Confronted with FOMO, FOBO, Choice Overload, and FUD, your prospects might take refuge in the status quo. Here's how you can help.
January 13, 2021
Experienced entrepreneurs agree: truly innovative products sell better to buying centers made up of well-informed buyers with significant authority. This blog examines some of the psychology behind why that is and why your goal should always be to seek out and shape such a buying group.
Who is your organization selling to now? Their levels of expertise, levels of risk tolerance, and other characteristics probably impact which approaches you use. They also present different types of objections and roadblocks.
Thinking about psychology can help you identify your ideal decision-maker and convince them of value as quickly as possible. When non-ideal or oppositional figures appear in the buying center, you can mitigate their impact and learn to overcome their objections.
These skills, based in psychology, will make you more persuasive in all your conversations—both in sales and in everyday life.
You’ve certainly heard about FOMO, or the fear of missing out. Patrick McGinnis has made sure of it. He originated the term while attending Harvard Business School in 2004, hosts a podcast called “FOMO Sapiens” through Harvard Business Review, and last year published a book on the topic.
While it’s a handy shorthand for a form of distraction that’s endemic in life, FOMO hasn’t actually been the topic of much serious organizational- or behavioral-psychology research. Over the last fifteen years, those studies that have considered it have largely focused on it from a social perspective, since McGinnis originally described the phenomenon in relation to students’ social lives.
Certain modern businesses are built to capitalize on the social aspects of FOMO. The constant notifications on our phone engage our attention because of it. But is FOMO really salient in most business situations?
The short answer is “we don’t know,” simply because it hasn’t been studied. FOMO is powerful if you are in retail or have a product or service that sells well through a social media channel. FOMO has been harnessed effectively in the past at conferences (think exciting booths and happy hours sponsored by firms to give their salespeople opportunities to make new connections), and probably will continue to be once conferences become safe again. And while B2B SaaS buyers don’t generally invest in software based on a feeling that they are missing out on something social, they do want to “keep up with the Joneses” and emulate peer organizations in order to stay relevant.
FOMO, and its lesser-known sibling, FOBO, fear of a better option, look even more relevant once you realize that they are related to a more thoroughly-studied concept called “Choice Overload.” Offering customers more choices can sometimes result in them making no choice at all, because their decision-making apparatus becomes overwhelmed. Or they may make a choice, but have a higher likelihood of experiencing regret that they did not make some other choice.
One of the things we speak about most often when teaching sales professionals to be more effective communicators is controlling the number of choices when offering a decision. This comes up very frequently in arranging meetings. A study by meetings-automation firm Chili Piper found that compared to an open calendar request, offering three possible windows for a meeting in an email results in a 12.5x higher response rate.
As it turns out, part of this effect is due to getting the choices down to a manageable number. The recipient of the message doesn’t have to do the legwork of identifying possible meeting windows. Another part, though, is that the number of choices also isn’t too small.
People like to feel that there are more than two options, since two options may feel like you are just choosing the lesser of two evils. Duke’s Dan Ariely gave a classic TED talk on the topic, showing how a clearly useless or nonsensical third option still made people more confident in choosing a more expensive option.
So, what does the whole world of concepts surrounding FOMO, FOBO, choice overload, and the like tell us? Follow the Rule of Three by offering three options, whether they be products, subscription tiers, or times to meet. It will make your customers happiest, and they may spend more. Plus, avoiding choice overload helps your prospects save mental bandwidth and focus on the important information, like your value proposition.
FUD (Fear, Uncertainty, and Doubt) has been part of the conversation in sales for a lot longer than FOMO. The modern history of FUD starts with IBM. According to former IBM employee, later competitor Gene Amdahl, IBM’s sales representatives would try to instill these feelings in customers about competitors’ products. They would go so far as to use disinformation in the process. Microsoft later imitated these techniques.
Obviously using FUD to generate bad feelings about the competition is not a great look for sales professionals. It rarely works except from a position of power: entrenched market leaders can build on the fact that their competition is relatively unknown. For most of the sales teams we work with, who are working at growth-stage entrepreneurial start-ups, the bigger issue is combating FUD, not creating it, especially when you are in a market with better-known competitors (even if they aren’t known for the particular type of product or service you are competing on).
The most important factor here is knowing your competition. Frame the conversation in terms of your differentiators, and know how the competition is selling against you so you can defuse any FUD they have seeded. Often, a great first step is to ask “What do you love about the product you’re currently using for this?” This both shows you how the buying decision is currently framed in their mind, and may get them thinking about how they don’t actually love their current situation that much.
This idea that decisions are strongly shaped by existing experiences ties into the status quo bias. Many buyers have a strong unconscious preference to avoid change. Kahneman and Tversky have shown how in the face of uncertainty, humans have more negative feelings about bad things resulting from new decisions than about bad things resulting from inaction. Sticking with the status quo thus plays into the powerful system of loss aversion.
Some buyers are more invested in the status quo. As Harvey and Consalvi described in 1960, people who have attained a middle status—in business, the classic “middle manager” role—feel higher pressure to conform. This theory of “middle-status conformity” explains that low-status individuals have little to lose from a failure, while C-suite executives and other high-status roles have amassed sufficient reputation that they have more leeway to initiate change. They also possess the incentive of being able to claim responsibility for positive ROI coming from a change.
It’s quite likely that status quo bias is actually harming some of your customers’ businesses. Failing to invest in a change that significantly improves efficiency or efficacy means lost revenue and harder work for the team.
There are customers with whom status quo bias works in your favor. These are your current customers! Reinforcing preferences for the status quo and avoiding messages about how exciting change is are important tactics for encouraging renewals and expanding relationships. If, on the other hand, you are trying to acquire new customers, try to reach buyers who are not entrenched in middle-status roles.
In this piece, we’ve examined three trending theories from psychology and behavioral economics and how they play out in different situations. Status quo bias is a challenge to overcome for customer acquisition and new market entrants, but is helpful in retaining and expanding accounts. FUD helps established market leaders, but is a challenge that needs to be overcome if you are new, innovative, or smaller. FOMO, meanwhile, ties into choice overload and managing how many choices you present to customers at each stage in the sales process.
Depending on who is making the decision, these biases and preferences play out more or less powerfully. For example, a manager who is nearing retirement and has a long and productive relationship with your competitor is going to be harder to detach from the status quo than someone who is new to their position. FUD has a bigger effect on more junior decision-makers; IBM salespeople would capitalize on their loss aversion (no one ever got fired for buying IBM). In fact, they went out of their way to make sure inexperienced people were included in the decision-making process.
More senior individuals can move an innovative purchase forward more quickly and find budget for it, and their status allows them the authority and incentives to lead change. But at all levels, well-informed buyers will be better able to assess your product based on its actual value, rather than vague concerns for their career.
Luckily, you don’t just need to find well-informed buyers. You can also create them. This is partially the responsibility of the marketing department, but you can contribute by gifting relevant information to your contacts. It will help to build their impression of your role as a trusted advisor, while at the same time growing their knowledge and expertise in your market segment. Then they too can have the confidence to embrace change.
Reach out to mastery@maestrogroup.co to boost your game when it comes to buyers.
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