By Curtis Gogolinski, UMASS Isenberg 2023’ and Mark Altman President Of MindsetGo
At the beginning of the 2008 financial crisis, the brokerage company Lehman Brothers were in deep trouble. They had over-aggressively lent money, and the value of their stocks was falling dramatically. They had to change something, and it was up to their CEO, Dick Fuld.
Fuld was offered a deal by Warren Buffett, to buy a large number of Lehman’s shares at a discounted rate. This would stabilize Lehman, in theory, and the company would be saved. The clear cut deal, right? Fuld was too afraid and drastically pained by the potential possibility of selling shares under “value”, so he passed on the deal and spurned Buffett, who took his money elsewhere. The rest is history. Lehman collapsed and lost everything.
By holding onto to what he had in hopes of avoiding a potential loss, Fuld showed us an example of Loss Aversion at the grandest stage.
Loss aversion is the natural human tendency to favor avoiding loss over obtaining rewards. Research has proven that if someone were to give you $10, the small boost of satisfaction you would experience would be dramatically smaller than the disappointment you would feel if you lost $10.
This can explain why you might feel worse, in comparison, about losing a $30,000 sale with one customer than gaining a $60,000 sale with another.
As a salesperson, we should be continuing to learn from our losses, whether an important sale or a relationship with a customer. Our hardwired tendencies to steer clear of losses often causes us to miss out on opportunities just to secure what we already have. This fear causes us to miss out on greater experiences and opportunities.
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MindsetGo will help you avoid letting fear determine and impact your behavior. Contact Mark Altman and MindsetGo today to discuss how bringing a MindsetGo training program to your organization can raise revenue and reach sales goals by tackling problems such as these, and so much more!