Second consecutive experiment proves insights-led messaging alienates existing customers when communicating renewals and price increases
PLEASANTON, Calif., April 25, 2017 – Whether you call it “provoking” or “challenging,” the insights-led sales approach that made big news in the Harvard Business Review and several subsequent books has become all the rage in the last few years. Surprisingly, though, it turns out that disrupting your customer during a renewal or price increase discussion is the exact wrong approach—one that could drive a good customer right into the arms of your competition.
That’s according to recent academic studies conducted by social psychology professors who put would-be customers into “buying simulations” and measured how they react. (This testing approach contrasts with the original research in support of the “provocative/challenging” methodologies, which were based on observing common behaviors among top-performing salespeople—instead of testing the actions of potential decision-makers.)
Over the last 18 months, Corporate Visions, the leading marketing and sales messaging, content and skills training company, has contracted three experiments with leading academic researchers to test the impact of supposed challenging or provocation-based messages in three specific selling scenarios:
- New Sales Opportunities – winning new business or stealing competitive business.
- Renewal Sales Opportunities – ensuring customer loyalty and capturing contract renewals
- Price Increase Opportunities – effectively passing along price increases to expand revenue while minimizing risk
In the first experiment, provocation-based messages introducing “unconsidered needs” or new insights proved to be the most successful in persuading potential customers to choose you over competitive alternatives that were responding to only “known needs.” The study showed that challenging your prospect in a “new sales” opportunity gives you a 10-plus percent lift in persuasion.
However, in the second and third experiments, which focused on existing customers, this approach became the biggest loser. Turns out, when you are trying to renew a customer, or pass along a price increase, introducing a challenging message with “unconsidered needs” will put you at significant risk of losing them.
The most recent experiment, focused on communicating price increases, showed that the provocative approach created these results for the “challenging message”:
- 18.8% less favorable attitudes
- 15.5% less likely to renew
- 16.3% more likely to switch
The actual winning approach focused more on reinforcing your customer’s status quo bias instead of disrupting their status quo bias.
“The picture is compelling,” said professor Nick Lee of Warwick Business School in England, who conducted this most recent experiment. “If you introduce an unconsidered need, you start making your customer think more carefully about what they want and how to get it. So, they become more likely to consider others.
“It was amazing to me, how the pattern was so clear. It is rare to see such strong and consistent results across so many different groups in this kind of experiment,” Professor Lee added. “It’s also quite counter-intuitive these days with all the hype around provocation-based selling, that the ‘unconsidered needs’ approach turns out to be such a poor idea, according to our data.”
“It’s clearly not a one-size-fits-all approach when it comes to communicating with customers,” said Tim Riesterer, chief strategy and research officer for Corporate Visions. “Challenging a customer when you are trying to defeat the status quo works. But, challenging a customer when you are trying to keep them and get them to pay more doesn’t.”
Based on the experiments, which also revealed the best approaches for customer messaging success, Corporate Visions has developed situational frameworks for helping companies create and deliver messages for each of the key selling moments:
- Why Change? – Telling a story that defeats status quo bias and gets prospects to agree to change
- Why You? – Telling a follow-on story that clearly differentiates you from the competing alternatives
- Why Stay? – Telling a story that convinces existing customers to renew their relationship with you
- Why Pay? – Telling your customers a story that is most likely to generate a positive response to a price increase
More details on the experiments entitled “Why Stay?” and “Why Pay” can be found in the Corporate Visions resource library. Here you will find the research briefs, infographics, video links and other content describing the results.