HOW PEOPLE MAKE BUYING DECISIONS (AND HOW WE STOP THEM)
by Michael Lovas
Caution: this article contains ideas that might upset you!
About 25 years ago, when I began writing professionally, no one in business knew much about how people make buying decisions. A few years later, when I began studying advertising at the University of Texas, we learned how to be creative, but we didn’t learn how people buy. Doesn’t that sound absurd to you? Creativity is ludicrous without knowing who’s going to buy and what they want. Beginning a marketing or advertising program before you know how people make buying decisions is just plain stupid.
Ten years ago, when I was an advertising writer for JCPenney, management taught me to use demographics. Again, this had no bearing on how people buy. The income range within a certain ZIP code tells you nothing about the mental process these prospects use to make buying decisions. Ditto for psychographics, which looks at purchase history and consumer behavior, not consumer thought processes. Likewise, focus groups are an expensive waste of time.
More recently, when I did a project for major financial firms, they would sometimes give me a copy of their sales procedures. Not one of these firms understood the first thing about basic rapport, much less about mental buying processes or psychological convincer strategies. Their main psychological tactic was usually to enter into a light conversation based on trivia. Ha! Can you name an A-level client who loves to chitchat with strangers? Probably not.
The point is that academicians and businesses have been throwing darts at a board they couldn’t see. So do financial advisors – because they don’t know how people buy, they’re throwing away between 50% and 75% of their potential business! I base this figure on two things: 1) Temperament Sorter percentages and 2) the typical “fallout” between first appointment and ultimate agreement.
A “Smart” Pill for Financial Advisors
A few years ago, I began discovering a body of knowledge related to applied psychology that links language and behavior. While at IBM, a brilliant man named Rodger Bailey developed a methodology for understanding, predicting, and influencing a person’s behavior by mirroring and employing their specific language patterns. From Rodger’s work, I found the “smart” pill for financial advisors! I now know how to find out how people buy! That said, consider this:
- If you’re developing marketing programs without using this knowledge, you’re sabotaging your own efforts. That’s because you’re selling the way that you buy – not necessarily the way your “A” clients buy.
- If you’re marketing, advising, or selling without this knowledge, you don’t have an accurate psychological profile of your top clients – and you’re losing millions of dollars.
- If you’re communicating in face-to-face meetings without knowing how your prospect buys, you could well be alienating most of the people you meet.
- If you don’t ask the right questions or learn to hear linguistic cues in your prospect’s language, you’re doing an ineffective job – and that’s an issue of professional ethics.
Why People Buy
People buy products and services based on strategies they learned early in their life. Those strategies usually remain unchanged throughout life. To learn how to sell, or even present a product effectively to a prospect, you need to find out how and why the person bought the same or a similar item previously.
Six Key Questions for Your Prospect
- Have you ever bought a financial product before?
- Have you used a financial advisor before?
- What about the product or investment caused you to buy it?
- What did you like about the advisor?
- How did you know it was a good product or investment?
- How did you know the advisor was good at his or her job?
The answers will provide the key to how the prospect buys financial products, services, and advisors. Questions 1 to 4 give you a starting point. However, the important questions are 5 and 6 because they should elicit specific words that tell you how the person represents information mentally. For instance, most people access information and learn in a visual mode. That’s why so you see so many PowerPoint slide presentations at conferences. However, financial products and services require explanation in an auditory mode – words, not pictures. This makes it difficult to provide prospects with effective advice. If you talk to prospects instead of showing them, you’ll lose their interest.
The Other Essential Question
“What’s important to you?” A well-known question in the financial industry asks about the value of money – even though the research clearly shows that most people do not list money as one of their top values. In other words, asking this question is like asking someone in Oakland, “How do you get to from Detroit to Phoenix?” It forces the person to go to a place in their brain that’s not necessarily important. It tells your prospect that you value their money more than they do. How does that make you look?
When you ask a prospect to list their values, often they can’t answer, will give conflicting answers, or offer a list of goals instead. Why is this important? If you don’t know your prospect’s values, you don’t know what they’re working for – which means you’ll build a strategy based on the wrong information. If you suggest inappropriate values (such as money) to the prospect, you’re making a grave mistake.
Proficiency in asking these questions and understanding the answers requires effective observation and rapport. My firm, AboutPeople, has garnered a significant amount of experience helping people define their life’s values. We’ve gained much of this expertise by providing self-development and belief-system coaching to build psychological profiles of financial services professionals and their “A” level clients. More often than not, our clients refer to this approach as “business therapy.” These coaching sessions have taught us how to get people to open up and talk about their values.
The secrets to getting people to open up lie in rapport and recognizing non-verbal information, which accounts for between 70% and 90% of all communication. We use this knowledge to teach planners how to help their clients go through a “values elicitation” process. Conducting this process will help your prospects feel that you’re connecting with them. They, then begin to trust you, which is the first step in making the psychological sale. Once you’ve done this, you can make the logical sale.
Michael Lovas is the president of AboutPeople (Colbert, WA, a firm that uses Psychological Language Patterns to develop marketing programs. . . A Master Practitioner of Neuro-linguistic Programming, he teaches financial advisors how to use common-sense psychology to help build trust with A-level target markets. He has written twelve books, mainly on professional communication in the financial industry Michael also holds the distinction of creating “Credibility Marketing” in 1991. For more information, call (509) 465-5599, e-mail [email protected], or visit www.aboutpeople.com.