The surprising truth about what closes deals: Insights from 2.5m sales conversations | Matt Dixon

Matt’s background (00:00:00)

• Collected and studied 2.5 million sales calls using a machine learning platform.
• Key insight: Most deals are lost not to competition but to indecision stemming from fear of failure.
• Dialing up the fear of missing out (FOMO) backfires 87% of the time.
• Customers are not afraid of missing out, they are afraid of messing up.
• To improve the sales process, use the JOLT method:
  • Judge the level of indecision.
  • Offer a recommendation.
  • Limit the exploration.
  • Take some risk off the table.
• Most salespeople try to figure out what keeps the customer up at night.
• The Challenger approach shows the customer what should be keeping them up at night, a risk they are unaware of.

The research behind Matt’s books (00:01:57)

• Conducted an in-depth survey with 6,000 salespeople and collected performance data.
• The research was global, cross-industry, and included different types and sizes of companies.
• The research has been ongoing and has collected data on approximately a quarter million salespeople worldwide.
• The research for "The Challenger Sale" was published in 2011.
• The research for "The Jolt Effect" was started in March 2020.
• Collected 2.5 million sales calls and studied them with a machine learning platform.
• The research was conducted during the pandemic when sales processes shifted to virtual platforms.
• The research involved several dozen companies across industries and around the world.

Insights from The JOLT Effect (00:06:08)

• The JOLT Effect is based on 2.5 million sales conversations.
• The book provides insights into why customers make decisions and what the best salespeople do differently to avoid losing deals.
• 40-60% of qualified sales opportunities end with no decision from the customer.
• Customers go through the evaluation process and express interest in buying but then ghost the salesperson.
• This is puzzling because it wastes the time of both the customer and the salesperson.
• The best salespeople are able to avoid losing deals to indecision by:
  • Helping customers overcome their fear of making a mistake.
  • Providing customers with the information they need to make a decision.
  • Building trust and rapport with customers.

FOMO vs. FOMU (00:10:15)

• Customers often hesitate between expressing intent to move forward and taking action due to fear of failure, not status quo bias.
• Tactics like emphasizing benefits, creating urgency, or offering discounts backfire with customers who have already expressed intent to move forward.
• Salespeople should focus on understanding and addressing customers' concerns, rather than using challenging tactics.
• The omission bias, fear of being blamed for losses, is more powerful than status quo bias in causing indecision.
• Scare tactics focused on missing out (FOMO) are less effective than addressing customers' fear of messing up (FOMO).
• The key to closing deals is understanding the customer's needs and providing a solution that addresses those needs, not being the most persuasive or having the best product.
• Salespeople should focus on building trust and rapport with the customer, rather than trying to sell them something they don't need.

An example of selling software (00:18:18)

• Customers have three main fears when making purchasing decisions: making the wrong choice, learning something negative about the chosen vendor after the contract is signed, and not seeing the expected return on investment (ROI).
• Customers are more anxious about buying new software due to the risk of making the wrong choice, the amount of information available, and the higher cost of enterprise solutions.
• Startups face less customer anxiety compared to established companies because they offer fewer choices, have less coverage, and lower investment.
• Customers' fear of negative outcomes and uncertainty often prevent them from making decisions, even when the benefits of a product are clear.

The JOLT method Step 1: Judge their level of indecision (00:26:04)

• Indecision is a significant barrier in sales, affecting 87% of buyers.
• Buyers often overestimate their decisiveness, a phenomenon known as the Dunning-Kruger effect.
• Customers may be reluctant to discuss their indecisiveness due to embarrassment.
• Classic open-ended questions may not be effective in uncovering indecision.
• Provide a clear recommendation based on the customer's situation and needs.
• Tailor the recommendation to address the customer's specific concerns and objections.
• Be confident and assertive in presenting the recommendation.
• Encourage the customer to trust the seller's expertise and limit further research.
• Provide evidence and data to support the recommendation and build credibility.
• Gently push the customer towards making a decision by highlighting the benefits of taking action.
• Reduce the customer's perceived risk by offering guarantees, warranties, or other risk-mitigation strategies.
• Address the customer's concerns and objections head-on, providing reassurance and building trust.
• Emphasize the potential negative consequences of inaction or delay.
• Create a sense of security and support for the customer throughout the buying process.
• Provide ongoing communication and support to ensure the customer feels confident in their decision.
• Continuously monitor the customer's satisfaction and address any issues or concerns promptly.

The “pings and echoes” technique (00:29:41)

• High-performing salespeople use the "pings and echoes" technique to detect and address customer concerns without directly asking them.
• This helps uncover whether customers are overwhelmed with options, still researching, or have doubts about the product's value.
• If a customer is struggling to make a decision, identify the underlying concern or objection, such as ROI, believability, or execution gaps.
• Address the specific concern or objection directly and provide reassurance or solutions to build confidence and overcome the customer's hesitation.

Step 2: Offer a recommendation (00:34:49)

• Offering options is a double-edged sword.
• Too many choices can overwhelm customers and lead to negative outcomes.
• Salespeople should shift from asking customers what they want to recommending what they should do.
• Customers often look for someone to share the risk and burden of making a bad decision.
• Providing recommendations and guidance can increase the chances of getting a decision from the customer.

Step 3: Limit the exploration (00:38:36)

• Customers often do endless research because they don't want to be surprised and don't trust salespeople to be forthcoming.
• To build trust, salespeople should be brutally transparent with customers about potential drawbacks or limitations of their products or services.
• Salespeople should demonstrate expertise by offering valuable insights and guidance, rather than relying solely on subject matter experts.
• The final step in the Challenger sale is to take control of the sales process by guiding the customer towards a decision.
• Salespeople should use their expertise to help customers understand the risks and rewards of different options and make an informed decision.
• By taking control, salespeople can differentiate themselves from competitors and increase their chances of closing deals.

Step 4: Take risk off the table (00:41:43)

• Great salespeople manage customer expectations by under-promising and over-delivering.
• To instill confidence, establish safety net options like involving the implementation team or adding professional services support.
• Create opt-out clauses or specialized contracts to reduce the customer's perceived risk.
• Focus on alleviating the customer's concerns about making a mistake rather than solely highlighting product benefits.

When to hit the pause button with a customer (00:45:58)

• When customers get cold feet late in the sales process, avoid immediately using fear-based tactics like FOMO or price-based urgency drivers.
• If the customer is already convinced that the status quo is suboptimal and has the intent to purchase, using fear-based tactics can make the situation worse.
• Instead, hit the pause button and reflect on whether the customer is indifferent or indecisive. These are two different things and require different approaches.

Insights from The Challenger Sale (00:47:27)

• The Challenger Sale's main idea is that the best salespeople challenge their prospects' thinking and teach them about the market and what they should be doing, rather than just helping them get what they want.
• Challenger salespeople show customers what should be keeping them up at night, such as risks they may not be aware of, and how other customers have benefited from the solution.
• This approach is not about free consulting, but about creating a need for the salesperson's unique benefits by reframing the customer's understanding of the world.

An example of a challenger sale (00:49:07)

• DenSply developed a lightweight, ergonomic, cordless dental wand but initially struggled to convince dentists to pay a premium for it due to its higher cost compared to traditional wands.
• DenSply discovered a connection between heavy wands and absenteeism, injuries, and high costs for dental offices due to hygienists' repetitive motions and awkward postures.
• By reframing their sales pitch to focus on the cost savings and benefits related to hygienist well-being and practice efficiency, DenSply successfully convinced dentists to invest in the new wand.
• To convince customers to pay a premium, companies should:
  • Start with an insight that the customer may not be aware of.
  • Help the customer learn about future problems they need to know about.
  • Transition to how their product or service can solve the customer's problem.
  • Focus on what makes their company unique and sets them apart from competitors.

Where to find Matt (00:55:23)

• Matt Dixon can be found on LinkedIn.
• He is active on LinkedIn and welcomes connection requests.
• Visit jolt effect.com for more information about the jolt effect methodology, workshops, training, and free tools.
• His books are available at major online retailers.
• The podcast can be subscribed to on Apple Podcasts, Spotify, or your favorite podcast app.
• Ratings and reviews are appreciated as they help other listeners find the podcast.
• Past episodes and more information about the show can be found at lennyspodcast.com.