Sell new ideas by telling non-experts “why,” experts “how”
/What’s the best way to persuade people to adopt and act on new ideas?
It’s ongoing question in the investment industry, where we’re often trying to present products that are either new to the marketplace or new to a specific investor or intermediary.
Why or how?
There are two major schools of thought on how to best frame (that is, package and present) new ideas. One, popularized by Simon Sinek, recommends focusing on the “why”—the idea’s underlying purpose. The more people understand the motives and goals behind an idea, the theory goes, the more they’re able to engage with the idea. A “why” framing works at an abstract, big-picture level and emphasizes outcomes.
a very young simon sinek. posted to flickr by cea+ (CC BY 2.0, license below)
The other view, most recently put forward by Adam Grant in his New York Times bestseller Originals, suggests focusing on the “how.” A “why” approach may run up against strongly held convictions, goes this argument. Salespeople, marketers, and other persuaders are therefore better off explaining how the new idea will be implemented, using concrete details.
These are two very different cognitive approaches. Which is best?
An academic research team looked into it. Specifically, they wanted to know how well each framing approach worked with two different audiences: experts and non-experts in evaluating new ideas. If your mind just leaped to sophisticated and unsophisticated investors, you know where this is going.
There’s a lot of evidence that the way in which audiences interpret an idea affects their reaction to that idea. What’s more, people tend to place more weight on information that’s consistent with how they interpret information. Given all this, you should be able to influence an audience’s reaction to a new idea by how you frame your pitch.
Experts rely on experience, non-experts on abstract thinking
There’s also good evidence that experts and non-experts interpret information differently. Because non-experts have little to no experience in evaluating new ideas in areas where they’re not experts, they rely on abstract thinking, focusing on the idea’s desirability and ultimate benefits. On the other hand, experts in evaluating ideas don’t think abstractly—instead, they rely heavily on their experience, judging an idea’s likelihood of reaching an outcome and how that outcome will be achieved.
From this starting point, the researchers came up with two hypotheses. First, “why” framing should be better at persuading non-experts. It deals with outcomes and doesn’t get into practical details that would be lost on non-experts. Second, “how” framing should speak best to experts. They want concrete information that will help them assess whether the new idea can actually work.
The team asked expert investors (venture capital and angel investors; current and former MBA students) and novice investors (non-experts) to evaluate investment pitches for two new health products: a wearable sensor and a sun lamp.
Why framing
Here’s how the sensor was described in the “why” framing:
Why consider TrackMee? Here is WHY:
To train like an elite professional and maximize your training effectiveness
To achieve ambitious training goals with super accurate insights
To know your limits, avoiding physical exhaustion and train at your optimum level
To optimize your diet, improve your fit[ness], and make a big impact on your health
How framing
And with the “how” framing:
How to use TrackMee? Here is HOW:
Select your TrackMee model and buy it on its website
Wear your wristband and start your workout: TrackMee stores and monitors your data
Do not recharge TrackMee: it is charged by your movements
Listen to TrackMee: it emits sounds when your physiological parameters reach critical thresholds
Sure enough, the researchers’ assumptions were correct. Expert audiences were far more persuaded by “how” framing, while novices preferred “why” framing.
“… Innovators championing novel ideas have a better chance of appealing to novices (e.g., the crowd, friends, family members) and attracting resource commitments from them when their idea is pitched emphasizing a why framing and abstract arguments. But the same ideas should be pitched emphasizing a how framing and concrete arguments to experts (e.g., professional investors, innovation managers). ”
(Check out the original research and Harvard Business Review’s summary for more details.)
More critical for new investment ideas
Framing is even more important, these researchers say, when the new idea is intangible and the idea is conveyed orally as in a face-to-face meeting or with print or online text. Of course, investments are a classic example of an intangible product.
These findings jibe nicely with what we know about how different audiences react to new investment ideas. For simplicity, let’s call institutional investors and RIAs “expert” audiences and most retail investors and their financial advisors “non-expert” audiences. (Not because advisors as a whole are non-experts, but because they are on the front line for communicating to their non-expert clients and will prefer to get information that is already framed for non-experts.)
We know that advisors and retail investors prefer less information on process, strategy, and other details. They want to know the big picture, the outcome—all “why” stuff. We also know that RIAs and institutional investors want to kick the tires and drill down into process. They want to understand the “how.”
When “process” does and doesn’t work
We can also draw some useful conclusions.
First, it should give us more confidence in avoiding process and other “how” details when we’re communicating new ideas to non-experts. If retail salespeoples’ (correct) intuition that “process doesn’t sell” isn’t persuading your portfolio managers because it’s based on anecdotal experience and not on empirical research, here’s the research.
It also strengthens the case I’ve made for why expert audiences really hate what they perceive as marketing. When you dig deeper, it’s clear that what institutional and other sophisticated investors really object to is being told what conclusions to draw. Drawing conclusions is exactly what “why” framing does. Novices need an idea’s implications explained to them, whereas experts are highly allergic to this framing.
You’ll often hear people attempt to describe good institutional communications with such vague phrases as “more factual” and “less salesey.” For this audience, it’s just one word: “how.” Provide clear and concrete details, create use cases and scenarios, and by all means don’t do anything they can interpret as drawing conclusions for them.
We’re not always talking to a purely expert or non-expert audience, however, so you’ll need to modulate this guidance. For example, many advisors to non-experts are quite sophisticated and may want some of the “how.” This might include proof points that provide credibility such as portfolio team longevity and experience, investment characteristics, and other supporting facts. These might be mentioned in advisor-only pieces, and they would still be relatively high-level.
At the same time, institutional audiences are not necessarily all experts. They might include HR staff sitting on corporate investment committees, for example, or executives inside an organization who will need new investment ideas explained to them. RIAs and private wealth managers may want help explaining a new idea to non-expert family members who aren’t key decision makers but whose buy-in is needed for consensus. Retail materials could be re-purposed for this niche audience.
Making a hard job a little easier
Let’s give ourselves a break: it’s hard to sell new investment ideas. This research tested responses in a staged setting. When faced with real choices, investors tend to be more risk-averse than they are reward-driven. Their advisors usually mirror these attitudes. Outside of speculators, most investors and advisors seem to believe they aren’t giving up much reward for being patient and observing how others benefit from a new idea before they jump in.
All the more important that we know our audiences—and frame our persuasive communications in ways that appeal to how they think.
Image courtesy of CEA+ on Flickr. License: CC BY 2.0