How Do Customers Make Purchase Decisions?

It’s the elusive question all business owners want to understand – how do customers make purchasing decisions? What triggers them to buy one brand over another? 

Customer purchase behaviour is a complex process that all marketers and business owners can familiarise themselves with. Being familiar with how your customers decide to purchase your product or service is the key to closing those sales figure KPI’s!  

Understanding the buyer's journey and their decision-making process will bring you one step closer to sales success.

Firstly, you need to understand how your customer processes the information you give them – before making a purchase. This is critical to the success of your marketing campaigns because you can use your knowledge to develop better marketing and sales practices. It also keeps your expectations realistic. Before we delve right into the consumer psyche, let’s start with a bit of background information. 

Top Statistics On Consumer Shopping Behaviour

According to HubSpot's data on global purchasing behaviour in 2020, almost half of consumers tell their friends and family about their favourite purchases at least once a week. This goes to prove that happy customers are a business's greatest asset. It also shows that consumers trust referrals from people they know, more than they trust direct marketing from a company.

How can you use this to stand out from your competitors? By making your customer experience unforgettable, of course. This way, your customers will act as your brand ambassadors.

Other fascinating statistics:

  1. 87% of shoppers start their product search on online platforms.
  2. Customers appreciate exemplary customer service, now, more than they did previously.
  3. Shoppers expect consistent service delivery across different platforms.
  4. More than 30% of social media users expect brands to respond to their queries within half an hour.

How Does Cognitive Bias Affect Our Purchase Behaviour?

Cognitive bias shapes a customer's purchase behaviour and is what guides us to buy from a particular brand instead of another. What is cognitive bias? It is the deviation from the norm in a consumer's judgement that causes them to create their own subjective reality based on the information they receive from different sources. 

You need to understand that along the customer journey, we are flooded with information from different sources. Our brains then develop a system to rank information and identify the kind of information that deserves more of our attention.

This can be better explained through the 6 types of cognitive bias that affect customers:

  1. The power of now – the more a customer has to wait for a product, the weaker its appeal becomes.
  2. Authority bias – A customer's decision can be swayed if the information is coming from an authority source or an expert.
  3. Category heuristics – customers are impatient and don't want to process complex information when making purchases. Shortening the product descriptions may ease their purchasing decision.
  4. The power of free – free gifts are powerful purchase motivators.
  5. Scarcity bias – if a product is scarce or its stock decreases quickly, it will become more desirable to the customer.
  6. Social proof – shoppers are more likely to test a brand with impressive reviews and high ratings.

With these 6 cognitive bias tips in mind, how can YOU use this information to increase your sales

  • Make sure your proposition is compelling to the customer as they evaluate their options.
  • Position your brand strategically so that your presence is felt by the shopper as they evaluate brands
  • Fill the gap between when the customer is triggered to buy a product, and when they actually do – to ensure they are not solely exposed to your competitor's products.

What Is The "Modern Consumer Decision Making Process"? 

At this point, it’s important to understand how we, as consumers, process these decisions. There are five main stages in the consumer's decision-making process:

  1. Recognition of the need — shopper acknowledges that they need a product
  2. Information search — they explore different products from various brands and get as much information as possible
  3. Evaluation — they compare the different products
  4. Purchase — they settle on one product and buy the product
  5. Post-purchase behaviour — how do they act or feel once they buy the product?

The search & Evaluation Process

Believe it or not, there is a psychological process that we, as consumers, go through when trying to decide where to spend our money and place our purchases. There are a lot of factors that come into play (i.e. age, demographic, socio-income, etc.). Still, typically, once a customer establishes a need or want, they either do an information search, transactional search, or a compulsive buy.  

This ‘search and evaluation process’ can be split into four phases, and in these phases, we as marketers, and business owners, can try to target decisions that will convert to sales.

PHASE 1 – The trigger: 

  • Shoppers buy a product either because they need it or they want it. ‘Needs’ are the products that they can't live without, while ‘wants’ are the items they purchase to make their lives more comfortable. 

Your Task: Understand what triggers your customers to purchase your products? Figure out if your product or service is a need or a want?

PHASE 2 – Exploration: 

  • Once a customer identifies that they need a product, they then begin looking for different alternatives. This is the phase where they look for as many brands as possible so that they can have options to choose from. If customers are truly committed, they may opt to do an information search where they get as much information as they can, about a particular product or brand, either internally (i.e. through their own experience/memory) or externally (i.e. online or through referrals). 

Your Task: Ensure that your brand is visible on the channels your customer is likely to go and perform an information search on.

PHASE 3 – Evaluation:

  • This is the comparison stage where a shopper looks at the brands available, looking for the one that suits their needs best. For example, when it comes to prices, a customer can evaluate the products using the criteria of cheap vs. best. ‘Cheap’ means that the product costs less than the other brand while 'best’ carries various meanings either in terms of value, popularity, quality performance, etc. 

Your Task: Know where your product/service sits in the marketplace and how it compares to your competition? Do you provide high quality, win by popularity, or do you compete based on price and value?  

PHASE 4 – Purchase & Experience: 

  • The customer buys the product and forms an opinion of the brand based on their experience with it. Either during the purchase process, during the use of the product and its performance, or after the long term effects of the product. 

Your Task: Ensure your purchasing process is effortless and enjoyable. Conduct testing and follow up on your customer reviews and how your product performed. Smart brands that know the 'ins and outs' of their business tend to be the most successful.  

Where Do Customers Go To Make Decisions And What Tools Do They Use?

Google’s recent purchase behaviour research has found that (at least online) customers spend more time in the exploration and evaluation stage, forming what can be described as 'a loop'.

For example, assuming a shopper wants to buy an appliance, they will explore different brands and shortlist the ones that they feel suit their needs, preferences and budget. They then move onto the evaluation stage where they take a closer look at those shortlisted brands, hoping to make a purchase. 

At this stage, however, most customers end up feeling unsatisfied with their options and move back to the exploration stage, repeating the process multiple times ('the loop') until they finally find a product that satisfies all their needs.

Customers' touchpoints are the areas a customer interacts with your brand from the time they identify a need, to the point they finally make a purchase.

For example, a customer may have their first interaction with your brand from an ad, they then look at your online ratings, visit your website, and finally come to your shop to make a purchase.

The main customer touchpoints online might be:

  • Social media
  • Search engines
  • Blogging sites
  • Forums
  • Review sites
  • Coupon sites
  • Branded sites

Other tools include retailer sites, publishers, video sharing sites, etc. Shoppers spend most of their time shifting tabs and navigating various sites, and at the same time, they might be exploring different brands.

How Can You Improve Your Marketing Strategies Using Consumer Purchase Behaviour?

As a business owner, you can forecast your customer's purchase decision-making behaviour in advance, by first identifying the activities, interests, opinions, needs and benefits of your product or service.  

Your Task: Find out what yours might be, and apply them to your daily marketing operations and promotions.

Ensure your customers are in the ‘right frame of mind’ or the correct phase of their purchase decision to want to buy from you. If they're not, they will need a high-value trigger to make that purchase. Remember that trigger needs to be of value to them, not you. 

Your Task: Map out your customer's buyer journey to help you target them effectively.  

Use your customer's purchase decisions to form communication messages so that you can sell more. Start by evaluating your marketing strategies to ensure you appeal to your ideal customer.

Your Task: Develop your content pillars to address your customer's purchase decisions. This will ensure you naturally align with the fundamental concepts or influences that could make you the sale.

  


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