The CMO as Psychologist in the B2B Buyer’s Journey
By Andrea Grodnitzky | 6.3018
CMOs shape their brand’s value proposition in part by considering how their solution measures against the competition. This approach ignores one crucial truth: The most powerful competition doesn’t come from other brands; it comes from the customer. Customers’ habits and apathy are the strongest deterrents to everything from initially engaging them to closing a sale.
Winning over customers requires marketing leaders to acknowledge the cognitive biases preventing a customer from moving forward. Understanding these psychological factors is critical to success because even the customer is often unaware of them. In B2B, knowing these issues is especially important because marketing and sales teams must align around them in their communications. Plus, planning marketing and sales activity based on an understanding of these cognitive processes offers advantages because these issues stem from basic human psychology that is common among nearly all people and most marketing and selling scenarios.
Here, we look at the four most prevalent psychologic barriers to winning customers and closing sales, as well as how CMOs should work with their own team and with sales to overcome each.
Loss aversion is sometimes called regret aversion or buyer’s remorse. Loss aversion is the tendency to avoid acting because we feel greater regret for the adverse outcomes from new actions than for any bad consequences from no action. Some have suggested that loss aversion is the result of human’s innate tendency to place a higher value on something they own compared to an identical item they do not own.
Psychologist and Nobel Prize winner Daniel Kahneman uses a coin toss to illustrate the power of loss aversion. He explains to participants that he will flip a coin, and if it lands on tails, the person will lose $10. Then, he asks the individual how much they would need to gain on a winning flip to accept the gamble. “People want more than $20 before it is acceptable,” Kahneman explains. The takeaway: Most people will walk away from significant opportunities to avoid the risk of losing something.
What does this mean for marketing leaders? It means that it’s not enough to be better than the customer’s existing solution. The customer’s dissatisfaction with the current solution is more acceptable to them than the perceived risk of moving to the unknown. CMOs must help their brand and its sales team earn the status of a trusted advisor. Doing so means offering insights that are relevant to the customer’s business. Often this is delivered through content on channels such as a company’s website and social platforms. But it also should be through providing materials to the sales team that they can personalize based on insights they’ve gathered by asking questions to understand the details behind a specific customer’s goals or challenges.
Sunk cost fallacy
The sunk cost fallacy is the tendency to continue a behavior or endeavor despite unsuccessful outcomes. Humans often double down on poor decisions. The reasoning behind this irrational behavior is that we fear walking away from an investment without seeing a return. This fallacy explains why so many customers are hesitant to move forward with a new solution. As research from Gallup shows, “71 percent of B2B customers are indifferent or actively disengaged.”
In most cases, marketers are trying to capture the attention of customers who are already using a competitor’s solution. This existing solution represents time and money. Accepting a new solution means walking away from those costs and efforts. As a result, the status quo persists.
Marketing leaders who are aware of this common bias are equipped to address the customer’s concerns proactively in marketing communications, campaigns, and content. Additionally, the marketing team should provide the sales team with collateral and content they can use to demonstrate that they’ll be an ongoing resource, even after the customer implements their new solution.
The key to this approach is adopting a customer-centric perspective. This change will set a brand apart from its competition—especially considering that B2B companies’ scores averaged less than 50 percent on a customer experience index rating (compared to 65 to 85 percent for B2C companies), according to McKinsey. Customers need to see that a new solution addresses their unique challenges and that the relationship will extend beyond a signature.
Businesses have a more extensive range of solutions than ever before. Choosing the best path forward has become a challenge. Historically, economists have shown that logic influences most people’s purchasing decisions. However, 2017 Nobel prize winner Richard Thaler explains that this idea only explains ordinary, everyday purchases, such as groceries. Bigger purchases, such as B2B enterprise solutions, are different. These high-stakes choices present us with new complexity, revealing emotion and illogic in our decisions. These decisions require an intense level of focus and attention. This exhaustive process helps explain why “people have a bias toward the status quo.” CMOs need to simplify the decision-making process for customers.
To encourage a customer to move forward, Thaler suggests offering a “nudge.” Marketing leaders can offer this nudge by framing the information they present. Thaler calls those who use this method “choice architects.” Doing so means articulating how each of the solution’s benefits connects to a specific aspect of the customer’s challenge. “People are busy; they’re absent-minded,” Thaler explains. “We should try to make things as easy for them as possible.”
These findings illustrate the importance of crafting a clear, concise value statement. In doing so, CMOs identify the customer’s challenge, suggests an action, and then clarifies the solution’s value.
Status quo bias
The easiest path forward always appears to be the one you’re on. This idea defines the status quo bias. When facing a decision to act, we give more weight to any possible losses incurred than we do to potential gains. Every marketer trying to sway prospective customers faces the status quo bias. And any content or collateral they produce to support their sales team needs to help them overcome it. In a 2018 survey of sales professionals across industries, our organization found that 27 percent of respondents cited “overcoming the status quo” as a top challenge.
CMOs can overcome the status quo bias by illustrating that no decision is, in fact, a decision. As the customer stands still, the competition is moving forward. Additionally, marketers should use concise and straightforward language to articulate how the product satisfies the customer’s business challenges. This approach lowers the “activation energy” required to purchase.
Finally, marketing communications, including sales collateral, will be more compelling if it’s personalized to reflect detailed information on a customer’s business. Personalized collateral that marketing produces for the sales team will “credentialize” the sales professionals, which is critical to success. Consider: “From the customer’s point of view, the greatest need for improvement is in salespeople’s knowledge of the customer’s business and industry,” according to research found in Harvard Business Review.
Adding it all up
Every buying decision is different, but the psychological mechanisms influencing those decisions are universal. Knowing how to capture prospective customers’ attention and help the sales team close sales means understanding how customers think. When pursuing new customers, remember how to overcome these four psychological processes:
Loss aversion: Reassure the customer by rising to the status of a trusted advisor.
Sunk cost fallacy: Articulate that you’ll be involved even after implementation.
Decision fatigue: Craft a clear, concise value statement that makes it easy to say yes.
Status quo bias: Emphasize that no decision is a decision.
About the Author
As Richardson Sales Training’s Chief Marketing Officer, Andrea Grodnitzky is responsible for demand generation and value creation. With a passion for sales and customer-centric activity, Andrea and her team work to inspire customers across the engagement lifecycle and support them in their journey to market leadership by delivering fresh perspectives to their sales challenges.