How cognitive biases influence sales (and why this blog is biased)

This list of cognitive biases in sales is biased. But isn't everything?

We humans believe ourselves to be free and rational thinkers, but our minds keep tricking us into specific thinking patterns. We don't even realize it when it's happening. There's a reason for it—it's evolution's way of helping us make rapid judgment calls. In the wild, a second of hesitation could have meant the difference between life and death. Now we're separated from that life by millennia, but in evolutionary terms, it's too short a timeframe for the human brain to rewire itself and adjust to its new reality.

Some biases (also known as heuristics) can be harmless—for example, we're far likelier to spend a coin than its equivalent currency note. But when they affect the performance of sales teams and your business's bottom line, it's time to take a closer look and adopt some corrective measures.

Identifying biases

Before we get into cognitive biases in sales, we want to tell you how this list is biased. Today, we don't just suffer from cognitive biases. Since we base much of what we do on information from the internet (like this blog), many of our thoughts are shaped by algorithmic biases, and how search engines filter and prioritize information. And since most people don't go past page 1 of their search engines, the information there tends to have an outsized impact.

We based this blog on the most frequently mentioned cognitive biases for the search "cognitive biases in sales" on page 1 of Google. We omitted links 6, 7, 9, and 10 because they were only partially relevant to the topic. Here's the data.

As you can see, the biases that were included the most were ambiguity bias, the bandwagon effect, and confirmation bias.

Does that mean these are the most impactful heuristics in the sales field? Let's explore these biases first, and we shall see.

Bias 1: The ambiguity effect

The proverb "the known devil is better than an unknown angel," captures the essence of this psychological effect. We have a strong aversion to uncertainty. It's why some people remain in jobs they don't like and continue to live in places they want to move out of. Even in a situation with unsatisfactory outcomes, individuals often choose familiarity over the complete uncertainty that comes with change. It gives them a feeling of control.

When talking to prospects, the ambiguity bias poses a significant mental barrier to overcome for sales teams. The prospect might be unfamiliar with various aspects of your offering. If you're offering a radical solution to a pain point that they hadn't considered addressing, the uncertainty only increases—or they may already use a competitor's products and feel that the risks of switching may outweigh the rewards.

Unfamiliarity with your company can be a strong inhibiting factor, and ambiguity bias is especially tough on new entrants. If you're a young unknown company, your prospect's subconscious mind is scanning for excuses to reject you. So how do you tackle this?

Solution: Hitch your unknown to the known

Your company may not be well-known. But can you use the credibility of others to fuel your own? If the customer is unaware of you, having worked with well-known brands can work in your favor. This is why brands display their "customers" page prominently on their websites, and it significantly helps sales teams. Data points like customer count, products sold, or awards won can help B2C businesses similarly.

You also need to understand your prospects and anticipate what their needs, pain points, and knowledge gaps might be. Remember that unnecessary data and fluff can work against you. Beyond a certain threshold, details start to overwhelm prospects and might produce the ambiguity effect all over again. Information is most effective when it's clear and relevant—it's the best weapon against uncertainty.

Case studies are another common but effective tool salespeople use to assure prospects of their reliability and reputation. A good case study can answer key questions in the mind of the prospect, including:

• What results has the company achieved?
• Are they ready to configure a solution that addresses my pain points?
• Is the offering suited to my industry and my needs?

You need to make your prospects confident about choosing you and make them feel that their trust is not based on a whim but on a solid rationale.

Bias 2: The bandwagon effect

While this bias is referred to as the "bandwagon effect" in psychology, many people are already familiar with this human tendency by the term "herd mentality."

Our decisions are influenced by what others around us are doing. A need to conform is hardwired into our psyches. When you go against the grain, you call attention to yourself and feel pressure to justify your choice.

Is your brand on the right or wrong side of the effect? If you're a well-known brand and have established yourself as a market leader, this cognitive bias is working in your favor, not against you. Brand equity at its peak simply leverages the bandwagon effect for maximum (positive) impact and makes the job easier for salespeople. If you're on the wrong side, however, you need to work extra hard and present narratives that frame you as the right choice.

Solution: Give them a herd to follow and well-travelled paths to walk on

Nobody is thrilled at the thought of being a guinea pig for a brand new product or service. This is why sales teams should leverage social proof to demonstrate to prospects that others have used your offering and experienced positive results. Use statistics to showcase product or service usage and leverage testimonials to increase trust.

Highlighting the most popular plan for your service or a popular item in your portfolio can flip a switch in the prospect's mind. This is because doing so implies that there are plenty of buyers. It paints a picture of high demand for your offerings and provides them with a herd—however real or imaginary—to follow.

Aligning your product pitch with wider trends in the industry landscape helps for the same reason. That way, you make your product part of a bigger story and a larger movement. It allows you to use the momentum of these shifts to usher the prospect into the fold.

If you're not the market leader, your sales teams must simultaneously dismantle the leader's brand mystique while convincing prospects why your brand is the right choice. Identify pain points that the market leader has not been able to address, and communicate how you're better positioned to solve those issues for them. Smaller companies that are starting out are often able to promise greater attention and levels of service than their large-scale competitors.

Bias 3: Confirmation bias

Many people become uncomfortable in discussions about cryptocurrency because it contradicts their fundamental notion of what monetary value is, how it's stored, and how it behaves. It activates the skeptical part of their minds. When the same people find articles that question the concept of cryptocurrency, they become happy. That's the confirmation bias at work.

People generally look for confirmation of their long-held beliefs and feel uncomfortable when faced with information that contradicts them. After all, an open mind is a lot to ask from a person who isn't really invested in you and is receiving a cold call or email. Confirmation bias is what drives polarization in politics—and it's what causes a customer to shut you out if your statements fly in the face of their worldview.

Solution: Switch your pitch based on who you're talking to

Use your intelligent CRM solution to gather information about your prospects, and then carry out any additional research you think is required.

Tailor your pitch to the customer persona you're addressing, and—if you have access to even more granular data—to the specific people you'll be talking to. Details about their backgrounds can help inform your pitch. A person's posts online on professional social networks can also give you an angle when you approach them.

Approach them with an angle that's aligned with their beliefs, rather than one that goes against them. If you flood them with information before doing research, you may risk contradicting their beliefs, and their confirmation bias will kick in. Some sales executives even leverage prospects' posts on professional social networks. They may bring up a particular post and describe how it resonated with them, establishing relatability, before seguing smoothly into their pitch.

Approach them with an angle that's aligned with their beliefs, rather than one that goes against them. If you flood them with information before doing research, you may risk contradicting their beliefs, and their confirmation bias will kick in. Some sales executives even leverage prospects' posts on professional social networks. They may bring up a particular post and describe how it resonated with them, establishing relatability, before seguing smoothly into their pitch.

What do Zoho's key salespeople think of the top 3 biases?

That brings us back to our list and its methodology. Did search engine results point us in the right direction, or was it algorithmic bias throwing us off? Does the weightage make sense?

Our top salespeople seem to agree that the bandwagon effect is one of the most relevant heuristics affecting sales outcomes. They felt that most of the biases mentioned in the broader list exert their influence at some point or the other in sales journeys. However, they were not convinced that the confirmation and ambiguity biases were among the top three impactful biases in the field. Other biases—such as the halo effect, the IKEA effect, and the mere exposure effect—had an equal, if not greater, impact in the field.

"Proofs of concept, demonstrations of product configurability, and information that addresses customer concerns go a long way in minimizing the bandwagon effect. However, the halo effect and the mere exposure effect also play significant roles in conversions. A positive first impression helps you start on the right foot with the prospect, and having your brand's reputation precede you accelerates the entire process." - Arjun Somasekar, Sales Director, HCM, Zoho

"While many of the biases are relevant, the anchoring effect and the bandwagon effect are obstacles that salespeople regularly encounter." - John Paulraj, Associate Director, Sales, Zoho

"The bandwagon effect is an ever-present factor in sales, at least as far as software products for enterprise customers are concerned. A top-down approach, targeting high-level stakeholders rather than technical teams, is vital in countering it. The IKEA effect can help sales teams when a key stakeholder turns into an evangelist and vocal champion of the solution. And confirmation bias can play a role even in a post-purchase scenario. Salespeople need to constantly reassure customers about their buying decision with positive reports, product accolades, and mentions." - Mack K Murthy, Regional Director, Sales, Zoho

A range of search engine optimization factors, industry peculiarities of the businesses posting the web pages, and the experiences of the authors writing them, played into the heuristics covered in the long list. Our blog is biased as a result. And, as you can see from the responses, it is neither perfect nor far from the truth. We will explore the other biases our salespeople connected with (such as the halo effect) in a separate blog.

Managing your biases

Over a hundred cognitive biases have been identified so far. Is it possible to be free of all of them? Certainly not. But being aware of the most pertinent biases in one's field and having frameworks ready to navigate them can boost one's performance and yield improvements in conversion rates.

It's not about how many biases you can reverse but how well you maneuver around the few biases you choose to focus on—even if that number is as low as one. Navigating cognitive biases in sales may also take different routes for different sales teams depending on their industries, their positions in their market, and other factors. Like all things rooted in the human mind, it's not easy to pin down. It's a journey of trial and error, but one that's well worth embarking on.

How do cognitive biases affect product management? Find out at our blog here.