The Psychology Behind Consumer Decision Making
In today’s age of increased dependence on technology, consumers have at their fingertips more information than ever before. By the time they actually step foot in a store, many already have the facts, figures and details of each option available to them. Today’s consumers are therefore much more complex, and no longer solely price focused.
In order to succeed, retailers must transform the way they do business in order to build a deeper connection with potential customers. By better understanding the psychology involved in the act of purchasing, businesses will be able to more effectively construct robust lead management and sales acceleration strategies.
As a retailer, it's easy to assume that as long as your prices are lower than your competitors, you’ll attract more customers. If you’re selling T-shirts for $10.99 compared to $15.99 at the boutique down the street, it makes logical sense that you’d be the obvious choice. Rational choice theory assumes that consumers will always make the decision that's in their best self-interest or that yields the highest benefit. By spending $5 less on a T-shirt, I can boost my savings or have more money for a much needed car repair. However, research has shown that for consumers choice is at times void of rational and logical thought.
Time and again, consumers prove to be influenced at a higher degree by emotional, social and cognitive factors when making economic decisions. In the age of social media, consumers are looking to the brands their friends or even celebrities are using, basing their purchase decisions on the social implications their choices will have. Another major influence? The potential for personal gain. Consumers are willing to spend more for a product of superior quality, so long as the benefits are clear and compelling.
In order to build and maintain brand awareness in a crowded market, many retailers take an aggressive approach to connecting with prospects as well as established customers. Through daily promotional emails, ads on social media sites, repeated mailings, etc., consumers are constantly bombarded with information.
While companies hope that these frequent interactions will lead to conversions, they may actually be doing more harm than good. It's essential that retailers strike a balance when nurturing a lead. Too many attempts to contact can actually drive consumers away, pushing them into the arms (and stores) of a less aggressive competitor with a more strategic lead nurturing plan.
If you’ve ever spent a day visiting car dealership after car dealership in an attempt to find the right car at the best price possible, you’ve likely experienced this phenomenon. Decision fatigue occurs when a consumer, mentally exhausted from weighing the available options, impulsively chooses a product or service simply to end the grueling decision-making process. Furthermore, in some cases decision fatigues causes consumers to abandon the process altogether, opting to go home empty handed. When consumers have reached this point, they have little regard for the consequences their choice may have.
Research has shown that consumers are less likely to experience decision fatigue if they're able to make the more difficult decisions in the decision-making process early on. By addressing these topics early — e.g., price or competition — businesses are more likely to keep customers engaged and interested. In addition, by nurturing leads in a controlled, conservative, yet consistent manner, retailers are able to prevent fatigue while also continually demonstrating value.
Keep it Simple
The easiest way to convert leads to paying customers is to make the path to point of sale as simple as possible. Consumers should be able to easily gather information about a company’s offerings, whether from a website, social media page or even a customer service representative over the phone. By maintaining availability and transparency, retailers are better able to build trust with prospects. This will ultimately leave the consumer comfortable and confident in their decision to move forward in the purchasing process.
While we often focus on all that's available to consumers, it's important to note that retailers too have access to tools and resources that allow them to target the appropriate audience through the most effective channels, at the optimal time. Through the proper implementation of these resources, businesses are better positioned to achieve and surpass sales targets and increase their customer base. Furthermore, by aiding navigation, building consumer trust and simplifying options, retailers can build a brand that remains accessible, visible and relevant among the sea of information consumers come into contact with every day.
Sean Gordon is the CEO of Intelliverse, a global provider of sales accelerated enterprise software and managed services.