(842 words – 7 min)
How do buyers choose what to buy? A purchase decision can be broken up into two processes, rational and irrational. Dan Ariely’s book, Predictably Irrational, did a wonderful job of explaining how humans use heuristics or mental shortcuts instead of pure logic to make decisions. This field of behavioral economics is fascinating and fun, but it only describes a portion of a buyer’s decision process.
Buyers buy value. They only have so much money, so they choose carefully how to spend it. Sure, they make mistakes, but they try not to. They try to be rational.
Shoppers look at the value they expect to receive from purchasing a new product. If the value they perceive is not worth the price, they will not purchase. If the perceived value is worth more than the price, they are more likely to purchase, but it’s not guaranteed. The rational part of the decision comes down to value versus price. Companies that can create, communicate and capture more value win more deals at higher prices. Yes, behavioral economics can influence some portion of the decision, but they can’t overcome a lack of customer-perceived value – and that’s what sales leaders can use to help in their success.
Value Is Unpredictable
Ariely’s book title uses the word “predictably.” Behavioral economists run tests of large samples and find that many or most people have the same irrational tendencies. Hence, any one of these tactics would likely have an impact on at least some portion of any market. This is true across many products, industries and market segments. In this sense, these tactics are predictable.
In contrast, value is unpredictable. It is not the same for any two products. In fact, it is not the same for the exact same product for two customers. This is easiest to see in a B2B sales situation. Let’s define perceived value for a B2B buyer as the company’s expected increase in profit. It is obvious that any two companies would receive different values for the exact same product.
Not only is the size of the value unpredictable, but so is the key reason a buyer buys this product. Buyers buy products because they have a problem they want to solve. They expect that after they buy a product to solve a problem, they will achieve a result. That result should drive increased profitability. A salesperson trying to sell the same product to two companies will likely find different problems driving the decisions. The companies expect or hope for different results. Hence, buyers’ perceptions of value are unpredictable.
It is possible that many companies have similar problems that a product can solve. If this problem is important and common, it often becomes part of the value proposition. A value proposition is the big idea marketing teams use to attract the attention of potential buyers. However, once a salesperson gets involved in an account, that salesperson needs to start determining what problems that specific account is trying to solve. Value is unpredictable for any account.
More Than A Single Value Proposition
Instead of a single value proposition, it is powerful for salespeople to have a list of problems and results they might encounter in any account. While having conversations with the buyer, the salesperson has an idea of what to look for. Since salespeople usually sell more than one product, a problem list per product helps them look for problems. Using business acumen, experienced salespeople can help buyers calculate the value (increased profitability) of the results from solving a problem.
Use Value Conversations To Break Down Unpredictability
Not only is a buyer unpredictable, they are also naive. Buyers don’t know how much value they will get from any given product until they buy it and use it. They don’t know the capabilities of the product that well. They need help. Guess what? Salespeople are also naive. They cannot know how much value any one buyer will get from their product because they don’t know that buyer’s situation.
This leads us to a conclusion: The only way to truly determine the value a B2B buyer should expect from purchasing and using a product is if the salesperson and the buyer work together. This is called a value conversation. It may feel like a sales technique, but it’s equally valuable to the buyer. The buyer isn’t sure if they should invest in a product like this. The buyer may have to sell this solution up the chain of command. The buyer will benefit from understanding how much value they will get.
Back to the title. Buyers are not perfectly rational, but they try to be. They explore product features and benefits. They try to make the best decisions. They do their best to estimate the value they should expect. And since every buyer is different, they are definitely unpredictable.
My suggestion is to learn to have value conversations. Help your buyers understand how much value they should expect. You know your product and have a broader industry perspective. Your buyer knows their situation. Together you can discover value.