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Marketing & Sales16 min read
The JOLT Effect
by Matthew Dixon and Ted McKenna
How High Performers Overcome Customer Indecision
Published: June 19, 2023
4.5 (73 ratings)
Table of Contents
Book Summary
This is a comprehensive summary of “The JOLT Effect” by Matthew Dixon and Ted McKenna. The book explores how high performers overcome customer indecision.
what’s in it for me? learn the jolt effect to overcome customer indecision and become a better salesperson.#
Introduction
matthew dixon and ted mckenna the jolt effect
how high performers overcome customer indecision
if you're well-versed in the literature on sales techniques, it could be you need some new information.
it turns out that many of the tactics salespeople have used for decades are not as effective as they seem.
that's because new research has uncovered the tactics that really separate high-performing salespeople from their colleagues.
matthew dixon and ted mckenna have analyzed more than 2.5 million sales transactions, searching for what worked and what didn't.
in doing so, they discovered that practically everything they thought they knew about best practices in sales was wrong.
rather than beating themselves up about promoting bad ideas for decades, they've decided to share their findings with you.
in this chapter, we'll cover each part of their groundbreaking jolt effect in detail.
we'll also present evidence showing how this technique effectively leads to higher win rates for salespeople.
by the end, you'll have learned why telling a customer what they need persuades them to buy, how interrupting a customer is actually a good thing, and what taste-testing jelly can teach us about human decision-making.
overcoming customer indecision is not about beating the status quo.#
overcoming customer indecision is not about beating the status quo.
for decades, experts have agreed that the key to making a sale is beating the customer's preference for the status quo.
the consensus around this idea has been so strong that it's been adopted by just about everyone in the field.
unfortunately, it also happens to be flat-out wrong.
in reality, missed sales opportunities aren't primarily due to status quo bias.
the real culprit is customer indecision, which accounts for 56% of missed sales.
though it may seem like a minor distinction, this status quo vs. customer indecision divide actually makes a significant difference.
let's explore this difference a bit more closely.
it's true that people usually exhibit a preference for things to stay as they are.
this is the status quo bias.
but an even stronger preference is people's desire to avoid loss, or what's known as loss aversion.
it's loss aversion that prevents so many customers from following through on a purchase, even when they admit they'd be better off buying.
so why do customers hesitate even when they want to change the status quo?
turns out, it's due to yet another bias, the omission bias.
while everyone dislikes making the wrong decision, the fear of making an active mistake often outweighs the regret of failing to take beneficial action.
in other words, customers fear making a bad purchase more than they fear missing out on a great one.
so it's easier for them to kick the can down the road rather than to sign on the dotted line.
how then can salespeople overcome customer indecision to make good on a sale?
before we answer this, let's discuss a common sales tactic that usually backfires, relitigating the status quo.
this is when salespeople counter indecision by trying to convince the customer all over again to buy the product.
according to dixon and mckenna's research, the relitigation strategy has a negative effect on 84% of sales attempts.
fortunately, there is a method for overcoming customer indecision.
it's a series of four strategies that's been coined the jolt effect.
we'll consider the first of these strategies, judging the indecision, in the next section.
judging the indecision.#
judging the indecision every salesperson grapples with the issue of a customer's inability to follow through on a purchase.
this is why understanding where indecision comes from and how to assess its severity are key to overcoming it.
this is known as judging the indecision, and it's the j in the jolt effect.
according to dixon and mckenna, the three factors that lead to customer indecision are valuation problems, lack of information, and outcome uncertainty.
by identifying which type of indecision a customer faces, you'll know which component of the jolt effect to employ.
let's explore the telltale signs of each.
first, valuation problems are when customers simply don't know which option to choose.
customers with this type of indecision are often confused about which options or features they prefer or have trouble articulating what they're really looking for.
valuation problems are best overcome by offering your recommendation, this representing the o in the jolt effect.
second, there's indecision caused by a lack of information.
this occurs when a customer is constantly trying to do their research, often going above and beyond what is reasonable.
these customers also ask for more info, even when it isn't relevant, and delay deciding in order to learn even more about a product.
lack of information is best overcome through the l of the jolt effect, limiting the exploration.
the third and final factor is outcome uncertainty.
this is when customers grow anxious about the risk of making a purchase.
one common sign of this is when a customer brings up bad purchases they've made previously.
outcome uncertainty is best overcome through the final aspect of the jolt effect, taking risk off the table.
before delving into each strategy in more detail, let's discuss how to gauge a customer's level of indecision.
according to research, top-performing salespeople are able to separate potential buyers from those who are hopelessly indecisive.
there are four keys to making this distinction.
the first key is the amount of information a customer desires.
while it's natural to want to be well-informed, customers who demand every tidbit of information they can get are probably not going to be satisfied.
second, if the customer engages in backtracking, when they're nearing a purchase and then suddenly go back to being undecided, they probably aren't going to buy at all.
the third key is based on how a customer judges their options.
if they constantly change which criteria they're using to judge which option is best, this will make any sale difficult.
and finally, always ask yourself if the customer is willing to accept good enough.
knowing which customers are likely to settle for good enough can help you prioritize these more serious buyers.
now that we've covered how to judge the causes and magnitude of a customer's indecision, we'll turn to the sales techniques you can use to overcome it.
offer your recommendation.#
offer your recommendation.
having lots of options is a good thing, except when it isn't.
this contradiction is known as the paradox of choice.
while people value the freedom of choice, too much choice can become overwhelming.
this phenomenon is captured by a now-famous experiment involving jelly samples in a grocery store.
researchers set up a table with 24 different flavors.
customers were so intrigued that 60% of them stopped by for a taste.
however, only a measly 3% of them bought a jar.
the next day, researchers set up shop again, but with only 6 flavors.
only 40% of people stopped, but among these, a whopping 30% bought a jar.
so while more options were enough to intrigue customers, they weren't enough to get them to buy.
this is where offering your recommendation comes in.
by doing so, you can maintain the variety of choices that customers value early in the buying process and then narrow the customer's options to alleviate choice paralysis.
so how can you offer effective recommendations to sway customers?
the first step is called proactive guidance.
this is when a sales rep shifts from passive questions like, help me understand your needs, to proactive declarations like, here's what you need.
this subtle shift nudges customers toward a specific choice, and the evidence shows it works.
when reps used proactive guidance, their sales win rates jumped from 18% to 44%.
the second component of offering a recommendation is advocacy.
when offering a recommendation, make it personal.
top-performing reps use phrases like, if i were in your position, i'd go with option x.
this personal touch has been shown to improve win rates by 74%.
by offering your recommendation, you can effectively overcome indecision caused by valuation problems.
in the next section, we'll discuss how to overcome the lack of information problem.
limiting the exploration.#
limiting the exploration.
perhaps you're familiar with a particular type of customer, the one who simply can't get enough information about potential options.
they acquire mountains of info, ask tons of questions, and analyze the minutiae of every option, only to decide they can't settle on anything.
dixon and mckenna offer three ways to best deal with these nitpickers.
owning the flow of information, anticipating needs and objections, and practicing radical candor.
first, you can own the flow of information by convincing the customer you're an expert on the subject.
if a customer trusts your expertise, they're more likely to defer to your judgment.
interestingly, top-performing sales reps who brought in outside experts to speak to customers performed worse than salespeople who exhibited expertise themselves.
if a customer believes that you need assistance to be able to assist them, they're more likely to doubt your judgment.
anticipating customers' needs and objections is also paramount.
69% of sales calls include a customer objection.
knowing how to handle them can make a huge difference.
offering a rebuttal, a response to a customer concern or complaint, is important.
sales calls that lacked a rebuttal had win rates of just 17%.
but a pre-buttle is even more effective.
this is when the sales rep anticipates an unspoken customer concern and raises it.
for example, saying, i'm guessing you're wondering about x.
this kind of response helps reassure the customer you understand their concerns even when they aren't stating them directly.
the third tip is practicing radical candor.
this involves two parts.
caring about the customer and a willingness to challenge them directly.
the best salespeople not only put their customers' interests first, they're also able to tell their customers when they're mistaken.
for instance, if a customer asks for another demo you know is redundant, don't be afraid to kindly tell them so.
rather than indulge them, dig deeper into the cause of their hesitation.
another interesting finding from the author's study was the way that sales reps listened.
unsurprisingly, sales reps who interrupted and talked over their customers had much higher win rates.
these weren't rude interjections, however.
they're what are known as cooperative overlapping.
this is when a listener actively engages in the conversation by talking along with the customer to validate what they're saying.
subtle phrases like, hmm, that makes sense and yep, i agree are examples of cooperative overlapping.
in the next chapter, we'll turn to the last step in the jolt effect, taking risk off the table.
taking risk off the table.#
taking risk off the table.
indecision comes in many forms, but perhaps the most pervasive kind of indecision comes from customers' fear of making the wrong choice.
being stuck with buyer's remorse is no fun and potential customers often become frozen by fear of it.
large salespeople fight this concern with the old fud tactic, fear, uncertainty, and doubt.
but this is counterproductive.
trying to use fud to overcome customer indecision only makes customers more fearful.
so rather than use fud, here's a three-step strategy that works to de-risk the purchase.
rather than make a customer feel bad for not buying, taking risk off the table serves to instill confidence in their decision to buy.
first, set outcome expectations that are realistic.
when salespeople promise the moon, customers usually see through it.
if you can provide assurance of some positive impact, though, customers are more likely to believe it.
when expectations were set improperly, win rates were only 20% per the author's study.
but when they were set properly, win rates jumped to 51%.
next, offer downside risk protection.
customers respond well to safety nets, such as opt-out clauses and money-back guarantees.
however, these options are only brought up in around 15% of sales calls.
if you can't offer these kinds of safety nets, there are other techniques, too.
consider offering professional service support, or crafting contracts that specifically address customer concerns.
for example, by including an opt-out clause for one component of the sale.
third, start small.
even smaller than the customer might want.
rather than going for the biggest, most profitable sale, give the customer an option that's cheaper and less daunting.
this helps convince the customer you are a helpful steward of their money, rather than just trying to force them to purchase.
together, these three techniques help take risk off the table and jolt the customer out of their indecision.
final summary#
Conclusion
in this chapter-to-the-jolt effect by matthew dixon and david mckenna, you've learned that the prominent culprit behind missed sales opportunities isn't the status quo bias, but rather customer indecision, accounting for a considerable 56% of these missed shots.
this derives mainly from people's innate desire to sidestep loss and an inherent fear of making an active blunder.
to tackle this conundrum, a four-pronged method called the jolt effect is recommended.
this method encompasses judging the root of the indecision, providing recommendations to alleviate the paradox of choice, containing the exploration of limitless options by pre-empting needs, exhibiting radical candor, and expunging the risk associated with the purchase to foster buyer confidence.
thanks so much for listening.
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see you in the next chapter.
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