According to behavioral psychologists, rewards are more attractive to us the closer we are to receiving them. Further, humans have a tendency to “discount” equal or even greater rewards when not available until the distant future.
Why does this make sales hard?
Because especially in many instances we are asking our prospects for immediate sacrifices, ie. hard money and formal agreements, in exchange for future rewards, ie. direct or indirect ROI, often not realized until months or years have passed.
Further complicating matters, it is not uncommon for promised returns to be vague or without guarantee. In other words, in addition to asking for a specific amount of money now, we essentially ask our prospects to gamble their ultimate rewards, creating a noteworthy imbalance between seller and buyer.
The question then becomes, how do sales ever happen?
One answer is to remind us that sales do in fact happen, even if most expected deals fall through, something one might predict knowing the significant psychological roadblocks placed before us. (30% win rate usually indicates success.)
A second answer, however, is emotions.
According to Robert H. Frank, author of “Passions Within Reason, The Strategic Role of Emotions”, a key role of emotions is to provide a regulating mechanism to prevent us from discounting future rewards so haphazardly they hinder our long term success or goal attainment.
For example, an illustration from Frank is the connection between love and marriage. Here, the underlying ritual involves exchanging our freedom in the hopes of living a long and happy life with one partner.
Because there are a variety of reasons one might be wary of tying the knot the experience of “cold feet”occurs. Yet, instead of always falling victim, emotions arrive to help us take the plunge. Feelings of love for our partner, sadness at the thought of hurting them, and fear of embarrassment for not meeting the expectations of our friends and loved ones.
So now back to sales. How should we grapple with this interesting and impactful psychological quirk?
1. Acknowledge that we are built to discount long term gains when compared to immediate ones.
2. Recognize that emotions are not our enemy when it comes to decisions, but are in fact our friends.
For instance, many view emotions as fight-or-flight impulses causing rash decisions against our own interests. The reality is emotions as self-destructing impulses are the exception – not the rule. Far more often emotions serve in quiet yet consistent ways to help us achieve the best outcomes for ourselves.
3. Finally, awareness that the psychology of discounting rewards is active in sales when rewards are delayed.
In these instances we must go above and beyond to ensure rewards are outlined in a clear and compelling way, and have the conversations needed to help our prospect understand how they impact important goals, both now and far into the future.