Huh? Now that sounds counter-intuitive, right?
However, a recent study from PowerReviews and Northwestern University found the likelihood of a product being purchased doesn’t necessarily increase as its star rating increases.
When the rating is between 1 and about 3 stars, people don't bother. But a customer is more likely to purchase a product with a 4 star rating that one with 3 stars.
Purchase likelihood then peaks when the average star rating of a product is between 4.2 and 4.5 stars. Once the average star rating surpasses this sweet spot, however, the purchase likelihood actually drops. Surprisingly, a shopper is more likely to purchase a product with an average of 4.2 stars than one with a 5 star rating.
Take a look at the graph below and you’ll see that a perfect 5 star rating is NOT the most desirable.
Why a 5 Star Rating Isn’t the Best
Why do purchases drop off a bit once the average star rating surpasses 4.2-4.5? The Northwestern research team believes this is because consumers perceive ratings closer to a perfect 5.0 as “too good to be true.”
Buyers are smart and know that a product can’t be all things to all people. And they appreciate negative reviews as an important element in their decision-making process. In fact, previous PowerReviews research found that 82% of shoppers specifically seek out negative reviews. Among shoppers under 45, this number jumps to 86%.
What Does That Have To Do With KnowBe4 Sales?
In the IT space, we are dealing with very smart people, who if you leave them to their own devices will buy things online after reading reviews and talk to their peers and never talk to a sales rep. They trust their peers more than they trust the brand itself.
IT people are used to change, but there is always an innate resistance to change, especially when it's about their users who they have often a somewhat strained relationship with.
Today, information is everywhere, and prospects and customers share feedback on independent sites like Gartner who are collecting verified reviews. Some call this the fast growing "feedback economy" which forces sellers to change the way they approach buyers.
Transparency: The Next Era In Enterprise Sales
Let's have a quick look at how sales has developed over time, and note that this is an evolution with steps that build on top of the earlier ones. Nothing has been thrown away, the process has evolved using all earlier existing steps.
The most successful approach is "feature-benefit" selling: "Look at this great feature, your benefit is so-and-so and here is the story how that would work for you." Has worked since the 1920s. Still works, and we are still using it.
Around 1980, this got a bit more refined into what they called Solution Selling. The "feature-benefit" was still there, but what was added was the "discovery" phase which we are using to the max in KnowBe4, to help the buyer focus on their pain points. The seller is using a more consultative approach. Still works, and we are still using it.
By now, the next major wave is hitting. It's called the Transparency Sale. It's based on the fact that no product is perfect, the buyer knows that, and sales needs to own that dialogue too.
In the Transparency Sale, sellers will still use the "feature-benefit-story" approach, will still do a lot of discovery to get to the pain points, but also take the position that they are not a perfect 5 and help a buyer to understand why.
That disarms the buyer, and engages the two in a true conversation about the value of the platform. Reps will still discover, they will still position features and benefits, but they’ll also present applicable shortcomings when relevant. For instance, a rep can be completely honest why customers churn. They can discuss the magic quadrant and things that are on the roadmap but are not here yet.
Shorter Sales Cycles
Sales cycles will shorten, as the relationship between buyer and seller will include more trust. Sales reps will spend less time on opportunities they should have "qualified out" earlier. Buyers will be less likely to go dark or believe false claims of a competitor, because that trust and openness will be established from the beginning. Sellers will differentiate through their honesty and openness, and get POs in faster.
To win in the future, sellers will need to create a trust relationship and become the source for information the buyers cannot get anywhere else: provide the real deal about the product.
Just like brands and retailers displaying positive and negative ratings and reviews on their own web pages online, the successful future sellers will lead with transparency.
Part Of Transparency: Putting Your Prices Online
The idea of putting pricing online used to terrify many B2B software entrepreneurs. They worried about competitors seeing their pricing, and then undercutting them. And they feared giving enterprise customers yet another negotiating lever to squeeze out lower prices.
Despite these fears, many of the hottest software companies like InsideSales.com, MarkLogic and AppDynamics now put their pricing online. InsideSales.com, a sales acceleration software company valued at $1.5B, makes for an interesting case in point. As recently as June 2014 they shunned communicating their pricing online, and required web visitors to fill out a detailed form in order to request pricing. Now they prominently display their platform editions and price points.
Hot B2B Saas companies have several motivations for making their pricing public, the most likely ones being lead qualification, optimization opportunities and SEO improvement.
- Lead qualification: Clearly sets expectations on how much the platform will cost so that less serious prospects or those looking to be educated do not waste the sales team’s time.
- Optimization opportunities: Allows to test different package configurations, messaging and price points, and see how each change impacts conversion.
- SEO improvement: One of the first things a buyer wants to know is price, and so prominent placement in search terms related to “cost” and “price” has the opportunity to drive substantial incremental inbound traffic.
Last but not least, a simple google search gives people access to our pricing anyway, through old price list PDFs, channel partners' websites who have SKUs and pricing online, and forums like SpiceWorks where customers exchange pricing data. Our competitors already have our list pricing, and we have theirs.
Since KnowBe4 is the disrupting player in our business anyway, we decided to make part of our our pricing (up to 5000 users) more transparent and make our competitors even more nervous!