It’s the middle of Q2 and sales are lagging.
If you can’t get a new influx of buyers in the next month, you’ll miss your growth goal *whomp whomp*
You decide to experiment with Google Ads.
You’ve never set up a Google ad before, but you’re a fast learner so you decide to do it yourself rather than hiring a specialist.
You set aside 5 hours to get your first ads live. That’s lots of time, right?
Unfortunately, not. Three days later—and 10+ hours of reading blog posts and troubleshooting—and you’re still working on it. Darn it.
Finally, you hit the pretty publish button and your ads go live.
You wait a week to see the results… but they’re not good. Your conversion rate is way lower than you thought, and the ads cost much more than anticipated.
You’re disappointed, but you know this is all part of the game.
Rather than giving up, you decide to test a few more campaigns until you find something that works.
Knowing that it took you 3 days to publish your ads the first time…
How much time do you set aside for the project this time?
In today’s edition of Why We Buy, we’re exploring the Planning Fallacy – why we’re constantly underestimating how long it will actually take to finish tasks and projects.
Let’s get into it…
The Psychology of the Planning Fallacy
We’re wired for positivity and optimism, which makes us believe we can do more in less time with fewer resources. This is called the planning fallacy.
Even if you’ve already seen how inaccurate your predictions were in the past, you’re still likely to underestimate how long projects will take or how many resources you’ll need the second time around.
Psychologist Daniel Kahneman, whose book Thinking, Fast and Slow you’ve probably heard of (or read), discovered the planning fallacy in 1979.
The planning fallacy appears in all areas of our lives. It’s the reason why 80% of startups fail to reach their goals.
And it’s why people end up spending thousands more on home renovations than they anticipate.
Guy Kawasaki, the author of Rich Dad, Poor Dad, understands how the planning fallacy affects businesses. He says, “As a rule of thumb when I see a projection, I add one year to the delivery time and multiply revenues by 0.1.”
Inside Your Buyer’s Mind
Your buyers aren’t immune from the planning fallacy.
Just like you, your prospects and current customers are often wildly ambitious when it comes to setting project timelines or estimating how long it will take to get value from your product.
They may visit your website or sign-up for a free trial. But if it takes longer than expected for them to get results or take the next step, they may bounce.
It’s your job to set clear expectations for buyers and to make getting started as pain-free as possible. Otherwise, they may get frustrated and walk away.
How To Apply This
Alright, so how can we apply this right now to sell more?
Where are YOU falling into the planning fallacy? It’s easy to add a new task to our project management software and click a due date. It’s harder to meet that deadline when you and the team are busy with dozens of other projects.
The book, Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork, argues that rather than trying to figure out how to do something yourself, leaders who want to scale should delegate when possible.
Delegating more tasks to experienced people frees up your time and allows you to refocus on the most important stuff.
Monitor product usage
People will cancel subscriptions if it takes them much longer than expected to use or setup. Subscription businesses should monitor usage to adjust trial periods and outreach as needed to retain more users.
Leadpages noticed that users who struggled to launch their first landing pages would be more likely to cancel. To help more users to succeed, they offer 1:1 feedback from experienced marketers—super smart, right!?
Create small wins
Breaking big, scary projects into smaller steps can motivate people to keep going when things don’t happen as quickly as they hoped.
Nathan saw the power of small wins firsthand after publishing his course on how to write a book. He was surprised to see readers’ were willing to spend much more to get access to a checklist.
What was so special about that checklist? It was a breakdown of the book writing and launching process into small daily, weekly, and monthly steps.
Small wins can push people to achieve big goals.
The Short of It
People underestimate how long tasks and projects will take and how many resources they’ll need to complete them.
The planning fallacy leads to disappointment and may cause customers to cancel subscriptions or put projects on hold if they can’t get results as quickly as expected.
Assume your buyers will underestimate how much effort is needed and strategize how you can help them to get value quickly.