In this episode, Bridget and I discuss how to recognize when you’ve fallen into a sunk cost trap, how to distinguish between a long sales cycle and a lost deal, and how to learn when to walk away. Join Bridget and me to find your path to avoid the sunk cost trap.
Welcome to another Front Line Friday with my remarkable guest, Bridget Gleason. On this week’s episode, Bridget and I discuss the sunk cost sales trap. It’s the place where bad deals, deals that will never close, will consume and waste a lot of your sales time.
Do you get attached too easily to prospects that will never close? Andy calls it the sunk cost effect, a result of decision bias due to our investment of time and money in the opportunity.
Andy believes that when a sales executive and her/his sales manager have different beliefs about the prospect’s potential, common sense dictates there is a decision to make.
Bridget raises the point that it’s hard to let go of a sales opportunity because maybe there’s a chance the deal will move forward, and the sales rep has invested so much in it. She explains, a really important skill in sales is knowing when to walk away.
Andy cites a study that found that it’s almost impossible for the lead person in an opportunity to make the decision to walk away. An outside party, like a manager, needs to be involved.
What are the signals to watch for to recognize when a deal will be lost?
Andy’s rule of thumb that the degree of defensiveness of the sales executive during a deal review is inversely proportional to the likelihood of the deal ever happening.
Bridget tells sales reps to get a lot of eyes on a stalled deal. Sometimes you need an objective point of view to get to the facts. Be open.
Andy suggests giving the decision to someone without a stake in the deal, such as the CFO, or even the CEO.
Andy encourages companies to ask for help from an executive coach or a consultant, to reach a dispassionate decision.