Heuristics and Bias in Sales and Buyer Decision Making

Who doesn’t love a shortcut? We take hundreds of mental shortcuts daily. Our brains are downright lazy when faced with thousands of neurological signals, and we unconsciously make decisions all the time. It may be surprising to learn that BIG choices we make consciously result from such unsophisticated thinking or mental shortcuts. 

The concept of energy conservation happening in the brain, as related to behavior, is called behavioral economics. The term was coined in the 1970s by researchers Daniel Kahneman and Amos Tversky but originated in the 18th century by economists to explain human rationality. Let’s walk through harnessing historic heuristic lessons in behavioral economics that influence modern-day buyer decisions in SaaS software sales.  

What are Behavioral Economics 

Behavioral economics combines psychology and economics to explain decisions that deviate from strict rationality. Economists Daniel Kahneman and Amos Tversky challenged the idea that people with all information and rationality act in their best interest. Their research showed instead that people use mental shortcuts, or “heuristics,” influenced by biases, emotions, and social factors. 

The insights resulted in further research that can explain how buyer decision-making behavior, such as loss aversion and social proof, operate. Recognizing how people actually think and feel, rather than how they’re “supposed” to, gives us tools to adapt go-to-market strategies, optimize user experience, and redirect purchasing behaviors. 

What are Heuristics? 

Heuristics are mental shortcuts or rules of thumb that people use to simplify decision-making and problem-solving. Instead of analyzing all available information and neurological inputs, and weighing every option carefully, heuristics allow us to make quick judgments based on previous experiences or limited information. Heuristics are constructive but can also be the source of biases and errors when they oversimplify complex situations.

Common Types of Heuristics 

Availability Heuristic: This heuristic represents the likelihood of an event based on how easily an outcome is recalled to mind, rather than on evidence. This can go both ways for sellers. The seller can take advantage of this by building associations with their product and solutions on product experience platforms so that when a solution is presented, they have its success in their mind. Alternatively, people may overestimate the risk of a solution after recently hearing of another person’s experience. Without putting in the work as a seller, you cannot control how a buyer will recall. 

Representativeness Heuristic: This is a snap assessment based on the probability of something closely resembling a stereotype. Representativeness Heuristics can lead to inaccurate judgments. Just because a mental representation exists in memory doesn't mean it's likely to occur in reality. 

Anchoring Heuristic: This shortcut relies too heavily on initial information (the "anchor") when making decisions. We see this in a situation where a bargain is in front of us. The initial price of an item can make a discount seem more attractive, even if the discounted price is still high.

As you can see, heuristics speed up decisions but can produce biases that influence everyday choices, from what we buy to whom we trust. These are just a few heuristics. To read more about how heuristics inform our thinking and behavior and understand biases, read Daniel Kahneman’s Thinking Fast and Slow. 

Biases and Sales Decision Making 

Heuristics are the 'shortcuts' that reduce the complexity of decision-making, and biases are the gaps between normative “economic” behavior and heuristically determined behavior. Sometimes, heuristics and biases are used interchangeably, and there are over 180 biases listed in the Cognitive Bias Codex. In Daniel Kahneman’s Thinking Fast and Slow, he outlined thirteen cognitive biases that come into play when an individual is making a decision, and we have further narrowed our cognitive bias base to those that shape buyer behavior and decision-making.  

Anchoring Bias: The anchoring bias is derived from the anchoring heuristic. This is when a buyer’s decision is “anchored” by the first piece of information they see. This changes frequently, but never more so than in the last thirty years with the advent of personal computers and increased connectivity. In terms of modern buyer decision-making, it can be the first impressions of a product. 

Scarcity Bias: Buyers place a higher value on a product, line, or software that appears limited or rare. This is one of the most well-known biases. Limited-time offers, countdown timers on websites, and other labels create urgency in purchasing decisions.

Social Proof Bias: This is increasingly common in the age of influencers. Consumers rely on others’ experiences with a product or service to help make their decisions. Customer testimonials, reviews, or advertising claims like “most popular” or “top-ranked” in sales boost conversions. 

Sales-based social proof notifications boost website conversions by 98%. Showing customer reviews makes online shopping better, increasing purchases by 67%. Products with 5 or more reviews are 270% more likely to be bought than those with no reviews. 

Loss Aversion: FOMO is actually a cognitive bias that drives behavior. Individuals can have a stronger desire to avoid loss than to achieve equivalent gains. This operates similarly to scarcity bias in that they ultimately do not want to lose the opportunity to purchase, i.e., limited-time discounts or exclusive benefits of joining. 

Confirmation Bias: Buyers, like everyone, like to be right and are looking for confirmation of their initial beliefs or preferences. When presented later in the funnel, aligning information with customers' interests or reinforcing their positive thoughts about a product or elements of discovery performed can speed sales velocity. 

Reciprocity Bias: Reciprocity bias occurs when a seller offers something for free, a concession, or help, and a buyer feels compelled to “return the favor” by purchasing. 

Authority Bias: People trust experts and figures of authority. This operates similarly to social proof bias, where sellers can use endorsements, certifications, or expert opinions to increase their credibility and influence buyer decisions.

These are some of the most common sales strategies that rely on biases to shape buyer perception, speed decision-making, and close deals through alignment with natural decision-making patterns. How can we further refine these strategies to meet SaaS sales needs? 

Leveraging Cognitive Biases in SaaS Sales and Demos

In the book, Rule of 24, 2Win CEO, Dan Conway, and founder, Bob Riefstahl discuss four biases that are very powerful for presales sellers to be mindful of in demonstrations and presentations. Leveraging ease of recall, conjunctive and disjunctive bias, anchoring, and confirmation biases can be very effective in guiding your audience and easing their decision-making process. 

Ease of Recall 

An event an individual can more easily recall is one they are biased towards. If you are demonstrating a solution, make sure to frame it in the context of what the audience is already doing or familiar with. Showing how your solution will make your audience's job easier or help them achieve their goals will make your demo more memorable and will place you in a more favorable light. 

Conjunctive and Disjunctive Bias 

We overestimate the probability of positive outcomes resulting from conjunctive events, and we underestimate the likelihood of negative outcomes resulting from disjunctive events. Conjunctive events are events that will impact each other, or happen in conjunction with each other. Disjunctive events are events that result without causation by the other simultaneous events.

To take advantage of our conjunctive event bias, it is critical to show your audience the connection between using your solution and achieving their desired outcomes. For example, we could say something like, "You can see how this feature simplifies your process so that you can achieve an increase in productivity, which will, in turn, result in revenue gains." Conjunctive bias allows your audience to accept that one action will positively lead to the next.

Anchor Bias and Adjustment Heuristic 

We discussed the anchor bias above, which can be the first or initial impression of a product or service in a presentation. This is why it is important to deliver the right context and messaging to the right people at the right time. We don't want a first impression to make our solution seem unnecessarily complex or deliver operational messaging to executive level decision makers.

If we align our messaging to what is important to our audience and make adjustments to our messaging as we make our way through different stakeholders, we can deliver a solid anchor to each potential buyer.

Your sales cycle can benefit tremendously from creating anchors that put your solution ahead of competitors. These may be product experience platform videos delivered at the appropriate time that offer industry insights that echo their position or change their frame of thought, or they can be moments in demonstrations or engagements where you prove that your solution is more compelling than your competitors. This is especially true where you can deliver more value and are judged less formally using digital content. Anchor your value through product experiences that resonate with your audience and begin to see the replicable power of winning more deals with the anchor bias and adjustment heuristic. 

Confirmation Bias 

Your buyer wants to believe that you have a solution to their problems. If you have utilized the conjunctive bias and created a flow-through of events that prove value from operations to executives, you are well on your way to winning the deal. Confirmation bias is working securely to your advantage. Especially where solutions and products are complex, even research that is meant to dissuade the decision-makers against you often will not result in that because they want to believe that this choice is the right one. 

Mindfully Deploying Bias-Driven Decision Strategies 

Addressing biases thoughtfully and mindfully confers some real advantages to sellers. Buyers know when they are being sold, and there is a fine line between pushing conjunctive bias and an agenda. Additionally, forcing an anchor won’t secure your sale if it is not what you offer. Transparency about value propositions helps clients always find real value.  Being conscious of these biases enables you to win favor AND foster ethical, customer-centric engagements. Prioritize building trust and delivering value over closing the sale, but be mindful that being on the right side of mental shortcuts can have lasting and replicable impacts on your presentations and win rate.