In a recent post on Seth’s Blog, Seth explains that we’re all irrational and describes how around 40% of auctions on e-bay sell for greater than the buy it now price.
In the cold light of day, it is irrational. But there’s a reason why this happens: in an auction of this nature, whether it’s on e-bay or not, once you’ve bid and you’re winning, you start to feel like you own the item in question. The longer you stay winning the bid, the more you feel like you own it. It belongs to you.
Next, someone bids a little more and you’re not leading: someone is trying to steal from you. Something that you feel that you already own. So you bid a little more to stop the thief. Even if that means you bid more than you wanted to pay, or even if it’s more than the ‘buy it now price’.
The more you feel attached to the item, the easier the sale is and the more you’ll pay.
It’s the same when you buy a house. You go and view a stranger’s house and it’s always more appealing if it’s full of furniture rather than empty. Why? The same reason: you can imagine living here, somewhere in your mind you can imagine your furniture in here, your dog sleeping in the kitchen. Would you buy a friend’s home? Probably not, because if they’d lived there a long time, it would always feel like their home, not yours.
What works better if you’re selling a car? Seeing it sitting on your driveway, or in a showroom? Better with your family in it, or on your own? Better to have a friend with you who’s envious of the purchase, or alone?
If you’re demonstrating a software application, try and do it with some of your prospect’s data. If you can’t manage that, try something from their vertical market, at least. The prospect will start to feel like it’s their application already. Better still, install it and let them try it out, assuming you’re confident that the software is up to the job, of course. The customer will start to feel like they own the software.
I think of this process as an increase in stakeholding. The higher the stake you have in the deal, the harder it is to let it go, and the more you’ll increase the stakes to avoid losing what you already committed.