If you want to get people to buy your stuff, you need to understand how people make purchasing decisions.
Product quality and seller reputation matter, goes without saying. What about when the product matches the customer’s needs and wants, and they trust the seller? What are the things that influence purchasing decisions once those fundamentals are in place?
Online purchases start with a Google or Amazon search. Most people do online research and compare different options. This applies equally to B2B – 71 percent of enterprise purchase decisions in the United States begin with research conducted on a search engine.
Here are 9 things you should know about purchasing decisions.
1. Peer reviews matter
A 2010 study by The Nielsen Company confirmed what we already knew – people read reviews and decide by them.
Nearly 60 percent of online shoppers said they consult reviews prior to purchasing consumer electronics and 40 percent of online shoppers claimed that they would not even buy electronics without seeking reviews about the product online first.
Start gathering reviews on your site. If you sell commodity products, you might want to look into pulling reviews from an external site to have more of them.
2. People gather information from mixed sources
Even though social media and internet rule, customers make purchase decisions using a combination of old media, new media, and old-fashioned conversations with friends and family. See: People Comparison Shop, Stupid.
According to a relatively old study (2009) by Harris Interactive, the most common methods of gathering information prior to making a purchase are
- using a company website (36%),
- face-to-face conversation with a salesperson or other company representative (22%),
- face-to-face conversation with a person not associated with the company (21%).
Another study says even 59% of people consult friends and family for purchasing decisions.
Asking people around us for recommendations is still commonplace. This means the experience you provide to your customers matters a great deal.
3. People don’t often know why they prefer something
There’s a famous study about jam tasting.
These scientists asked a big sample of consumers to rank jams on taste, ordering them from top to bottom.
Then the scientists re-did the study with a different, but still statistically representative, group except this time they asked the sample to put the jams in order of taste and write down why. The result when they did that was that the order literally flipped, so the ones that the first group ranked as best tasting were judged to be the worst by the second group and vice versa.
The reason was that they were asking the conscious brain to suddenly get involved in something that it really doesn’t know, and suddenly there are all these sort of social pressures, e.g. what they “should” choose, leading the answers away from what the people actually liked.
People make instant decisions with their sub-conscious. When they have to explain the choice, the choice might change all together since the rational mind is then involved.
Takeaway: don’t trust people when they explain why they bought something or didn’t. They might not know themselves.
4. Mass leads the way
Most of our preferences are learned and largely formed by social norms and expectations that producers have a strong hand in shaping.
A Washington Post column uses the example of clam chowder. It used to be thin decades ago, but is now almost uniformly super thick. What happened? At some point, restaurateurs got in the habit of adding flour to make chowder thicker and thicker, and now this is what consumers have come to expect constitutes a bowl of “authentic” clam chowder. Now that has become what the consumer prefers.
These learned preferences can just as easily involve characteristics that, from an objective standpoint, do not make a product any better and might even make them worse — particularly when it relates to texture.
Ravi Dhar, a marketing professor at the Yale School of Management, notes that although Heinz ketchup does not reliably win in blind taste tests, it has established itself as the gold standard in its category because it is thicker. In the marketing world, Dhar says, “meaningless attributes often lead to meaningful differentiation. “
Ever wondered why so many products on the store shelves are so similar? Wouldn’t it be better to make them different? Not necessarily.
There are huge incentives in consumer markets even for competing companies to make everything the same.
- says Dan McGinn, president of a research and strategy consultancy in Arlington
Yes, our preferences evolve as the society evolves. A “family car” used to mean a station wagon in people’s minds. Then it was the family van. Now it is an SUV.
Suggestion: In markets where people have a lot of experience with the product category, it pays to be like the market standard.
5. Cognitive fluency
Cognitive fluency is the human tendency to prefer things that are familiar and easy to understand.
For marketers this means that the easier to understand your offer is, the more likely people are to buy it.
Psychologists have determined, for example, that shares in companies with easy-to-pronounce names do indeed significantly outperform those with hard-to-pronounce names. Coincidence? Nope.
Why people prefer unlimited plans
Understanding and comparing different cell phone plans is a pain and takes too much time. Who wants to spend minutes comparing monthly minutes and text-message limits? So what do people do? They go with the unlimited plan. It’s often not the best value, but it’s easy to understand.
Cell phone companies make the most money from unlimited plans, and they have an extra incentive to make other plans confusing. Plans with a fixed amount of minutes charge high fees for going over your allotted minutes – it’s designed to cause you enough pain that you will switch to a plan with a higher regular fee.
Suggestion: make your offer and pricing as easy to understand as possible.
Previous positive experiences matter
Cognitive fluency also explains why you stick with brand and service providers you have used before, why you often order the same thing from the menu – it’s easy. You’ve tried it, it worked, and you don’t want to spend a bunch of time researching alternatives and risking a bad purchase.
As a marketer, this means it’s super important to get that first purchase from a customer. Make your first offer packed with value and as easy as possible to buy. Once they have their first positive buying experience, it’s much easier to get repeat purchases.
Hard to read, hard to buy
Make your website easy to read.
When people read something in a difficult-to-read font, they transfer that sense of difficulty onto the topic they’re reading about.
Norbert Schwarz, a leading fluency researcher, and his former student Hyunjin Song have found that when people read about an exercise regimen or a recipe in a less legible font, they tend to rate the exercise regimen more difficult and the recipe more complicated than if they read about them in a clearer font.
The same goes for products and purchases. Nathan Novemsky and his colleagues did a study on this called Preference Fluency in Choice. They manipulated the fluency of a product by listing its features in either an easy or hard to read font. Easy to read fonts doubled the number of people willing to purchase the product.
Bottom line: make everything as simple as possible.
6. For retail stores, flooring matters
Research by Joan Meyers-Levy suggests that the way people judge products may be influenced by the ground beneath them.
“When a person stands on carpeted flooring, it feels comforting,” says Meyers-Levy. “But the irony is that when people stand on carpet, they will judge products that are close to them as less comforting.”
When people were standing on soft carpet and viewed a product that was moderately far away, they judged that item’s appearance to be comforting. However, people who examined products while standing on this same plush carpet judged items that were close by as being less comforting than they did if the products were moderately far away.
Suggestion: cover the walking areas with soft carpet, but have hard flooring next to the products.
7. Does social media have an impact on purchasing decisions?
There’s conflicting research on this.
A 2010 study by Chadwick Martin Bailey and iModerate Research Technologies found that consumers are 67% more likely to buy from the brands they follow on Twitter, and 51% more likely to buy from a brand they follow on Facebook.
Another report, by Forrester Research and GSI Commerce, analyzed data captured from online retailers between November 12 and December 20, 2010. Their research showed that social media rarely leads directly to purchases online — data indicates that less than 2% of orders were the result of shoppers coming from a social network. The report found email and search advertising were much more effective vehicles for turning browsers into buyers.
The difference between these two studies is that the first research was based on what people said, but the second one on what people actually did (although they were tracking direct clickthroughs from social media, not taking into account positive influence over time).
The real answer is probably that social media does impact purchasing decisions, but it’s a slow relationship building process and just shouting “buy this” works on a very small number of people.
Social media links have an influence
A recent study by the University of Miami School of Business Administration, Empirica Research, and StyleCaster Media Group examined how the presence of the Facebook “Like” button and Twitter symbol might affect online purchase decisions.
- When the product was one for which public consumption is desirable (sportswear, fragrance) the presence of the Facebook and Twitter icons made people 25% more likely to purchase
- When the product was more private in nature (Spanx, Clearasil), the presence of Facebook and Twitter icons made participants 25% less likely to purchase
8. Emotional decisions, rational justifications
Do people make decisions based on emotions or logic?
McCombs marketing professor Raj Raghunathan and Ph.D. student Szu-Chi Huang point to their research study that shows comparative features are important, but mostly as justification after a buyer makes a decision based on emotional response.
The story of two chickens
Research participants were showed two photos. One was a nice looking, plump chicken. The other was a chicken that looked thin and sickly. Participants were told that the plump chicken was a natural chicken, and the thin chicken was genetically engineered.
The researchers informed half of the participants that natural chickens were healthy but less tasty, and genetically engineered chickens were tasty, but less healthy. The other half were told the opposite.
Overwhelmingly, both halves of participants preferred the nice plump chicken, but their reasoning was different. The first group claimed it was because they valued health above taste, and the second group said it was because taste was more important.
Neither group seemed to justify their choice based on how they felt about the chicken’s looks. They felt compelled to justify their emotional choices with non-emotional reasons, to the point that the two groups found completely opposite ways to justify the same decision.
Emotions rule in all areas
The scientists replicated the results in other areas as well – in marketing, politics, religion and life in general.
“This process seems to be happening somewhat unconsciously, people are not really aware they’re coming up with these justifications. What is even more interesting is that people who claim that emotions are not that important, who consider themselves to be really rational, are actually more prone to fall into this trap.”
What does this mean for marketers? Ragunathan suggests the earlier you make the emotional connection the better, because once consumers have decided they like a particular option, the more difficult it is for them to backpedal.
Rational thinking will only justify their emotional choice.
If you have further interest in research concerning emotions in marketing, check out this study.
9. It’s the subconscious that drives buying decisions
For the last 50 or 60 years, market research as an industry has relied on an understanding that people make decisions based on rational conscious thought processes. What the science tells us now is turning that fundamental belief on its head – most decision making happens at the non-conscious level.
We have a tendency to focus on facts and numbers, but in many cases it’s the subliminal that makes people decide one way or the other.
People are complex and we are just beginning to scratch the surface of what they really want. Some tests have shown that people prefer items on the right or at the bottom of the list.. why? We don’t know yet. Sometimes we make buying decisions even when we aren’t paying attention to the products.
Neuroscience is still working on the answers, but there are some insights that we can start putting into play now and see what happens.
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