We Hate to Lose

I recently read an article about Behavioral Finance, which studies the decision making process in regards to financial decisions. The theory brought forward in the article is that individuals and businesses do not act rationally when making financial decisions, even when they are presented all the available information.

 

One of the case studies mentioned involved two groups. The first group was presented with this problem.

 

A. A sure gain of $500.

B. A 50% chance to gain $1000 and a 50% chance to gain nothing.

 

Another group of subjects was given this problem.

 

A . A sure loss of $500.

B. A 50% chance to lose $1000 or a 50% chance to lose nothing.

 

In the first group 84% chose A. In the second group 69% chose B. The two problems are identical in terms of net cash to the subject, however the phrasing of the question causes the problems to be interpreted differently.

 

The study concluded that people are much more distressed by potential losses than are happy about equivalent gains. Some economists decided that people consider the loss of $1 twice as painful as the pleasure from gaining $1.

 

So this begs the question, What are your lost sales costing you?

 

Lost sales are not just those that a prospect chose not to act, or chose a competitor. Lost sales include those prospects that never contacted you in the first place. It can be painful to look at your business in terms of lost sales rather than just looking at sales generated, but it is absolutely necessary.

 

This is where the professionals at MHMSM.com come in. We have the tools and resources available to help you capture new business and grow your sales. Utilizing the knowledge and strategies from our solution oriented sales and marketing programs and training, or attending free business building seminars like those at the upcoming Great Southwest Home Show and maximizing exposure and generating sales by advertising on MHProNews.com are how you minimize lost sales and maximize your businesses' sales. # #