Sunday, September 14, 2008

Selling using the Black Swan

I've been reading The Black Swan recently, an exciting book by Nassim Nicholas Taleb. In its essence, it reminds us how fooled we may be in the way we describe reality, history and future, and possibly it may assist us to make much better decisions and being ready for the unexpected.

Taleb sums this down as being due to two primary ways of assessing things in the human mind:

  • System 1 - the experiential. Rapid decisions according to experience and habit, the "gut feeling" and prejudice (in the true sense of the word)

  • System 2 - the cogitative. Thinking rationally and logically about things, involving experience but also assessing the influence of abstracts such as statistics
The problem is of course that the experiental system can frequently be wildly inaccurate but you don't notice it unless you knowingly bring in the cogitative system to actually assess things. Using the cogitative system is both energy consuming and tricky as you don't always know when it would make a difference. I myself experience that I everyday think a certain way about things, but when you stop to think about how you actually should act, sometimes it seems that your direction has drifted way off target.

Anyway, the book also recently taught me a little clever thing about sales, especially if you're selling something obscure. Essentially if consider the probability of a generic situation A, compared to a more specific situation B whichas a consequence will result in A happening. Even if mathematically the likelyhood of A must be greater than that of B (and thus A) since other situations than B may also cause A, if B feels rational and A more complicated, people will generally think experientally and inaccurately think that B feels much more probable than the complex situation A.

So how to use this in sales? Well, describing the situations you want your customers to use your product for will make them seem more likely. Maybe this is very basic to anyone in sales, but for me it was a realization. I'll make an example below, and as a hint, A as described above is someone stealing and your email password and abusing it because you don't use SSL and B is computer wiz-kid stealing your password while you're working in the same café:
Rather than just talking about the importance of using encrypted POP and SMTP email (that's just a matter of ticking a box in the email program) tell the story of the university computer security student who has a hobby to run a network sniffer and log anything interesting when he's working from cafés. Your email program is checking the email every few minutes and the young student captures your username and password every time. Every now and then he takes a look in the logs and checks out the people of which he's got the accounts of, emptying his nets so to say.

In a couple of months, he's soon gathered some thousand accounts and realizes that besides playing pranks on his clueless victims (they had really given him their passwords!), he can make a little bit of extra money from monitoring the gossip or business pages and matching them to his secret lists. It is easy for the guy to be very safe from getting caught, every now and then he will get his hands on some very valuable information, and the people he sells it to can create a world of trouble for the victims. And all this because they didn't use secure email connections. Please use secure email connections and don't become a victim yourself. Tick that one box, check it now.

5 comments:

nicolai said...

CJ,

Good analysis; makes me think of the classic "the innivators solution", where Christensson describes when building thego-to market and product positioning strategy for a technology, you need to think of which "job" the product/service solve for the user/customer. That way of reasoning changes the way products are built, marketed and sold.

Cheers,
Nicolai

Carl-Johan Sveningsson said...

Nicolai, when a guy as seasoned as you thinks my thought is good, I believe it, thanks!

Definitely, I agree, and it's imperative to stay in control of what your product is (except maybe for modern web2.0 stuff which can be very versatile), or clients will try to use the excellent spoon you're selling them as both knife and fork as well, ending up disappointed.

Actually I think the "job" analogy may be limping a little bit, many products survive even though they don't fill a defined existing need, they're just... good. And served an appealing enough use-case, everyone will still buy your product even if it involves the strangest logic - "smoke - it makes you sexy!"

nicolai said...

Hi,

Thanks! I do think the "job" analogy Christensson is using is not applied to an existing "job", but rather trying to think in terms of usage scenarios, and what situation is the intended customer in when the product is used.

It even applies to cigarettes as you mention,

The "job" of the cigarette is the whole situation where a cigarette is consumed, the tobacco industry really understands this.

If cigarettes were sold as many tech companies sell their products; they would sell it as "Our product cures you nicotine craving much quicker and more effective", but the customer is probably going for "looking sexy".

By using the "job" analogy approach you move away from the specs of the product and look at the customer and how your product might change or be part of a specific scenario.

The Henry Ford quote still applies; "If you asked my customers what they wanted, they would have said a faster horse", you need to address needs not wants, the customer want is created out of a somebody's perception of a solution of their need (which very often do not fulfill their actual need).

Martin said...

- What is the likelyhood that you would die in a natural disaster in US this year.

-Ehh dunno... lets say 1 in 100 million.

- OK then.. What is the likeleyhood that you would have your house swept away and die in the big hurricane right now in Texas?

- Jeehh... I've seen that on the news... and it's happening right now... must be like one in a million or so.

Carl-Johan Sveningsson said...

@Nicolai, Martin: Great comments from both of you, spot on!