This article is an excerpt from the Shortform book guide to "To Sell Is Human" by Daniel H. Pink. Shortform has the world's best summaries and analyses of books you should be reading.
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What do caveat emptor and caveat venditor mean? How has the general feeling around sales shifted?
Caveat emptor is the traditional, profit-focused sales model while caveat venditor is the more modern, service-focused model of selling. The general value system has shifted from “buyer beware” to “seller beware” due to the rise in technology and social media evening the playing field between sellers and buyers.
Continue below to learn more about caveat emptor and and caveat venditor.
From Profit-Focused Sales to Service-Focused Sales
Sales was traditionally built on a transactional, self-serving value system. Sales people were a necessary information authority, and people were dependent on them for acquiring services or goods. They also played a crucial role in an economy dependent on production and consumption. When the global financial system fell apart, and access to the internet expanded, it seemed as if there might no longer be a need for salespeople. Despite that, sales has remained a steady industry. What has changed is the role of the salesperson, and how we define “selling.” Specifically, there has been a shift from caveat emptor to caveat venditor sales. The difference between caveat emptor and caveat venditor sales is that the former are profit-oriented sales, while the latter are service-focused.
How Do We Feel About Sales?
We generally don’t trust or like traditional salespeople. Sales is seen as a “dog eat dog” industry full of selfish people who can and will take advantage of you to make a quick buck.
Studies show that the strongest emotion associated with sales is distaste—people associate sales with deceit and lack of integrity. Words commonly associated include “aggressive,” “sleazy,” and “manipulative.” When asked what they picture when they think of sales, respondents described a pushy dude in a suit, selling shitty, used cars to unsuspecting buyers.
What Is the Source of This Negative Association?
According to old-school “economic reasoning,” all people involved in sales transactions are fully informed, making rational choices and prioritizing self-interest. The truth is that we are not always making rational choices intended to serve our own self-interest, and we’re not actually fully informed.
What does this mean? Let’s say you are a used car salesman. Only the seller knows the quality of the vehicle for sale, so only one party is fully informed, leaving your buyer less informed by default. Not being equally informed creates problems in the seller/buyer dynamic, whether there is ill will or not. For example, the imbalance can cause your buyer to feel suspicious of your motives and consequently less willing to move forward with a transaction.
Furthermore, deceitful sales practices have caused people to associate all sales practices with distrust. This means people with integrity have historically been less likely to involve themselves in the industry, which increases the negative association.
What Has Changed?
Due to technology, buyers and sellers now have equal access to information. This has forced a shift in the value system from caveat emptor to caveat venditor.
Value System #1: Caveat Emptor = Buyer Beware
This is the value system traditional sales runs on. It places the buyer in an uninformed, inferior position where they can be taken advantage of. It typically has results that greatly (or solely) benefit the seller. Caveat emptor is problematic because it encourages the seller to exploit the buyer in order to make a profit. Its structure inherently discourages integrity and rewards deceit.
An example of the caveat emptor philosophy is Joe Girard and his “Rule of 250.” Joe says each of us has 250 people in our lives who we are close enough to invite to major events. Reaching one person gives you access to their 250, and anyone you connect with there will unlock their 250. Tapping into this network, Joe uses manipulation and dishonesty to build connections. He might make a cold call to a random number, and pretend to the caller that he is confirming their purchase (which they have not made, and he knows that). When the caller says they don’t know what he’s talking about, he might then make a pitch for them to consider buying a car. In living by caveat emptor, Joe represents the problem.
Value System #2: Caveat Venditor = Seller Beware
The tactics listed in Joe’s example wouldn’t be effective now. Caller ID would prevent someone from answering an unknown number, in most cases both targets would be at work (no stay at home wife in this economy), and Joe would likely be blasted on Yelp for being slimy. With buyers having access to information, there is an increased pressure for sellers to have integrity. Additionally, social media acts as a “checks and balances” system. Consequences for nefarious sales tactics are swift and far-reaching (you can go viral and lose your job in the same day). Sellers in the new economy benefit most from seeing themselves as servicepeople, identifying problems and providing pathways to solutions for buyers to choose from.
For example, Tammy Darvish, the vice president of DARCARS auto group, has allowed the changing industry to reshape her sales model. At DARCARS, buyers do most of their research before arriving at a point where they will engage with an actual salesperson. In many scenarios, buyers know more than sellers about the product they are seeking to buy, so the leverage resides with the buyer, which changes the role of the seller. The seller’s job is to support the buyer to make sense of the information available to them. Darvish looks for persistence and empathy when she selects salespeople for hire. Her approach to sales is human-centric and rooted in service. In choosing to live by caveat venditor, Tammy represents the solution.
The major benefit of the shift from caveat emptor to caveat venditor is that it has blown up three significant myths about the sales industry.
Myth 1: People in sales are less intelligent and less sophisticated than their peers in other industries
Operating via caveat venditor requires a sophisticated skillset (moving people is a complex goal to navigate), and sales in this arena requires both intellect and creativity.
Myth 2: Being an effective salesperson requires sacrificing integrity and being money focused
Sectors that are more focused on non-sales selling make up the majority of transactions, and none of these involves money. Even the sectors that involve exchange of goods for money are not driven by money anymore.
Myth 3: Some people are good at sales and some aren’t
There is no such thing as a natural salesperson. We are all innately equipped and motivated to sell. We all have that instinct and can improve the skills that stem from it.
In summary, the low road is “out,” the high road is “in.” The low road (caveat emptor) erodes long-term success in favor of short-term satisfaction. The high road (caveat venditor) suspends immediate gratification to facilitate long term satisfaction and success.
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