Albert Einstein once said, “The more I learn, the more I realize how much I don’t know.” Unfortunately, the converse is also true: if you haven’t learned anything, you don’t realize how much you don’t know.
We often see this play out in sales departments where the sales team hasn’t been exposed to negotiation or pricing training. In these groups, the individuals invariably assess themselves as being pretty good at these activities—even when they’re really pretty bad at it.
Back in 1999, a couple of Cornell University psychologists named David Dunning and Justin Kruger conducted a study that measured this effect. They found that when they tested people on skills like driving, chess, logic and reading comprehension, the people who did the worst on the tests tended to rate themselves fairly highly. In fact, people whose test scores put them way down in the 12th percentile judged themselves to be in the 62nd percentile.
On the opposite side of the scale, people who were very skilled tended to underestimate their abilities and rated themselves lower than their actual performance.
This phenomenon has come to be known as the Dunning-Kruger effect. It’s a very real problem for sales teams because it means that the worst negotiators in your sales department don’t know how much they suck.
And unfortunately, they probably aren’t going to learn how bad they are at negotiating in the normal course of business. With other skills, people can become aware of their incompetence as a result of outside indicators, like bad grades or moving violations or losing a lot of games. But with negotiation, salespeople are unlikely to learn that a buyer would have paid a higher price, and if they lose a deal, it’s all too easy to blame something other than bad negotiating.
The only surefire cure for this problem that Dunning and Kruger found in their studies is the same one Einstein suggested: education. And in fact, the psychologists found that when they gave their test subjects some training in a particular area, people become much better at judging their abilities. They had gained the competence to be able to judge their own level of competence.
The obvious upshot here is that B2B firms absolutely must train their sales staff in negotiation and pricing techniques if they want to improve skill levels. And if they don’t, the staff is likely to think they’re doing a great job—even if they’re not.
To get you started, we’d like to recommend a couple of SellingBrew webinars. Negotiating Profitable Deals covers some basic strategies and tactics for improving deal-making skills, and Getting Salespeople to Price Better offers tips on modifying pricing behavior. Both are a good way to start the process of learning just how much you don’t know about pricing and negotiation, which is, of course, the first step towards improving.
In closing, we’ll leave you with one more quote that illustrates the Dunning-Kruger effect; this one’s from Shakespeare:
“The fool doth think he is wise, but the wise man knows himself to be a fool.”
Negotiating Profitable Deals
Everything comes to a head when your sales team negotiates a deal. You want to win, but you don't want to leave money on the table. So, how do you help your sales team to become better negotiators, so they win the deals they should, at the right price?
Getting Your Salespeople to Price Better
Chances are, the behavior of your salespeople will ultimately determine whether pricing strategies are effective or not. In this on-demand training seminar, learn proven approaches and strategies for getting your sales team to price and discount far more effectively.