Thursday, November 6, 2008

Black swans, gamblers and selling

Wow, what a week. I have had three full day courses in one week and am immersed in a book teaching me about unpredictability. There is a reason I call myself 'Sean is always learning'.

One of the three courses was actually sales training which we had in-house. More about that later.

Within the book, Black Swan by Nassim Nicholas Taleb, there is this bit about beginners luck. All gamblers - ie people who gamble regularly, and have being doing so for some time - believe in beginners luck. They remember it fondly because, with few exceptions, they seemed to do better when they started.

Nassim explains that this idea that they did better in the early days is probably true. The reason being, those who didn't do well in their first days of gambling are much less likely to be gambling years later than those who did well. If you lost straight away, you would be more likely to give up.

It is almost like natural selection, but actually more 'random' selection.

Now, Pareto Phoneand Pareto Fundraising exist to help charities raise more money and we are pretty damn good at it. And Paul Roberts and I set the up to genuinely help charities. I am very passionate about this, and very keen to help them.

Consequently my sales 'technique' has been very forthright. Very quickly in a relationship with someone from a charity I start telling them how we can help. A poor victim of this approach from UNICEF sat next to me at dinner at IFC two weeks ago, and has probably not recovered since.

I am very passionate about it, and have the evidence to back it up - and when the charity agrees to work with us they find out it was true. I am also impatient, and really believe that by not persuading the charity to make as much money as possible (ie hire Pareto) I am letting the charity's beneficiaries down!

This 'full-on' approach has served us well in that most of the charities we have long term relationships with were brought together with us following such a meeting. So, when looking at the best sales 'technique' it is easy for me to say 'Well, being honest upfront and presenting our credentials / ideas has worked in the past - so this is how we should do it in the future'.

Hopefully you can see the flaw in this thinking. It is identical to the gambler's mistake. The gambler doesn't see that some people didn't have beginners luck - because they are no longer there.

The absence of contrary evidence leads the gambler to the wrong assumption. All the gamblers he or she knows also had beginners luck.

So, for Pareto we don't see all the charities we don't work with - and we don't have the same evidence of how they didn't become partners. So my theory (carrying on doing it the same way) is clearly flawed. Of course the answer is to have more than one approach. Luckily, the new boss of Pareto Fundraising (Martin Paul) is Ying to my Yang so that should be right.

Looking at charities - or other businesses, it is easy to see the same pattern emerging. A charity that has done well from lottery fundraising, or a technique based around corporate fundraising will find it really hard to see what it is not doing.

This is brilliant, mind expanding stuff which is going to have profound impact on my approach and therefore allow me to help more charities (through Pareto companies).

I can't resist though, we do pretty much double charity appeal income within 12 months so if you want... ow, Martin leave me alone!

Check out the book for a better explanation.

Sean Triner

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