Favorite-Long Shot Bias & New Business

betting

 

A friend of mine has been trying to set a meeting with a prospect.  After the initial communication the prospect replied:

Just checked you out on line.  I have had discussions in the past with your representatives.  We are a Factory Authorized Carrier Dealer and do not have any intentions of switching or carrying a “second” line.  I always enjoy meeting people, however I do not believe our meeting would be productive.  If I ever become frustrated with Carrier, I know where to find you

Thanks
D________
When it comes to new business you have to kiss a lot of frogs.
Salespeople frequently determine a prospect’s validity based on organizational criteria: years in business, web presence, projected volume, etc.  Yet the prospect doesn’t feel a need or interest or pressure to change.  And they won’t.  So why did the salesperson determine that it was worth the risk and effort?  Why do salespeople bet on the long odds?
When it comes to prospecting, salespeople are susceptible to Favorite-Long Shot Bias.  The salesperson overvalues the odds of a long shot and undervalues the favorite. As a result the salesperson bets on the long shot and wagers an inordinate amount of time and resources for little to no gain.  The odds of a win were never in his favor.
It’s tough for salespeople to avoid this bias.  The bias is not, however, completely irrational.  A long shot prospect may demonstrate a greater interest in conversion than is actually accurate.  The long shot prospect may go so far as to participate in sponsored events such as a factory tour or a product tear-down.  Prospects can give every indication that they’re sincerely interested in converting as a means of gaining pricing insight or leverage.  The bias can be manipulated without the salesperson’s awareness.
In order to avoid this miscalculation of probability a salesperson should evaluate behavioral or contextual criteria rather than over simplified organizational criteria:
“Is the prospect under pressure to change due to market or competitive conditions?”
“Are there internal pressures to change?”
“Is there broad discontent with the status quo?”
“Is there ONE person in the business who will advocate on the salesperson’s behalf?”
“Is this a learning environment that values new ideas and/or perspectives?”
Favorite-Long Shot Bias occurs in part because the person placing the bet is unwilling or unable to accept behavioral realities.  Long Shots are long shots because they win with much less frequency than the favorites.  Yet the siren-song is alluring.
Favorite-Long Shot Bias happens because a risk-tolerant sales person overvalues the likelihood of the White Whale deciding to flip because the prospect fits an organizational profile rather than a behavioral profile.  The salesperson has failed to consider the behavioral realities.
I know a lot of sales people who love to gamble.  For a long time it never made sense.  Why does a person (like myself) with an unpredictable income roll the dice and magnify the unpredictability while certainly guaranteeing a loss?  Don’t they face enough risk and loss already?  In a sense salespeople are gamblers–on themselves, on their skills, on their intelligence, their EQ, their training, their products and employers.  Favorite-Long Shot Bias:  They often want to believe that the long shot will beat the odds even when the odds are millions to one.
As my friends in Texas say: You just can’t wish horns on a doe.

Published by Matt Plughoff

Exploring the next evolution of small business success.

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