The 2015 Sales Performance Optimization survey by CSO Insights revealed that between 20% and 28% of forecast deals result in no decision. Note that these percentages refer to forecast deals - sales opportunities that were sufficiently "mature" to be included in revenue projections for a specific fiscal period. Taking a broader view, Sales Benchmark Index has estimated that 58% of the typical sales pipeline will stall or result in no decision.
Of course, some no decisions are completely rational. In some cases, the prospect's existing solution or process may be objectively superior (or at least equivalent) to the proposed alternative. Or, a change in a company's leadership team may cause a shift in organizational priorities. Frequently, however, a prospect's decision not to make a purchase can't be explained on a rational basis. When this occurs, it is usually the result of the status quo bias - a powerful cognitive bias that causes humans to prefer the status quo for non-rational reasons.
Psychologists demonstrated the existence of the status quo bias in numerous experiments beginning in the late 1980's. Since that time, several psychologists and behavioral economists have attempted to identify the underlying cause or causes of the bias. So far, the evidence suggests that the status quo bias is caused by other biases in human decision making. For example:
- Daniel Kahneman argues that the status quo bias is related to loss aversion. He contends that most people make the status quo their reference point and tend to view change from the status quo as a loss. Because we perceive and weigh losses greater than potential gains, we become loss averse, which makes us inclined to stay with the status quo.
- Richard Thaler has argued that the status quo bias results from a psychological phenomenon called the endowment effect, which refers to the fact that most people like and value something more simply because they already own it. The endowment effect causes us to overvalue the benefits of the status quo and to under-appreciate its disadvantages.
- Some psychologists have attributed the status quo bias to a human desire to avoid or delay difficult or complicated choices, and there is evidence showing that people are more likely to stick with the status quo when the alternatives are difficult to evaluate or compare.
So how can marketing and sales professionals combat the status quo bias? Because the status quo bias is inherently non-rational, there are no silver-bullet solutions. But here are a few approaches that are often effective.
- As I wrote in an earlier post, one effective tactic is to frame the status quo as a loss that is immediate, significant, and, most importantly, certain. This taps into our human psychological desire to avoid losses, particularly those that are certain.
- Marketing and sales professionals should also frame their proposed solution as a low-risk alternative to the status quo. This helps to neutralize the risk that potential buyers inevitably associate with making a change.
- Finally, make sure that your content includes examples of people and/or organizations who have successfully adopted your alternative and derived significant benefits as a result of that decision. As humans, we crave consensus when we're faced with a decision to change, and we're more likely to change when we see that others like us have made a similar choice.