The Scarcity of Attention
Overview: James Oldroyd, professor of Strategy at BYU, teaches how sales reps can continue to close deals at the end of the month.
Professor James Oldroyd is an associate professor of Strategy at the Marriott School of Management, Brigham Young University, and the Ford Motor/Richard Cook Research Fellow. He received his Ph.D. from the Kellogg School of Management at Northwestern University in 2007.
He was an associate professor of management at SKK-GSB in Seoul, South Korea for five years. And an assistant professor of international business at The Ohio State University for three years. His research explores the intersection of networks and knowledge flows. This work has been published in multiple outlets. Such as the Academy of Management Review, Organization Science and Harvard Business Review.
Hello, my name is James Oldroyd. It’s great to be with you here in this virtual summit. I’m going to talk today. I’m a professor at Brigham Young University. And I’ve spent the last almost 20 years looking at sales and responding to leads, published a few things in Harvard Business Review, etc, looking at how sales leaders can maximize their energy and effort.
I’m going to talk today about some research I’ve been doing on closing deals and link that to managing attention, which I think’s a key key topic.
So if we look at the traditional sales cycle, what we’ll see is that there’s minimal effort in sales reps, until they get towards the end of month or a quarter or whenever those incentives really kick in. And then there’s this massive push to try to close business at the end of the month. And, you know, here’s here’s so this is the theoretical model.
Here’s data from a company looking across a couple of years. And then aggregating their results. Their monthly results across 24 different pay periods, or monthly periods. And the data plays out just as you’d expect, it would. So what we see is that there’s a huge push at the end of the month to close business and it works.
So the deals, one by a day of MONTH shows that we’re getting between 10 and 15 deals a month until those last four days of the quarter, or I’m sorry, of the month here, where it really just explodes. And what we see is that the deals increased by a factor of 3.6, or the first 25 days of the month. So those last few days are critical. Lots of deals are being pushed over the end.
I’m here to say that might not be the best thing. And if we layer on another layer of data, what we see is that, yes, wins do increase, but losses increase exponentially. So whereas you know, if they’re earlier the first 26 days of the month, the loss/win ratio is 0.5, meaning that on average reps are closing two deals for every one that they’re losing. And if we look towards the last four days of the month, we see that this flips to 1.5 in the last two days, and then 2.2 in the last day, meaning that on average reps are closing 0.5, to what they’re losing.
So in other words, they’re burning through lots and lots of potentials here to try to push that end of month approach. And so it’s costly. It’s costly for them to do this. So the question is, is, you know, why would this happen? And, of course, there’s several factors at play. But I think one of them is that the reps are focused on themselves. So they’re focused on their schedule. It’s the end of the month, I’m up against my, you know, incentives. And so they have huge incentives to meet quota by the end of the month. And they’re thinking about themselves, their incentives, and their needs.
Of course, that’s not likely to change soon, but what we see is that this problem is not one of mis-matched interests. If you have product market fit, and you have a good rep, pushing your product to market is easy. It’s finding the right time for the client, rather than, does this work for them? And so what I’m going to argue here is that what we really have rather than a mismatch of interests, meaning the product’s not the right thing for them, is that big push at the end of the month forces out so many clients because we have mismatch in the tension.
Now, one of my favorite scholars is a Nobel laureate Herbert Simon, who was at Carnegie Mellon University. And he said this, he said. “In an information rich world (which is the world we’re living in with lots of there’s just so much information) a wealth of information means a dearth of something else.
A scarcity of what it is that information consumes. What information consumes is rather obvious. It consumes the attention of its recipients. Hence, a wealth of information creates a poverty of attention, and a need to allocate that attention efficiently among the overabundance of information sources that might consume it.”
If we take this as true– that we’ve shifted from a poverty of information to a poverty of attention world. So in the first thousands of years of world history, I could not find the information I needed. Even in the world’s best libraries, I might not be able to find the information I needed. Herbert Simon is arguing that that has shifted, that it’s no longer information that’s the problem. It’s attention that’s the problem.
And if we believe that’s true, then that becomes the scarce resource for our potential customers, not information. Information is not a scarce resource, it’s attention. And so that changes the way we think about engaging with our customers, or potential customers. And so when we push hard at the end of the month, we get them to a state of information overload. What we know from the research on information overload is that it cripples performance. So you can imagine, you’re probably not the only person trying to sell to these customers at the end of the month, to close that business.
Everyone’s dumping all this information on them. And when you get to a state of overload, you just give up like, forget it, I’m in a state of overload. Performance drops exponentially. And what happens is they just forget it, I don’t care a walk away. And I think that’s part of what we’re seeing with those significant increase in losses at the end of the month. The push is forcing so much information on clients when their attention is already constrained to the point that they walk away.
So what are the implications of this? I think there’s several. First, is that we really need to shift the focus from your sales reps. From you as a sales rep, to finding ways to meet the client’s buying schedule. And what I mean by this is. How can you, again, if attention is the scarce resource. How can you engage with them in a way that preserves their attention. That minimizes their investment there. Which is their attention in what you’re doing.
And so ChatFunnels, who sponsored this event is, has one of the tools that’s pushing that kind of communication, where I no longer am trying to match my schedule with the client schedule to find a time when we can have a phone call or a visit or product demo, or whatever that may be. I’m opening up 24/7 for them to reach out to me when they can attend to it. And then I adjust my attention to meet their attention.
That’s going to be much, much more effective than our traditional approach. The other implication for this end game is incredibly costly. I am forcing my attention constraints on my clients, which is absolutely stupid. And, I not only that, but then I double down on it by providing incentives that reinforce that behavior and magnify that counterproductive behavior.
And so perhaps a better approach would be to think about the win/loss ratio rather than a calendar event. I don’t know if I give you a good lead, I don’t care if it takes you a week longer or even a month longer to close that deal, as long as you can match the clients attention when they have capacity, when they have attention.
So I think if we switch our mentality from one of an abundance of attention to clients, potential clients sitting there with, with a lot of time to listen to me to one where their scarcest resource is no longer money, but rather attention, it changes our behavior and modifies our behavior so that we’re more patient and focus on them and meeting their availability.
And so, I think that the final thought is we operate in a world suffering from what Herbert Simon called the poverty of attention. Where people are constrained. And you know, what’s interesting is he wrote this article in the 1950s. Can you imagine what he would say about what the world looks like in 2020. Where attention has become the scarce resource. It’s no longer capital. If you go talk to any CEO, any executive and you say, what do you wish you had more of? The first thing they will say is time. What they really mean is what I wish I had more of is attention. Wo that they can attend to things that they need to.
Now, as a sales rep, what this implies is that when I’m closing business, I can no longer afford to think about my own attention and my own attention constraints. But start to consider what is the client what’s the client look like? And that can come in me easing the process for them, in easing the communication options available to them. And then reducing and simplifying, and again, thinking about, am I spending their attention?
Rather than am I spending their money? Or am I trying to extract money from them. They’re happy to give me money if I’ve got a good product. But they may not be willing to give me attention that is their scarce resource.
And so if we start to think about this in a serious way, it means that we need to start managing our attention and our clients attention. And if we can do that effectively, then we win in the future. It’s going to close more business for us. So, thank you. Again, my name is James Oldroyd. It’s been a pleasure to have been able to spend a few minutes. And share some of my research with you.