Here’s a quiz: Your child is invited to two birthday parties on the same afternoon. At one, the kids will be at a beach just a mile from where sharks were seen last year. The other party is in a small banquet room decorated with balloons. To which party do you send your child?
You picked the banquet room with the balloons, right? That certainly seems like what most cautious parents would choose. But here’s the scary truth: Balloons kill 13 times more people each year than sharks. (How? Well, for one, balloons can burst and fly into your throat, causing suffocation.) But we don’t hear much about this because it doesn’t make the news the same way a gory shark attack does.
We all make decisions—influenced by biases we’re not always aware of—that aren’t necessarily rational. It’s important that we recognize that our inherent cognitive biases can lead us to make bad product and marketing decisions. We must also recognize that those biases can affect our customers’ purchase decisions.
It’s common to assume that most business purchase decisions—especially those of significant strategic value, complex implementation, and high investment costs—are highly objective and involve detailed investigation, benchmark comparison, and critical analysis. But cognitive biases have a far greater effect on B2B customer decisions. Once you recognize those biases and understand how they affect your customers’ decisions, you can begin leveraging those same biases to your marketing benefit.
Groundbreaking research in the late 1970s by behavioral economics pioneers Daniel Kahneman and Amos Tversky found that the psychological pain of losing something is more than twice as powerful as the pleasure of gaining something of equal value. Simply put, we hate to lose more than we love to gain.
This is one of the few cognitive biases that many marketers recognize and attempt to leverage in their marketing efforts. We seek to identify customers’ pain points (the fear of loss that keeps customers up at night) and then focus sales messaging on how our products can best alleviate those fears and avoid those losses.
It’s common to see B2B marketers leverage the pain-over-gain model by focusing messages on customers’ pain points. Most of this customer pain-point focus is on the business pain, which falls into two basic categories:
- The inability to reach a critical business goal
- How to navigate critical business risks/obstacles
These two business pain categories often are combined to create a value proposition: “(Your product) helps (your target customer) better achieve (critical business goal) by helping you more effectively address (critical business risks/obstacles).”
Yet, even when your value proposition successfully communicates your ability to solve critical business pain points and achieve key business goals, it may not truly differentiate your product. After all, your competition may be communicating something very similar.
B2B marketers often fail to recognize another pain point: personal pain. This is often overlooked because it’s assumed that most B2B purchases—especially for business-critical solutions of significant investment—are made objectively and based on a predefined set of key business, functional or technical criteria. We believe the purchase decision is based on careful investigation, analysis, and competitive review and benchmarking.
But studies have found that emotions and personal value play a far greater role in B2B purchase decisions than most people have thought. In fact, a CEB/Motista survey found that B2B buyers who see the personal value of your product are not only far likelier to purchase your product, they also are willing to pay more for it.
Few B2B marketers have caught on to this, and most fail to incorporate personal-value messaging. Instead, marketers leverage loss aversion by focusing solely on their business values—which often are the same as their competitors’—reducing their competitive differentiation.
To best leverage loss aversion, expand your focus beyond business pain points. Determine customers’ personal fears when it comes to making the right—or wrong—purchase decision. Examples of personal pain points include:
- Damage to professional reputation
- Reduced or slowed advancement opportunities
- Harder, more stressful work (or longer hours)
For example, a medical technology company may improve its value proposition by not only communicating how its products better solve key medical-practice pain points but also by addressing how it allows practice owners to work more reasonable hours—and spend more time with their families. By communicating how you help customers better overcome their business and personal pain points, you both strengthen and differentiate your sales messaging strategies.
That we prefer the familiar is hardly an earth-shattering revelation. In the marketing realm, familiarity is why we seek brand recognition. It’s also why, if you have brand recognition, you likely spend significant time and money trying to maintain it.
If you don’t have brand recognition, you’re likely spending almost as much trying to gain it. Even if you have the resources to build significant brand recognition on a national or global scale, you may not have the time—it can take months, if not years. If this is where you find yourself, focus on another type of familiarity: challenge recognition.
Even if customers don’t recognize your brand, they may recognize and deeply relate to the challenge your product addresses. People tend to gravitate toward solutions that alleviate the challenges and risks with which they’re most concerned. If customers recognize that you’re addressing a critical challenge, they’re likelier to pay attention.
The perceived level of risk involved with any challenge is not always proportionate to the actual risk. A nonmortal shark attack will fuel widespread news reports and become socially viral almost immediately. Meanwhile, we hear almost nothing about balloon-related deaths. And if the perceived risk was even remotely proportionate to actual risk, we would never use staircases: 5,000 times as many people die each year from staircase accidents as they do from shark attacks.
Use this variation of familiarity by focusing on key challenges like:
- New or tightening regulations
- Product end of life or technical cliffs
- Changing customer needs
- Missed opportunities
These situational challenges often are effectively communicated via dramatic loss stories and reports. For example, a financial software company might showcase a story in which a manufacturer had its customer and vendor data stolen. Perhaps the theft occurred because it was using outdated software that was noncompliant with new regulations or it was past end of life and no longer supported with security updates.
Along with helping customers to recognize the business threats your product addresses, it also is important to communicate how your product helps address more personal/professional concerns:
- Job security
- Professional reputation
- Potential legal action
- Increased work stress
- Lack of personal time
Over time, creating challenge recognition can also help accelerate your brand recognition as customers begin associating your product with the ability to address both business and personal risks.
The Halo Effect Bias
The halo effect refers to the tendency to make prompt observations about someone or something as part of a first impression and then allowing those initial observations to influence how we interpret subsequent information about that person or thing.
More commonly recognized in our first impressions of people—you never get a second chance to make a first impression—in the marketing realm the halo effect significantly affects how customers form their first impressions of products and brands. Marketers need to promptly establish a positive first impression among prospective customers. This is key because the customer will interpret future information about your product as supporting those initial positive impressions.
Unless you’re a heavy advertiser in your marketplace, most B2B customers will develop their first impression of your product via your website. A smaller portion may be introduced to your company at your exhibit booth at a trade event.
To make that positive first impression, you’ve likely placed a lot of attention on the messaging for your website and tradeshow exhibits. But how effective is your messaging? Does it clearly communicate your value proposition? Is that value proposition unique? Or is it similar to what your primary competitors are saying?
Several factors can keep you from making that positive first impression. Your value proposition may not be aligned to true customer needs. Your sales messaging may lack real differentiation. Or you may simply be communicating your information in the wrong order. But one of the most common mistakes is that your value proposition takes too long for customers to truly understand. This is a real challenge—and a common mistake for marketers of complex products. This is especially difficult to overcome because today’s customers face ever-expanding content bombardment, not to mention an ever-shrinking attention span. The average attention span of people has shrunk from 12 seconds in 2000 to 8 seconds today. That’s one second shorter than the attention span of a goldfish! So, the time to deliver a clear, concise value proposition that resonates is limited.
While your value proposition and sales messaging are vital for a positive first impression, there are other ways to leverage the halo effect. One means is to associate your company with some of your more well-known and successful customers. For example, well-designed company websites and other sales tools often showcase a series of recognizable customer logos. Associating your company with a recognized, highly regarded customer lets some of that customer’s positive image rub off on your company. Customer success stories and testimonial videos also are useful in leveraging the halo effect to your benefit.
Sharks vs. Balloons
Cognitive biases creep into the way we communicate as well as into the way we process and understand information. These often-unconscious biases can cause people to make improper conclusions that lead to bad decisions. It’s important to recognize that these biases not only affect our marketing decisions but also our customers’ purchase decisions. Once we understand that, we can find ways to leverage those biases to improve our marketing efforts.
The intense fear of sharks hasn’t always been the case. Most people didn’t think about them much … until the summer of 1975. That’s when a young filmmaker named Steven Spielberg released a movie named Jaws and turned great white sharks into the deadly sea monsters we fear so much today—more than 40 years later.
Meanwhile, we still love balloons.
To learn more about behavioral economics and how we make decisions using subconscious filters influenced by what we read, hear and experience, see Neil Baron and Robert Hatcher’s article “It’s All in Your Head: The Effective of Cognitive Bias on Our Decisions and Our Products,” published in the spring 2019 issue of The Pragmatic.