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    How the Planning Fallacy Can Make or Break a Deal

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    I don’t think we talk enough about the impact of timelines on making and breaking deals, especially in complex b2b sales.

    When I recently needed a new fridge, I was concerned about the timeline for the purchase, because it was really important to have it delivered and installed with the new kitchen we were installing. Due to delays from the pandemic, not everything on the market was available immediately, and one place couldn’t deliver for several weeks. That was a deal-breaker for us. In short - the availability of the product and its ability to be installed in a timely fashion were a major differentiating factor in our decision to purchase.

    In complex sales, timelines can be even more important, because of dependencies that develop. For instance, when we built our house, late delivery of a product or material had the potential to set the entire project back by days, weeks, or even months, and cost a lot of money due to having to send crews home or let equipment sit around while waiting on deliveries.

    If you multiply that complexity by the size of many complex b2b deals, you can see how important timelines can be to both customers and sellers. Yet very often we forget to address this important differentiating factor in our sales process.

    Unfortunately, what often happens in a sales process is that salespeople become overly optimistic and make promises that can’t be delivered on. This then causes problems with customer satisfaction and can lead to losing the deal after the close. It also undermines trust and reputation.

    Sometimes, this over-optimism is deliberate and intentional, but often it’s simply due to a cognitive bias called the “planning fallacy.”

    What is the planning fallacy?

    The planning fallacy is a cognitive bias that interferes with our ability to accurately predict how much time it will take to complete a task or series of tasks. Specifically, it’s an optimism bias that tends to cause us to underestimate the amount of time needed.

    The planning fallacy interferes with our ability to accurately predict the time it will take to complete something.

    Interestingly, the planning fallacy is so strong that we can fall prey to it even when we have extensive previous experience showing that longer timelines have been required for similar tasks.

    How does the planning fallacy impact sales?

    The most obvious impact of planning fallacy occurs when salespeople promise a faster timeline than can be delivered, as described above.

    But it also has other impacts.

    For instance, a competitor may promise a faster timeline, leading the customer to choose them, even if the competitor can’t actually deliver on that timeline.

    Or the customer may fall prey to the planning fallacy and expect a faster timeline than you can deliver, which can cause them to balk at your estimate.

    Customers can also balk later in the process if you haven’t discussed the timeline. They can grow impatient when it takes longer than they were expecting.

    All of these factors can contribute to loss of deals, loss of trust, and loss of reputation.

    Additionally, the planning fallacy impacts sales at the management and executive levels. Managers, for instance, may underestimate the amount of time it will take for a new salesperson to onboard fully and become productive. At the executive level, new strategies and implementations may take longer than initially anticipated, leading to loss of momentum and missed deadlines.

    How to compensate for the planning fallacy

    The planning fallacy, like all cognitive biases, happens without our conscious participation. There’s no way to completely eliminate it, but we can compensate for it.

    First, it’s important to make sure everyone on your team knows that the planning fallacy existsand that they must consciously compensate for it. Teach them to always build in extra time beyond how long they think something will take.

    To compensate for competitors offering overly optimistic timelines, train your salespeople to talk about realistic timelines with customers, and to challenge competitors’ timelines. If you know competitors are over-promising, teach your salespeople to tell customers that upfront. Explain to customers why the timeline is overly optimistic, and show them how that will impact their implementation. Or recommend the customer to ask the other vendor for references where implementations took no longer than the “promised” time.

    In all cases, teach your salespeople to “chunk up” timelines so that customers can see what’s happening at each stage. You can also do this in your marketing. For instance, if you tell customers that your implementation will take six months, they may balk. If you show them “chunks” of time and what will be happening in each chunk, they are more likely to understand and trust your process.

    It can be tempting for salespeople to skip over timeline discussions because they are uncomfortable. If the customer doesn’t bring it up themselves, the salesperson may not think it is important.

    Teach your sales team that timeline discussions are critical during the sales process, regardless of whether the customer brings it up or not. This helps to avoid disillusionment later, and also to build trust now. Customers who understand clearly what will happen and when, and how quickly they can begin to see results, are more likely to trust that your team really can deliver on what they’re promising.

    Why you should also be discussing risks

    Along with the timeline, salespeople in complex b2b environments need to be discussing risks with customers. We often avoid these conversations because we’re afraid of scaring customers off.

    But customers already know there are risks involved. If they run into these risks partway through the process and they weren’t expecting them, it undermines trust. Instead, it’s important for salespeople, in presenting the timeline, to also discuss anything that might cause delays or obstructions at each point in the process, together with recommendations on how to prevent them.

    This helps reduce the risks, as well as preparing customers to deal with things as they come up.

    At Membrain, we offer a ClearPath Promise to our customers that helps them understand exactly how long implementation will take, what will happen at each stage, and what they need to know to mitigate risks at each stage. This carefully choreographed implementation process ensures smooth handoffs and takes as much of the heavy lifting off our customers as possible.

    If you implement something similar for your customers, it must be clear and choreographed throughout the organization to avoid salespeople promising things that the rest of the team can’t deliver on.

    The planning fallacy is one of the thousands of ways our brains bring illogical biases into the sales process. I’ve covered a few others in previous blogs, and here is one. I would love to know how you’re addressing the planning fallacy on your sales teams.

    George Brontén
    Published April 21, 2021
    By George Brontén

    George is the founder & CEO of Membrain, the Sales Enablement CRM that makes it easy to execute your sales strategy. A life-long entrepreneur with 20 years of experience in the software space and a passion for sales and marketing. With the life motto "Don't settle for mainstream", he is always looking for new ways to achieve improved business results using innovative software, skills, and processes. George is also the author of the book Stop Killing Deals and the host of the Stop Killing Deals webinar and podcast series.

    Find out more about George Brontén on LinkedIn