Episode 60 of Yes, and Marketing
If you’re selling to your existing customers the same way you’re selling to prospects, you’re going to fail. (And you might actually sell them on your competition instead!)
On this episode, Tim Riesterer joins Steve to tell you why and to explain the key takeaways from his book on the subject, The Expansion Sale. Tim’s strategies are backed by studies in neuroscience and behavioral economics from his work as Chief Visionary at B2B Decision Labs, where he brings science-backed strategies to B2B sellers.
Skim our summary of the highlights or listen to the full episode above for a litany of tactical insights:
- How to capitalize on the incumbent advantage with your existing customers
- The 4 psychological factors of status quo bias (and what they mean for both conversions and upsells)
- The 3 moments that matter most in sales
- Why popular myths like “Whoever speaks first in a negotiation loses” and “Your slide deck is too long” are wrong
📛 Name: Tim Riesterer
💥 What he does: Chief Visionary at B2B Decision Labs, Chief Strategy Officer at Corporate Visions, author, and keynote speaker.
💡 Get smart: “The incumbent advantage is documenting impact and documenting investment.”
Mythbusters #1: How to win a negotiation
“There used to be a history of people talking about, ‘He or she who speaks first in a negotiation loses.’ And the reality is, it’s a concept called first offers. And what we’ve been able to discover is whoever puts the first offer out, creates the anchor.
So if you don’t speak first, there’s a good chance your customer is going to anchor you and they aren’t going to anchor you high, and now you’re trying to fight your way back up and claw that back. And the interesting thing is if you make the first offer, you have a better shot—even though you might have to concede a little bit, you’re still going to land higher than where you would have clawed yourself up from if you let the customer make the first offer and anchor you. First offer equals anchoring. It allows you to set a high target. So everybody who has said, ‘He or she who speaks first loses,’ has been wrong.”
Mythbusters #2: The best slide deck
“Another [myth] is ‘Less is more’ in the era of our virtual presentations. Everybody’s like, ‘That slide deck’s too long, and why do you have those animations? Get rid of them.’ The truth is, we’ve discovered you need more motion—not emotion, more motion—more animation, more things happening, to keep people engaged and focused. We have tested that decks that are 2x and 3x as long as others are more effective, more memorable, more motivating.”
Tell the customer’s story, not yours
“I found this dissonance between the story that the customer lives in, versus the story the company wants to tell. …My premise was the customer lived in their story. We live in ours. Let’s not force them to live in ours. Let’s find a way to live in theirs and that will improve our effectiveness.”
Write down 3 numbers: 103, 12, and 88
“There was a study of online poker and they looked at 103 million hands of online poker, so that’s the 103. The number 12 is, they discovered that only 12% of the time did the best hand win, and the third number—88–-88% of the time, the best player wins. And what they said is, poker is not a game of luck. Poker is a game of skill, and the skill is to tell a certain story with the way you bluff, the way you bet, just the things you do and understanding the psychology of the moment you’re in. And you can outplay the best hand many times over.
And that’s the way it goes in sales. We think we just need that next feature, that next benefit or that next offer or something that’ll crack open this amazing window of opportunity—that if it was that big wouldn’t even require a salesperson. It just doesn’t exist. …Really the last bastion of competitive differentiation is someone with their lips moving, telling a better story. So the best player does win in sales and marketing just like in poker. It’s a combination of understanding the psychology and telling the right story with the right skill.”
The enemy isn’t the competition—it’s the status quo
“What we discovered is that on average, 60 to 80% of qualified pipeline went into ‘no decision’ and stuck with status quo. And then it was very clear that the enemy wasn’t just gaining access, the enemy was the status quo. And not the status quo meaning that competitor who was in there—it was just people’s bias towards not changing. And that the real job of a seller in new customer acquisition mode was to be a change agent, which meant you had to disrupt and defeat the status quo bias before you could convince them that you were different and better.”
The perception of value lies in contrast
“Every value proposition was all about this gain and this value—this benefit, this upside—and now they started to realize, ‘Holy cow, nobody cares about that yet. They’re like, yeah, that gain is interesting, but the change might kill me. It’s not perfect where I am today, but I’m not dead yet,’ you know?
…And so we discovered what selling really was is, you had to create the impetus for a change management project, and that meant showing them the loss to be avoided. It meant showing clear contrast between what they’re doing today versus tomorrow, because. The perception of value lives in that contrast, it doesn’t live in your solution. It lives in the contrast between the current state and the future state.”
3 moments that matter most in sales
“There are specific value moments that you have to be great at. One value moment is that initial one to create the disruption. The next one is how do you quantify that and build the logical part of the business case effectively to justify the emotional one, and that we call elevate value because you had to elevate it to the executive level to create the energy and emotion around change. …And then capture value is how you deal with purchasing and procurement, because somebody is going to want to negotiate this no matter how much everybody else liked it. So create value, elevate value, capture value: the three value conversations and the distinct value moments in any B2B decision.”
Price isn’t about budget
“Price is not a budget problem. Pricing is a contrast agent. They’re like, ‘Everything seems the same, so if somebody gets a lower price, I’m going to take that because it helped me make a decision.’ And they will tell you it’s a budget issue, but the reality is, is they’re really just trying to create some justifiable contrast between what appear to be similar, hard-to-discern, difficult-to-select competing vendors.”
How to hold onto your incumbent advantage
“The incumbent advantage is documenting impact and documenting investment.
Documenting impact is the anchoring effect. You anchor them on this positive feeling that they are on a trajectory and it’s moving in the right direction, and who wants to stop momentum and reconsider everything? Nobody’s going to step in front of that train. And then psychologically, it also kind of implies there’s a good chance there’s more where that’s coming from.
…But the one that’s most interesting is documenting the investment they’ve made and the effort that’s been made. And that comes back to one of my favorites: sunk costs. And so what happens here? They made a decision for you. They probably had to do some onboarding. They had to do some systems integration, etc. etc. …Now the thought is, ‘Do I want to do that again? Do I want to go through that whole process of examining all my options, doing due diligence on all the vendors, looking at all kinds of pilots and proof points, and then getting everybody onboarded and building the consensus that I got to build?’
You’re helping them see that they’ve come so far, both in impact and investment, and that the risk is if they change now, they might lose on both accounts.”
“Human decision making is emotion wrapped in logic, and you need to push both buttons—not just one or not just the other.”
“In a consumer purchase, you make a bad decision and usually you live with a little personal regret. In a business decision, you live with anticipated blame.”
“The incumbent advantage is documenting impact and documenting investment.”
“People won’t take the risk of change to get something that they believe is more or less the same, so they need contrast to make a decision.”