I heard that sentence come from a couple of rows in front of me on a flight from New York to Frankfurt. I smiled and respectfully tried to ignore the conversation. But the salesperson had one of those game-show-host voices that are impossible to ignore. When he continued to talk, I could hardly believe my ears.¹

‘It was some newcomer’, the salesperson said, adjusting one of his earbuds. ‘Basically, the same product, but they got a higher price?!? I mean, explain that one to me, huh.’

He paused for a moment when the flight attendant handed him a drink. The fact that the flight attendant called him ‘Mr. Anderson’ clued me in that this wasn't his first flight back from a sales negotiation.

‘I followed the request by the book’, Anderson said. ‘No idea how this could happen. I really did not see this coming.’

Needless to say, I could empathize. After over two decades spent at negotiating tables around the world, I could recall several lost negotiations that I couldn't immediately understand or explain. But at that moment, as I watched other passengers boarding the plane, I felt a mixture of happiness and relief. Why? I was on my way back from closing an important deal, one which my team stood little chance of winning – at least on paper – against the incumbent, a multinational conglomerate.

Then Anderson's voice once again rose above the noise of baggage compartments slamming shut and seatbelts clicking.

‘Yeah, yeah. You're probably right’, Anderson said. ‘Aurelio just wanted a change. Nothing we could have done to prevent that happening.’

Hearing the name ‘Aurelio’ gave me a strange chill. How slim are the chances that a procurement manager named Aurelio would reject Anderson's offer on the same day that my team had agreed to a landmark deal with a procurement manager named … Aurelio?

It dawned on me that the gentleman two rows ahead of me was debriefing with his headquarters about a deal he had just lost to my team. That moment forced me to reflect on exactly how and why we convinced Aurelio's company to work with us as their supplier.

Why did we win?

Let's start with Anderson's vague blanket justification for losing the deal. They believed that their customer just wanted ‘change’. That was their fatal misperception, one that my team didn't make.

In my assessment, our competitor had apparently disregarded or dismissed the nuances and intricacies of decision making. That not only means the way that professional buyers decide which supplier gets a multi-million-dollar contract it also means the way people, in general, make decisions.

I have no idea whether Anderson and his team underestimated that complexity or were unaware of it, but in the end, it didn't matter. My team overcame the odds and won a deal that superficially looked like nothing more than a battle between me-too products, one new and one familiar. Anderson and his team had done a lot of the right things and a lot of things right, but we had won by going beyond the obvious and offering a combination of reassurance, trust, and a promising future.

For example, we knew about the behaviours that derive from the endowment effect, and that's why we can confidently say that ‘change’ might have been the last thing that Aurelio wanted. Richard Thaler, who won the Nobel Prize in economics in 2017 for his studies of real-world human behaviour, coined the term ‘endowment effect’ in 1980 to describe the situation when people demand much more to give up an object than they would be willing to pay to acquire it.² So we knew how difficult it would be to influence any customer, never mind Aurelio, to turn away from an incumbent.

That's why my team focused on reassurance, trust, and future opportunities. Right from the start, our reassurance strategy gave the impression of low risk and low switching costs. We were new to the customer, so we focused on relationship-building to establish trust between them and our account team. Our language, our dress, and our tone all aimed to support the perception of familiarity, as ‘one of them’. It worked because it was authentic. We had a lot in common with them.

Finally, we knew we had a me-too product, so we didn't try to invent some creative or clever value claims. Instead, we stressed future opportunities by presenting Aurelio with a concrete proposal for co-innovation to drive mutual growth. In terms of prices, our choice architecture gave Aurelio some appealing trade-offs. He ultimately picked a slightly higher price in return for more resilience in their supply chain, something that we felt our competitor couldn't offer with the same level of assurance.³

When I returned home after that flight, I called Kai, my consultant at the time, to celebrate the success and share my experience. I had met Kai during my most difficult time as an account manager. It was in the aftermath of the Great Recession. For me, that period between 2008 and 2011 marks the time when buyers focused on generating savings from their external spending. My toolbox of relationship-selling techniques, acquired and fine-tuned during my career to that point, became obsolete. What's the use of even the most sophisticated hammer when the problem is no longer a nail?

The nightmare of seeing the old ways disappear – and having no clue about what the ‘new ways’ would look like – led to many sleepless nights. My margins started to decline, first slowly and then rapidly. I worked under constant fear of losing business. Whenever I doubted my sales approaches and looked for alternatives, I realized that conventional sales wisdom was an empty well. It offered no responses to the newly emerging challenges.

That's when I came across Kai's first book, NeuroPricing, which introduced me to some intriguing concepts.⁴ When we met, he quickly hooked me on the latest insights from neuroscience and behavioural economics. His guidance helped me develop a new understanding of how people behave in negotiations and how those behaviours affect the outcomes. With a trial-and-error approach, I learned to apply those insights successfully, improved my business, and restored my confidence.

Those initial successes made me want more.

Time is money … but not why you think it is

Eureka moments usually come from mundane or tedious events, often by accident. Mine didn't come from a mouldy Petri dish, which is how Alexander Fleming discovered penicillin.⁵ Nor did I accidentally drop a mix of India rubber and sulphur onto a hot stove and ‘invent’ vulcanized rubber the way Charles Goodyear did.⁶

No, mine began with a mind-numbing line of questioning to a pharmaceutical industry expert, which I mercifully shorten and summarize.⁷ After 10 years in academia, I had a PhD in cognitive neuroscience in my backpack and my name on several scientific studies. Then I moved to what academics call the dark side – the real world of industry. The objective of my project at the time was to help a company set the price for a new medication.

‘Would you reimburse this drug at a daily rate of €1.50?’ I asked the expert.

‘Absolutely’, she said. So I continued the line of questioning.

‘Would you reimburse this drug at a daily rate of €2.00?’

‘Sure.’

‘Would you reimburse this drug at a daily rate of €2.50?’

There was no immediate answer. In hindsight I’m sure her hesitation was brief, but it jarred me at the time.

‘Hmmm… €2.50? That's a tough one’, she said. ‘Hmmm … Probably not. Hmmm… let's say no, OK?’

My questionnaire still had a few more price points above €2.50. It was now obvious that she would reject those too, but protocols required me to ask her about them anyway. This was not simply to populate the rest of the cells in my Excel sheet, but to observe how she would answer the questions and what she would say.

‘Would you reimburse this drug at a daily rate of €3.00?’

‘Hmmm … that drug does have some impressive features’, she said. ‘€3.00? Well, I already said ‘no’ to a price of €2.50, right? So this has to be a “no”.’

‘Would you reimburse this drug at a daily rate of €3.50?’

‘Nope!’ she said immediately.

‘Would you reimburse this drug at a daily rate of … .’

‘No way!’ she said, before I could even give her the number.

Did you see the shift in the pattern of the respondent's answers? When she thought the price was too low or too high, she said ‘yes’ or ‘no’ without hesitation. But at the price points of €2.50 and €3.00, she struggled.

That sparked my curiosity. I reckoned that this significant delay offered a glimpse into her subconscious decision making. My imagination raced all the way back to my freshman year in undergraduate psychology at the University of Tübingen, where I had taken a class in mental chronometry. That discipline uses software to monitor people's responses to tasks, then applies mathematical and statistical models to analyse their reaction times in order to infer what the brain is doing. The idea of mental chronometry might not attract standing-room-only lecture crowds, but it intrigued me so much that I took a student job in the reaction time lab in the psychology department. To give you an idea of what we worked on, let's try an experiment with three challenges (see Figure I.3).

The odds are very high that when you answered the third challenge, you made a conscious effort to inhibit your first impulse, which is to read the word. Applying that effort – along with the switch in tasks from reading a word to identifying an attribute – leads not only to longer response times but also to more errors.⁸ In general, the tougher the mental task or the harder the decision is, the longer the response time will be. In his bestseller Thinking, Fast and Slow, Nobel laureate Daniel Kahneman describes this as a process where the analytical ‘System 2’ of our mind suppresses the automatic, fast response from ‘System 1’.⁹

That survey with the pharma expert was my Eureka moment: if studying response times will get you closer to the truth than studying someone's literal answers to a question, this must have valuable practical applications in marketing. Techniques borrowed from experimental psychology and brain research could help a company answer two of marketing's most perplexing and mysterious questions: how much value do customers place on a product, and how much are they really willing to pay for it?

In terms of prices, it means that the closer you get to a buyer's ‘feel good’ price – the highest price that still elicits a pleasant, positive response in their mind – the longer they will take either to commit to a judgment (expensive, cheap, and so on) or to make a purchase decision.

That Eureka moment provided the inspiration to dig deeper into this intersection of science and business. I left consulting and founded my own firm with the aspiration of using neurotechnology to study consumer perception of advertisements, products, and prices. Over time, my approach and the supporting algorithms and analyses I developed – known collectively as NeuroPricing™ – became a valuable market research tool used by numerous companies.¹⁰

When Gaby and I met, she was eager to try out more techniques to improve her sales performance. Around that time, the application of insights from behavioural economics was becoming a popular and fascinating business topic, as best-selling books (Predictably Irrational, Nudge, and Thinking, Fast and Slow) and a Nobel Prize (Kahneman) attest. But neither those breakthrough ideas, nor the emerging field of neuroscience, had yet become assets to the businesspeople who still form the backbone of many industries and many supply chains around the world: B2B salespeople like Gaby.

Gaby challenged me with an excellent question that soon became our shared passion: can those consumer insights – and the ever-growing body of research behind them – transfer to her world, the vast and diverse world of intercompany sales?

The answer: Yes, they can!

The Invisible Game: Where business meets neuroscience and behavioural economics

Understanding the time lag in decision making is important, but just as valuable for a salesperson is to understand the nature of the time lag. What are the buyers thinking about? What will influence their judgment?

It didn't take us long to conclude that the conventional wisdom about sales negotiations, trainings, and outcomes offered answers that were incomplete at best. Conventional wisdom and classical economics say that buyers carefully weigh sales arguments against objective data, and then calibrate their trade-offs against corporate objectives and incentives. That's how it works, right?

Then again, maybe that's not how it works.

Maybe sales negotiations are not soulless economic encounters better suited for robots and algorithms. Do buyers really do all that careful weighing and meticulous calibrating? You'd be surprised.

The more we explored that nature of professional sales negotiations, the more we realized that there is a lot more going on, not only in the buyers' minds, but in the salespeople's minds as well. Sales negotiations take place on two very different planes simultaneously, each with its own rules. We coined the terms ‘Visible Game’ and ‘Invisible Game’ to make the distinctions between those planes intuitively clear.

In the Visible Game, two or more parties exchange data, facts, and figures so that each can analyse different options against a set of predefined, clear-cut criteria. These comparisons lead to a decision in favour of the one that best fits the buying criteria. This is a simple and obvious choice. In the absence of other differentiators, price often plays a significant role as a decision criterion. This is the kind of decision process that lends itself to automation, because algorithms outperform the human brain when it comes to analysing large amounts of data.

But early in their careers, salespeople usually come to appreciate two important lessons. First, most decisions – particularly in B2B situations – do not boil down to simple choices. They aren't the kinds of choices that a company can automate. Second, they learn that loading their customer with additional data, facts, and figures does not automatically facilitate a decision.

So what happens when there is no simple choice and no obvious solution? The brain tries to evaluate all current and future aspects of a situation and makes a judgment call. But because the human brain is not constructed to process large data sets or to endure complexity, it reacts by trying to simplify the situation as much as possible and as quickly as possible.

A wealth of theories and models attempt to explain decisions and attitude formation. Many of these theories and models focus on two processes that work in parallel, with some authors using technical academic phrasing to distinguish between them and others using colourful metaphors. Chaiken proposed the distinction between heuristic and systematic processing, while Petty and Cacioppo explain persuasion and attitude change in their elaboration likelihood model by alluding to the central versus the peripheral route.¹¹ On the simpler and elegant side, Jonathan Haidt has proposed the metaphor of the elephant and the rider.¹² The most prominent model in recent years, however, is Kahneman's distinction between System 1 and System 2.¹³ It has become a foundation for how people understand behavioural economics, and that's one reason why we refer to his model frequently in our book.

In addition, many experiments have demonstrated how human behaviour deviates from economic expectations. These effects, thoroughly tested and studied, serve as the scientific foundation of this book. Heuristics, biases, and fallacies – such as hyperbolic discounting, decoys, anchors, or the base-rate neglect – describe the brain's urge for simplicity, speed, and survival. The brain needs a fast response to any given external situation.

Learning to play the Invisible Game

The Invisible Game has three parts, with each one building on the insights from the previous one.

Two more things before you get started

Before you dive into Part I, we'd like to explain some of the techniques we will use to make our ideas and recommendations more accessible, and then ask you to complete one task based on your own selling experience.

As with any new skill, your ability to play and win the Invisible Game will depend on practice, recovery, and reinforcement. That's why our book includes several elements that will guide you through that process.

• Timeouts and fun quizzes: We will cover a lot of new ground in the book, and some sections will be more intense than others. That's why we will give you breathers so that you can step away, digest the information, and reset. Sometimes they will be pure timeouts, while on other occasions we will use a fun quiz to ease you into a new section.
• Situations: The Invisible Game includes various practical situations that help you to see how the key ideas and the underlying science work when applied to real-life selling situations that most salespeople have encountered at least once.
• ‘Sticky’ notes: We will condense some of the most important ideas in the book onto notes to reinforce them and make them more memorable. You will find nine notes spread throughout the book. Of course, if there is another idea that you feel needs more reinforcement, we encourage you make your own notes as you read through the book.

Now let's get to the task based on your own experiences. Think back to Gaby's recollections of Mr. Anderson's debrief. We'd like you to do a similar debrief. If you are a professional corporate salesperson, we suggest that you think about a couple of deals you have recently participated in. Take out a piece of paper and write down the reasons why you won or lost, and note what you would do differently if you could repeat the negotiation. If you are either new to sales, or if selling is only one part of your work as a business owner or a professional, we suggest that you write down some questions you have or some aspects of sales that you find particularly frustrating.

Use that piece of paper as your bookmark, because we will refer to it from time to time to see how your answers change.