How to leverage the IKEA Effect on your sales team
This week we learned the news that the founder of Ikea, Ingvar Kamprad, passed away at the age of 91. Known as Sweden’s ‘greatest ever entrepreneur,’ Kamprad invented flat pack furniture after noticing a chap trying to take the table legs off before loading it into his Volvo.
In creating IKEA, Kamprad changed a mass market dynamic: they sell cheap, you do the building yourself. It’s an economic model that worked; in 2004 Kamprad had more money than Bill Gates.
In fact, the process lent itself to a psychological term called The IKEA Effect, describing the higher value consumer place on products they partially created. You sweat with a hex key and a mallet, and the sense of achievement means you learn to love the cupboard sitting in your bedroom, despite the fact the doors are a bit wonky.
This article isn’t an obituary for Kamprad. His was a life surrounded at times with controversy. Those words have, and will be, written.
Instead, this article is to talk about “The IKEA Effect” as it relates to selling. Because in one way or another, IKEA has touched us all. I’ve heard that 20% of us have been conceived on an IKEA mattress. (I hope that wasn’t you).
Sales and The IKEA Effect
I like to define a sale in terms of change. A sale usually represents some sort of change for a customer that quite often accompanies fear and uncertainty. The salesperson’s job is to manage this change – taking the customer from “A” to “B” with skill, empathy and determination.
When asking buyers to make this mental shift and say “yes”, we need to spend some time up front working out how to construct the sale. This is where the IKEA Effect has a role.
When we construct a sale, we have two choices:
1) Seller builds entire sale
This is the usual approach that salespeople take. Except for answering some questions and giving feedback, the customer pretty much does nothing. The seller uncovers the buying criteria, uses that information to formulate a proposal, achieves consensus, and closes the deal. 90-100% of the activity is done by the seller.
2) Buyer actively helps build the sale (The IKEA Effect)
This is when we give some of the responsibility of the sale to the customer, rather than doing it all ourselves. It’s the equivalent of the customer rolling up their sleeves and helping you to build the wardrobe.
In a sales sense, we might do a workshop where we design the solution together, and the customer might actively contribute to the report (which becomes the proposal).
Or we might ask the customer to hold internal meetings to achieve a common vision, or to create agendas, or to write a specification document. We might ask the customer to take us on a tour, or have us sit in meetings, or to present to our company at lunchtime.
We might ask the customer to read through our proposal or solution drafts together, and ask for ways to improve them. We might require that the customer talks to some of our other current customers first, or that they involve certain other colleagues.
All the above ideas take time, and effort, which can prolong a sale, sometimes unnecessarily. Yet sometimes they will be the difference between you and another supplier because they are collaborative. They carry risk; they can work, or they can backfire.
Here’s a matrix outlining some of the pros and cons with the IKEA Effect:
So, do we recommend the IKEA Effect approach to selling?
One of Natural Training’s key values is Simplicity. We believe that when selling, you should make it as simple as possible for a customer to buy from you at a premium price.
We recommend that you need to analyse what sort of customer you have in front of you. Sometimes a buyer just needs to solve a problem quickly. In this case, it would be a mistake to layer in extra jobs for them to do. Other times they might be uncertain, and need convincing, or need to join the dots with you and get involved. In which case the IKEA Effect might be perfect. Here’s an example:
Say you are a recruiter. Here are two customer scenarios:
This customer who just wants qualified CVs from you. They don’t want to talk to you much, or feedback much more than a few words on an email. But when they see the right CV, they pounce, in record time, and hire that individual. The client loves you because the relationship is working, and you have helped them achieve their goals.
You detect that customer B needs a bit more time and guidance to recruit the right people. In that case, you work together to design the perfect spec sheet. You give them some guidance on how to film a video for their recruitment hub. You might even interview together. The client loves you because you have worked together to achieve their goals.
The result might be the same: 3 placements and £20K in fees in 3 months. But the way you get there is completely different.
Be conscious of the right approach for THIS customer
The point is, you need to be conscious of which approach works best for your customer. It’s not about you, it’s about them. Trying to be collaborative with the wrong customer could be a disaster. Equally, going for the ‘quick win’ with someone who is uncertain about you could be a fatal move.
One thing is true: apply the IKEA Effect in the right circumstances and you will enjoy stronger, more profitable partnerships that stand the test of time. Call us today on 020 7264 1150 if you would like some strategies to help your sales team create the types of customer partnerships to fuel your success.
Call the team at Natural today on 0207 264 1150 today, or check out our 2018 Sales Technology Breakfast Roundtable events.
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