We have a lot of ideas about how buyers buy and how we as sellers should sell. We collect and count data (mostly without capturing any context) and use it to show how buyers make thoughtful, rational, well-informed decisions. But mostly, as buyers, we aren’t as thoughtful or rational as we pretend to be. Mostly, we make emotional decisions and rationalize them after the fact.
This week, Alan Greenspan, former Chairman of the Federal Reserve, made the rounds to promote his new book. With a sexy title like The Map and the Territory: Risk, Human Nature, and the Future of Forecasting, how could I possibly resist picking up? It wasn’t the title that got me. It was Greenspan’s admission that “animal spirits” have a greater impact on the economy as a whole, and that we aren’t ruled by “considerations of our rational long-term self-interest.” Greenspan wrote the book to suggest that animal spirits need to be considered when you look at whole economies.
So how is this useful to you and me? You and I have known animal spirits underlie economic decisions for a long time. Our clients aren’t rational, decision-making creatures.
Here are a few ideas Greenspan discusses in the book. I selected them specifically for the crossover into sales.
Animal Spirits: John Maynard Keynes coined this phrase to mean “a spontaneous urge to action rather than inaction, and not as the rational outcome of a weighted average of quantitative benefits multiplied quantitative probabilities.”
Purchasing agents use spreadsheets to try to rationalize buying decisions. No one else does. The weighting is done in their head and doesn’t have very much to do with mathematical equations.
Fear and Euphoria: “We all directly experience threats to our self and our values (fear) and the sense of well-being or elation (euphoria) triggered in pursuits of economic interests. Fear, a major component of animal spirits, is a response to a threat of life, limb, and net worth.”
People are motivated to move away from pain and towards pleasure. We move away from danger and towards security. In larger, complex deals, this matters a great deal.
Time Preference: “Time preference is the self-evident propensity to value more highly a claim to an asset today than a claim to that same asset at some fixed time in the future. A promise delivered tomorrow is not as valuable as that promised delivered today.”
The return on investment we promise needs to be sooner rather than later. We don’t act in our own long-term self-interest because we are focused on the here and now. Even (especially) your clients.
Herd Behavior: “There is a universally observed human trait to follow a leader of some sort. It is driven by most people’s need to achieve the security (emotional and physical) of belonging to a group. It is arguably one of our most important propensities, second only to fear, and a significant driver of economic activity.”
“The emergence of modern social media has only accelerated herd behavior.”
“People in every society seek to improve their status in the pecking order of any organization.”
Want to know why consensus is so important? Want to know why people go along and get along? We need to belong to a group. Want to know why some organizations are so political? It’s the pecking order. Welcome to the herd!
Home Bias: “Home bias is the propensity to deal with the familiar: with people and things geographically close to home and familiar in terms of culture, language, and trust.”
“A propensity related to the comfort and familiarity of trading with partners close to home is the emotional comfort we all sense in personal relationships that become familiar and predictable. The uncertainty that arises with strangers imparts a certain, if minor, stress that subsides with familiarity.”
All things being equal, relationships win. Trust matters. Caring matters.
Look at the opportunities that you are working on right now. Look at your clients. If you can’t see the animal spirits at work, then look deeper. We are human beings, and animal spirits is the deep stuff that drives our behaviors and beliefs.