Don’t fall victim to the Sunk Cost Fallacy and spend time with a prospect that will never buy, simply because you invested a lot of time, money, energy, and resources into getting that business.
“I’m definitely closing this week,” he said forecasting the same deal for the fourth time in a row.
“Alright, but this is your last chance. After this you can’t keep pursuing this,” the manager shot back.
The sales rep spent 10 weeks driving more than 6 hours round trip for a single prospect. This was a big deal. In fact, it was one of his only deals in the pipeline.
He spent countless hours in the office perfecting his proposal, hundreds of dollars on baked treats and clever gifts trying to push it over the finish line.
Next steps were few and far between. Getting information from the prospect was a slog which required tons of voicemails and emails just to get a response.
Every week he would hop in his car to drive into another state, missing prime selling hours, just to have a 30-minute meeting with another revised proposal.
After the third time promising to close this deal the sales manager said, “Why do you keep pursuing this?”
He responded, “I’ve spent so much time with this deal there’s no way I won’t close it.”
The sales manager knew the sales rep really meant that he spent so much effort and time that he couldn’t let the deal go. Letting go would have meant the several months leading up to that point would have been a waste.
The Fundamental Mistake
Imagine you buy a stock in a company because you read a cool story in the newspaper. Excited about the company you spend months researching the company and decide that you really love their vision.
Suddenly, a story breaks that the company’s CEO is leaving and there will be a change in management. The stock plummets and instead of selling off your shares while the losses are small you hold onto them because you don’t want all the research you did to go to waste.
Think about that. The research has already been done. The time has already been spent. You will never get that back.
Instead of cutting your losses, you held on to try and not waste the time that is already gone. This is known as the Sunk Cost Fallacy.
What’s even worse — many people will actually double down on their investment, throwing good money after bad.
Know When to Fold ‘em
Becoming emotionally attached to a deal is normal, everyone does it, and everyone will do it, it is a fact of life in sales.
However, the best way to avoid this trap is to keep yourself in check.
If a prospect is eagerly agreeing to micro-commitments, then you are on the right path.
However, when a prospect is not agreeing to micro-commitments or you are exerting a lot of energy to move them to the next step, it is time to evaluate either your strategy or your willingness to continue pursuing the deal.
For example, if a prospect cancels an initial meeting more than once it is not worth prying the door open at the cost of other opportunities.
If a prospect wants a proposal without allowing you to do proper discovery, then it’s time to walk away.
There are certain micro-commitments along the way that would help you determine if you should continue working with a prospect. Here’s how to test the temperature of the deal.
5 Ways to Test Your Deal
Ask for commitment to a next meeting
Ask for a facility tour
Ask for an agreement to send all necessary information by a set date
Ask for a follow up meeting for a proposal
Are they showing up to scheduled calls (Zoom/Phone)?
These five micro-commitments, also known as inflection points, are easy indicators of whether or not you should spend time with that prospect. When you aren’t continually testing the deal, the probability of wasting valuable time increases exponentially.
Along your process, especially when employing these tests, you will notice that your probability of winning is very high if they commit to a particular next step. But, if they do not agree to a micro-commitment then your deal is probably dead.
As a sales professional, it is vital you know at which points your probability of winning is highest. Example: If you are able to close deals at an 80% rate after a facility tour then that is your primary inflection point.
A prospect who is not willing to give you a tour is just not that into you.
Don’t spend time on deals that will never close.
About the author
Jeb Blount, Jr.
Jeb Blount, Jr. is a graduate of Berry College with a degree in Political…