Sunk-Cost Sales is a practice where you, the seller, intentionally play into the loss-aversion psychology of a prospect by making the prospect expend their time on the sales process before you reveal the details of the offer. This is often achieved by them spending time talking to you, or reading written materials sent by you. Once you reveal your offer, the prospect no longer evaluates the offer on its own merits, but also counts the time spent in the sales process. Rejecting the offer will make that time feel wasted in retrospect. Sunk cost selling is most effective in situations where the offer would be rejected out of hand when revealed too early. It benefits from any asymmetry where you value your own time significantly lower than the prospect values theirs and works best when the prospect is polite or conflict averse.
The first step in Sunk-Cost Selling is to establish some form of communication with the prospect. You can achieve this by leveraging the prospect’s general willingness to assist strangers. Ask a simple informational question and feign genuine interest in their answer. Alternatively you can start a conversation by asking if the prospect would have an interest in the market the offer falls into, rather than specifying the offer outright. For example, if you ask whether the prospect drives a car or uses a home internet connection you are much more likely to get an affirmative answer than asking whether they would be interested in buying a new car or switching internet providers. These introductory questions get you a “yes” from the prospect early in the conversation and build micro-commitments, which later increase the likelihood of the prospect accepting your offer by creating a momentum of affirmative responses.
After you have established communication with the prospect it is essential to create some rapport with them. You should see rapport as social capital that you can spend at a later time in order to overcome friction and resistance during later stages of the sales process. You can achieve this by revealing similar experiences and values to the prospect, or showing a general interest in the prospect’s personal life. This can be as simple as asking if the prospect had a good weekend, is planning to go on a vacation in the near future, or is enjoying the most recent weather. The questions are irrelevant and so are the prospect’s answers. However, you should ask questions, remember or write down the answers, and demonstrate your feigned interest later by bringing them up in conversation as a way to build rapport. You can also build rapport by discussing how you have experienced something the prospect has recently experienced as well, or proclaiming to like something the prospect likes. Disliking something the prospect dislikes can be even more effective.
You can also build rapport for later leverage by pretending to reveal insider information. For example, you can tell the client a discount is going to be available next week so they should not buy your product until then. When you show performative alignment with the prospect’s interest against your own you gain the prospect’s confidence and build rapport. This way you have a low-cost way to demonstrate honesty to a prospect, disarming future resistance early on. In addition to gaining social capital, you will be consuming the prospect’s time, increasing the sunk-cost of rejecting the offer.
Once you have established back and forth communication with the prospect you can increase the sunk time in various manners. Direct conversation with the prospect is effective when you are dealing with a high-value prospect. This works when the prospect has a higher time-value than you, which is often the case when the prospect has a higher socioeconomic status. The longer the conversation goes on the greater the cost-asymmetry in the scenario where the offer is rejected, because you both wasted an equal amount of time, but the prospect values their time higher than you. A common way you can increase the duration of a conversation is by asking the prospect about themselves and their current interaction with the market the offer falls into. You could, for example, ask them what kind of car they drive and if they are happy with it, or about their experience with their current internet provider.
Alternatively -or additionally- you can pad conversation time more by extolling the virtues of the offer while being vague about the specifics. Especially in service offerings, you can describe at length how great it is to work at your company, how motivated your colleagues are and how strong the company culture is. This is a tactic you can often use to extend the duration of the conversation. Make sure you do not mention anything measurable at the stage and definitely do not discuss the price of the offer.
You can still achieve leverage when the time-cost asymmetry is not in your favor. When you are dealing with a multitude of lower-value prospects whose individual time-value is lower than yours it can be effective to create time investment asymmetry with these prospects. You can achieve greater efficiency by creating a time-consuming artifact once, distributing it to many prospects, and leveraging rapport to apply social pressure to make sure they will spend their time-consuming it. You could, for example, write a brochure for the product or service you are selling, which praises all the values of the offering without communicating any potentially disqualifying details, such as technical specifications or price. You can greatly reduce your own time-cost this way, restoring the asymmetric time-value relation required for Sunk-Cost Sales.
You can improve perceived time-cost asymmetry significantly by spacing out the prospect’s sunk time over a longer period of time. If you would attempt to apply the full time-cost of a Sunk-Cost Sales process to a prospect in one go you could easily violate the prospect’s time-cost tolerance, prompting them to terminate the sales process. However, when paid piecemeal, the tolerance for time-consuming processes of any given prospect can be much higher. Additionally, there is a limit to the amount of offers a prospect can be considering at the same time, therefore if you cut the sales process up in multiple short events you keep the prospect occupied and prevent them from considering other offers. Lastly, by spacing out the moments of contact you increase the perceived time cost to the prospect. For example: declining an offer after a two-hour sales call could feel like throwing away two hours of effort, but declining an offer after four sales calls of thirty minutes each over the span of two weeks can feel like throwing away two weeks of effort to your prospect. How much you should space out the time-cost of your sales process is a matter of judgement and highly industry dependent. Do it too little, and you might violate your prospect’s time-cost tolerance as mentioned before, but do it too much and your prospect might lose interest, consider alternatives or do their own research and find out details about your offer ahead of time.
You have completed the cost-sinking part of Sunk-Cost Sales when you have reached an equilibrium between the increased likelihood of a sale through the loss aversion of the prospect, and the likelihood of the prospect terminating the sales process because you are violating their time-cost tolerance. You must err on the side of caution where your prospect’s time-cost tolerance is concerned in order to preserve at least some rapport and trust for the final phase. You want your prospect to be maximally averse to rejecting your offer, because of the time they spent evaluating it, but you don’t want them to get angry or exhausted and break off communication. You can determine the ideal length of a sales process per prospect, or predetermine the average ideal length in a formalized sales process, either way once the equilibrium is reached it is time to present the offer.
You will encounter the most friction in a Sunk-Cost Sales process when you present the offer to the prospect. Therefore, it is critical to create emotional distance between yourself and the offer. You can do this by presenting the offer in writing, so you are not present at the time the prospect receives it. You can present the offer to them by shifting responsibility to an external party such as your employer, client, or company policy. You should frame communications in a “we” form at this point, rather than an “I” form, to indicate you are not personally responsible for the quality of the offer. This ensures that unavoidable disappointment, annoyance or resentment are directed at an imaginary counter-party rather than at you, the seller. You can also present a slightly worse offer on purpose. When the prospect indicates the offer is not good enough, you can pretend to negotiate with the imaginary counter-party on your prospect’s behalf.
When, if ever, you are accused of intentionally wasting prospects’ time in order to increase the conversion rate of your offers, these accusations can be deflected easily. You can simply explain that long sales cycles are normal in your industry and you are doing relationship building, education, or qualification. Whatever you do, never describe your actions as Sunk-Cost Selling, because that is valuable insider information. Armed with the knowledge in this manual you should be fully capable of converting prospects into paying customers for offers that would be rejected out of hand when revealed at the start of the sales process.