Bias as Usual: Beware of Representativeness

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Are you an ideal salesperson? Do you possess the right habits and personality traits? Before you critique yourself, consider you may be battling an unseen enemy- representativeness

Consider the following hypothetical scenario: 
You’ve just learned your getting a new next-door neighbor. All you know is she will be one of two salespeople.  Salesperson A drives a BMW.  Salesperson B drives a BMW, has a confident personality, and travels extensively for work. Who is more likely to be your new neighbor, person A or person B?  If you chose person B you would be… (drum roll please) wrong!

How is this possible?  By definition, people like Salesperson B are a subset of people like Salesperson A.  Therefore, the group of people who comprise all BMW-driving salespeople has to be bigger than those with the same car who are also self-assured road warriors.  This means the likelihood of your neighbor being Salesperson A is higher.   The reason it’s so easy to chose Salesperson B is because, in our minds, the extra details provided make them more representative of a typical sales rep.

According to Daniel Kahneman, author of Thinking Fast and Slow, representativeness is a mental shortcut. We use it to judge probability by looking for patterns.  As a result, it’s easier to believe the validity of comparisons between reps when one meets our stereotype of the ideal rep and the other doesn’t.   

In real life, high performing salespeople are a topic of great interest. Leaders, often set out to find what makes these overachievers unique. In doing so they often mistakenly settle on the traits they expected them already to have. And, rarely do they look any further. Rushing to judgement, leaders may neglect factors, like the local economic climate, that can have a strong influence on sales.

As we know, the comparing of salespeople is serious business. For reps themselves, it can determine not only their income but their overall job security. Given the stakes, sales reps and leaders both need to slow their thinking and look deeper into the validity of their measurements.  It’s time to value representatives over mere representativeness.

Meaning2work.com

Bias As Usual: Errors in Sample Size

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In the articles to follow, we’ll explore cognitive biases. These are the mental shortcuts we all occasionally use to make sense of the flood of information we face everyday. First up: Sample Size.

Imagine, for a moment, you are the lowest performer on a sales team. Complete fiction, I know. Now imagine that, for some reason, you enjoy wearing wearing khakis and polos to work while the rest of your team all wear suits. Is it fair to conclude that your lack of formality (and taste?) is the reason for your lower sales results?

Not so fast! Before we go explaining how formal clothing enhances credibility, there’s something more important to consider. Sample size. Exactly how many people are on your sales team?

According to Sociology expert, Daniel Kahneman, small sample sizes lend themselves to extreme results. In his book Thinking Fast and Slow, he and a group of experts questioned the belief that certain small towns have high disease rates due to toxic waste.

The result? The small sample size of residents in each town made extremely high or low disease prevalence more likely. This doesn’t, of course, prove industrial pollution to be harmless. It instead invalidates the data as proof that toxic waste was the cause of disease. Perhaps, if the towns studied were larger, the researchers’ conclusion may have been different.

Therefore, we in sales should be cautious about the quick interpretations we make of both success and failure. For example, it may neither be fair or helpful to compare the results of one sales rep with several medium-sized accounts to another who manages one or two large, make or break clients.

Ultimately, if we want to make better decisions, we must gather enough information and only then draw our conclusions.

Chris Pawar

Meaning2work.com

Non-Selling Activities: Let the Salespeople Sell!

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Why do we hire salespeople, at great effort and expense, and ask them to do non-selling work like completing reports?

“Because, aside from selling, that’s what we pay them to do,” is the response I’d expect from many a manager.  Still, would you hire a plumber for your sink and ask him to fix a ceiling fan? Even if he agreed, wouldn’t you expect him to get the plumbing work done first?

Just as your Spring lawn looks it’s best when your landscaper isn’t also doing your taxes, salespeople sell more when they’re focused on selling.

If we want salespeople to give us marketing or decision support data, we should pay them for it.  In lieu of money, this can mean lowered sales expectations or increased time off.

Seriously, don’t we have to pay for most goods and services of value?  Non-selling activities take away from what salespeople are hired to do, sell. 

Sincerely,

Meaning2work.com

Sales Words – Golden Oasis

Good numbers make everything better! Don’t they? In most companies, sales performance trumps all other metrics. What I call the Golden Oasis is a version of the Halo Effect that applies to sales people when they look excellent on paper. Their advice is sought by other sales people and management alike. They seemingly can do no wrong.

Experiencing this phenomenon can make you, the sales person, give yourself too much credit. You must be an expert because the results say so! Don’t they? To the dismay of many, this luxurious state of mind is temporary. The loss of a big customer, a change in market conditions, or a price hike are just some of the circumstances that may cause a sales rep’s golden oasis to evaporate.

Can you think of a time when you were fooled into believing your own greatness? I welcome your comments!

Sincerely,
Meaning2work

You’ll Find Me in Cell Block C4 – Spreadsheets and Sales

Yes, they’re an excellent tool for analyzing data. Yes, they give individuals and companies the ability to store large amounts of information, perform calculations, and even spot trends. Yes, our employers probabaly wouldn’t be able to pay our paychecks without them. I am, of course, referring to spreadsheets.

No, spreadsheets don’t hurt people. People do. At some point, we went from using them as tools to inform decision making, to tools that actually make decisions. “I’ll spend the majority of my time with my top 20% of customers”, we might say. “We’ll fire the bottom 10% of the salesforce,” management might say. Like a sophisticated Magic 8 Ball toy, a formula plugged into a spreadsheet spits out a course of action for us and we dutily follow it.

Like all computer programs, spreadsheets cannot function without input. That’s where you and I come in. We take one of the outputs of our work, (ie. net sales, market share, etc.) and feed to the spreadsheet so it can work it’s magic. Unfortunately, magic has yet to be proven to be anything more than artistic, entertaining, trickery. Here are some problems with the way we use spreadsheets in sales. Feel free to add more in the comments section of this post.

Spreadsheets Can De-humanize Sales people and Customers

We humans want to be treated as individuals. Considering only a few data points takes away any unique or relevant details regarding the individual. Intellectually, we all know this but, in practice, we forget it very quickly. According to Cal Newport in his book “Deep Work”, it is scientifically impossible for the human brain to truly multitask. Instead, our focus switches quickly between two or more tasks giving us the illusion of doing more than one thing at once. Therefore, when analyzing a sales report, it is impossible to scrutinize the data and consider the person attached to it at the same time.

To this day, I have my personal breakthroughs quickly reduced to rubble at the hands of a spreadsheet. In response to a record week of sales, I am rewarded with a report sharing how many reps around the country had the same or more sales than I did. Customers don’t fare much better either. We don’t throw reports in their faces. Instead, we treat them only as well as their business potential dictiates. Why? That’s what a formula on our spreadsheet tell us to do.

Spreadsheets Facilitate False Assumptions

Where does data come from? The past. According to Nicholas Nassim Taleb in his book, “Fooled By Randomness”, one of the biggest mistakes humans make when looking at history is assuming everything is due to cause and effect and not randomness. He skillfully points out that even major historical events are the result of random factors. For example, what if Adolph Hitler was born a girl? Given the restrictions on women in Germany at the time, is there any way she could have risen to power, let alone attempted to take over the world? In a more practical sense, managers often assume reps are either unskilled or lazy when sales are low.

Don’t get me started on charts either! I like the visual representation they provide in describing the past. It’s what lies beyond the trend line the spreadsheet never tells you. As someone who has won and lost on the stock market, I can tell you that no trendline EVER guarantees what will happen in the future. When your personal sales trend line is pointing down, you are looking at a picture of the past. You and I only have influence on the future.

Spreadsheets Can Hide Information

Anyone who has used Excel can show you how easy it is to hide rows or columns of data. Once the information is out of sight, it’s much easier to ignore. Often its the data that’s NOT recorded in the first place that is relevant. Try developing a list of key customers without looking at geography and you may miss many smaller targets who have high potential because of some geographic factor.

I had a friend who was a judge tell me once that he did not like video-taped testimony. He felt something could be happening off camera that could be influencing the witness. Spreadsheets, have the same effect. They shout, “Hey look at this information here!” All the while, our focus is potentially taken away from something else that could be more relevant.

Spreadsheets Often Oversimplify the Real World

As sophisticated as we think we are when we use them, spreadsheets force us to limit the way we see the world. Why? Our brains are not wired to take in massive amounts of information at once. Therefore we use spreadsheets to help find that one crucial piece of data or trend. Again, it’s the ‘Hey, look over here’ effect. The dumbing down of our approach makes us susceptible to confirmation bias. This is when we only notice data that confirms what we already think. Daniel Kahneman explores this and many other cognitive biases in his book “Thinking Fast and Slow”.

One mostly uh-helpful excercise I’ve had to perform many times in my career is the “Hot, Warm, and Cold” list. “Hot” customers are those we think are close to buying. “Warm” need a little more work and “Cold” are not interested at all in my product. These designations fit nicely into a spreadsheet where they can be sorted. Other than for time management, this information provides little value in advancing sales cycles. Calling someone a “Hot” prospect does not tell me what I need to do next to insure the sale gets closed. Calling someone a “Cold” prospect doesn’t guarantee that I’m not losing business by ignoring them either.

Spreadsheets are no more to blame for these problems than a baby is for a dirty diaper. The real problem is the power we give them – the power to make decisions for us and make us less accountable. Stop confining yourself, your employees, and your customers to numbers in a cell and you just may see your world open up!

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Regards,

Meaning2work

9.13.18 Update:
To date, this my-most viewed post. If you have a second, please leave a quick comment below and tell me just what drew you to read it. Was it the title? What did you think of the content? All opinions are welcome!

Ps. I’d like to put a plug in for Seth Godin’s “Akimbo” podcast. I love his thoughtful and straightforward tone. His thoughts often inspire mine. To check it out on iTunes click here or search for “Akimbo” in your podcast player.
To check out Nassim Nicholas Taleb’s “Fooled By Randomness” on Amazon, click here.
To check out Cal Newport’s “Deep Work” on Amazon, click here.
To check out Daniel Kaheneman’s “Thinking Fast and Slow” on Amazon, click here.