False consensus effect, also known as consensus bias, causes people to “see their own behavioral choices and judgments as relatively common and appropriate to existing circumstances.”*
In other words, this pervasive cognitive bias leads people to believe that their own opinions, beliefs, and attributes are widespread in the general population.
Ok, but why write about consensus bias in a pricing article? Because salespeople are humans, and humans are vulnerable to the consensus effect: everyone thinks like I think. Or more specifically, everyone buys how I buy.
For example, if a salesperson is very price-sensitive in their own buying behavior, they might assume that their prospects and customers share the same level of price sensitivity.
“I shop around, so of course my customers want to get other quotes.”
“I want to make sure I get a good deal, so of course my customers will press on me for a lower price.”
Maybe. Maybe not. When customers apply these tactics to get a better deal, a price-sensitive salesperson is vulnerable to giving in to these objections because the objection makes sense to them.
When a seller who is very price-conscious in their personal life falls prey to consensus bias, ascribing outsized price sensitivity to their customers, a lot of damage can be done:
- Underpricing Products or Services: Believing that every customer values low prices above all else may lead a salesperson to underprice proposals and quotes, leaving money on the table.
- Impacting Negotiations: During negotiations, a salesperson might concede on price points too quickly or might not advocate strongly enough for the value their solution provides.
- Misinterpreting Objections: If a prospect raises objections, a salesperson might assume it’s price-related and offer discounts, even if the prospect’s concerns are about non-price factors.
- Overemphasizing Price in Sales Pitches: A salesperson who believes price is a primary concern may focus their pitch too heavily on price, underemphasizing benefits the customer may value more or missing opportunities to position their offering as a premium or value-added choice.
- Narrowing Target Market: Believing that only price-sensitive customers are worth pursuing, the salesperson might ignore or overlook segments of the market that are willing to pay more for premium features, better service, or other differentiating factors.
- Misreading the Competition: The salesperson might focus too much on competing on price and not enough on other areas of competitive advantage.
So, are salespeople who are frugal, careful shoppers in their personal lives doomed to fail as salespeople? Absolutely not.
To overcome it, follow these four steps:
- Awareness: Explore your own buying behaviors and beliefs. What is “the right way” to buy? Understanding that you may map these beliefs onto your customers can equip you to identify and counteract this bias in action.
- Challenge Assumptions: Before every sales interaction, question your assumptions about the customer’s price sensitivity. Are those assumptions based on facts or biases?
- Active Listening: Truly listen to your customer to avoid succumbing to consensus bias. You’ll base your strategies on what’s said, rather than preconceived notions.
- Seek Feedback: Regularly ask colleagues or managers for feedback on your progress. They can help point out where consensus bias might have influenced your decisions.
Remember, overcoming biases isn’t about achieving perfection, but about refining your approach for better outcomes. As with so much of sales success, it’s not just about skillset, it’s about mindset.
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