Improve your Persuasion in Sales by understanding the Decision Threshold

First introduce to me by my sales mentor Mike Winterfield, former President at Traction on Demand and now Active Impact Investor.

“People make a decision to change when they realize that the cost of staying the same exceeds the cost of changing”

Mike Winterfield, Founder @ Active Impact Investments

Some key points to bear in mind:

• This doesn’t always happen as a deliberate decision making exercise, and sometimes happens internally and unconsciously.
• Cost is subjective and may be skewered based on a person’s values, interest, and objectives.

Cost of Changing (Examples)

• Price
• Approval process/chain
• Training employees on the new solution, learning curve to hit proficiency
• Resistance to adoption
• Integrating the solution with existing workflows, processes, and tools
• Risk of failure

Cost of Staying (Examples)

• Risk
• Fines/penalties
• Challenges/difficulty with current method for solving the problem
• Financial cost
• Lost opportunity
• Time wasted

Simple enough right? Now that you know this, in order to motivate change and get your prospect across the line, you can either explore ways to highlight and elaborate on the Cost of Staying or Reduce the Cost of Changing.

This is why Freemium is so popular – it lowers the Cost of Changing and gives customers a flavour of how the solution can alleviate the pains caused by the Cost of Staying.

The very same reason is why pilot projects (e.g. testing in 1 location/department instead of a company-wide rollout) are commonly used in B2B sales pitches – it reduces the risk with a smaller scope and scale of implementation to give the prospect a chance to see how it might affect the rest of their organization.

The Decision Threshold is a strategic level tool to design experiments that can improve conversion. Sales Reps can be trained to emphasize Cost of Staying, but some Cost of Changing elements can only be modified by upper management (e.g. changing the price of your offerings or switching up what you’re selling).

Here are some examples taken from real companies:

• Pricing below $5,000 because anything higher requires approval from head office. Below $5,000, individual hotels have the flexibility to make their own purchase decisions.
• Offering a comprehensive audit at a much lower cost (compared to a company-wide implementation project) with detailed implementation suggestions (including competitor tools, and of course your tool in the mix). Once a client has experienced your team, they’re much more willing to close into a formal implementation project.

Business is all about relationships. Reducing the size of your offering helps you quickly get your foot in the door and establish that initial connection. From there, focus on delivering on a good experience, then “upsell” into future projects to increase the Lifetime Value (LTV) of your accounts.

For the very same reason, it’s much harder to leap from one tall building to another even if the gap is small because the risk of failure (cost of changing) is perceived as being greater as you are more aware of it. Reduce the perceived risk and it’ll make people feel like it’s a small hop across a puddle instead.