, the benefits are grouped and averaged, and the decision is based not as one would think regarding the sum of these benefits, but on the overall average. As a result, the decision maker only perceives $131,000 in benefits because the buyer AVERAGES the values rather than adding them together. This results in a $1.62 net for every $1 invested, likely not enough to bridge the Status Quo gap.
The conundrum: what can you do to shape your value selling, to overcome the Status Quo bias AND to address Less is More bias at the same time? In our example, the seller and value consultant would be better served focusing on the two highest benefits and NOT quantifying the business value of the lesser elements. Considering the $150k in productivity and $350k in growth benefits results in $250k in AVERAGED benefits and $4 net for every $1 invested, a winning formula. The other business benefits (as well as personal and organizational) can be mentioned, but not quantified or amplified – Less is More.
The math worked out well in our hypothetical example, whereby selecting the two highest benefits met both the Less is More as well as the Status Quo bias criteria. But in the real world, narrowing the benefits down to the top two or three Less is More criteria may not be enough to clear the perceived costs and risks hurdle of the Status Quo.
Value Is in the Eye of the Beholder
Making this more difficult, not all benefits are created equally in the eyes of the buyer.
When curating, selecting the benefits that have the highest contribution is not the only consideration factor. Certain benefits might not be relevant to certain buyers. When selecting a benefit to highlight, the benefit should not just be the highest financial contributor, but also emotionally relevant to the “day in the life” challenges of the buyer, and a benefit that the buyer can trust and not substantially discount as a result. Therefore you need to consider three factors when curating:
- Contribution: The most significant benefits that when AVERAGED using the Less is More bias, will help overcome the Status Quo bias the most
- Relevance: Tailoring the benefits to the buyer’s specific pain points and needs so there is an emotional inspiration to the benefit, not just a logical connection
- Trustworthiness: Assuring that the buyer believes the benefit is achievable, usually bolstered via third party sources and proof points, to help reduce the chance of discounting the values presented and helping to lower the Status Quo bias hurdle.
As a marketer, seller and value consultant, it is essential to understand the neuroscience of your buyer’s brain, and the impact that two competing biases can have on a decision stalling at “Do Nothing” or going your way. Status quo bias must be overcome in order to affect change, however, the typical approach of piling on more benefits to overcome outsized perceived costs and risks just doesn’t work. Because of the Less is More bias, benefits that are presented are not additive but averaged, meaning that more benefits can dilute the evaluation process.
Instead, smart curating is essential. Crafting your inspired value storytelling to present one, two or three of your strongest value propositions to potential buyers, that are also the most relevant and trustworthy, are key to hacking and overcoming both the Status Quo and Less is More biases.
By focusing on the most compelling, relevant and trustworthy value propositions and benefits, the marketer, seller and value consultant can substantially increase the chances of inspiring change, guiding a good decision, and winning the deal.