Buyers respond to confident advice

Why is Jim Cramer still on television and what does it say about B2B marketing and sales?

Jim Cramer, host of Mad Money, is a very confident host of a show that advises viewers on financial investment. Yet his track record is a dubious one. In fact, Cramer has been accused of pandering to corporate executives at the expense of the investors he is advising on his show.

Why do people still listen to him and why does he still have a show?

A recent study by Don Moore of Carnegie Mellon provides some insight into the link between people’s self-confidence and how it affects the way others respond to their advice.

The study showed that not only do we prefer advice from a confident source (no surprise there), we prefer it even to the extent that we’ll forgive a poor track record.

Moore suggests that, in competitive situations, people who give advice have an incentive to exaggerate how confident they are about the information they are giving. Cable news is certainly competitive, with each show struggling to win and keep their fickle audience.

How the experiment worked

In the experiment, volunteers were paid cash to correctly guess the weight of people in pictures they were shown. The volunteers could buy advice from four other volunteers. The guessers were told how confident each of the advisers was.

The guessers bought more advice from the confident advisers. This in turn caused the confident advisers to improve the precision of their guesses, which made them more confident, which increased the number of guessers who bought their advice.

The conclusion of this experiment? If you sell advice or expert opinions, confidence pays.

Moore interprets these results to mean that “following the advice of the most confident person often makes sense, as there is evidence that precision and expertise do tend to go hand in hand.”

But the link between confidence and accuracy does occasionally break down. When the topic is both complex and political, the thoughtful advisers who point out uncertainties will lose to those who confidently emphasize a single message.

What those of us in B2B marketing and sales can learn from this study

1. Confidence is critical. The study confirms what most already know, being confident and appearing confident is important if you want to persuade others to your point of view.
2. Confidence is necessary, but insufficient. It takes both competence and confidence. The buyer’s journey in business purchases is a long one and involves many people. It’s a process that has largely been rationalized in most companies. If you are wrong or provide poor advice to your buyers, they will eventually find out. They will start to avoid you and your advice, no matter how confident you are.
3. The more political the situation becomes, the bigger the role that confidence plays. If the buying process becomes very political in a company that you are selling to, then confidence becomes even more important.
4. Don’t let yourself lose to confident players with inferior products. If the buying process becomes very political in a company that you are selling to, then watch your competitors very carefully. A sales team that shows great confidence and aggressiveness can win over one that has a better product but is less emphatic in its message.