The Science behind customer decision-making process

Customer Decision-making process

Shopping = Decision-making?

Feels kind of weird that I’m here talking about shopping. I didn’t really ever expect to be a student of shopping. I don’t really like shopping, actually, there’s probably some of you who relate to that, not like my mom who goes to the mall on the weekend to unwind. That’s not me, but that’s also a narrow way of thinking about what shopping is.

 

What I’d like to propose for this article is that shopping is really about customer decision-making process, and so when we think about shopping, rather than think about it as the person who goes and does the grocery shopping, or maybe your sister who likes to go and buy clothes, or my mom who likes to go to the mall, I’d like to propose we think about it as this idea of decision-making.

 

So if shopping is decision-making, then so many of the things that we do each day could be encompassed in that. It could be where to go to school, what classes to take, what to do with our financial future, what kind of insurance to sign up for, an elective medical procedure we might do, should I get braces etc..

So if that is if all of those things are shopping, then what we wanted to understand is what does it take to get someone to say “Yes!”. If you think about all the moments in your life, where you have this journey where you’ve got to go from undecided to decided, what are the information sources that you include to sort of get you to a place where you feel comfortable and say “Yes”, whether it’s a trip to Europe, whether it’s to go out on a date with someone,  

 

If you think about the inputs that we used to have let’s say if we were to have bought an appliance 10 or 15 years ago what you’ve done? Could have asked your father-in-law for information? Could you have gone to the store? I suppose you could have ordered a cd-rom at some point? What was that customer decision-making process? Today if we’re going to buy an appliance we can spend months if we choose reading reviews, talking to other shoppers online. We can ask for input on Facebook and we might get, depending on the category we’re looking at dozens or hundreds of emphatic responses. How do all of those sources go into our brain and help us get to a place where we say:

 

“Yep! I’m going to go ahead and purchase!”

 

Purchase Funnel

 

So, if you are familiar with marketing, have worked in marketing, have worked for brands or a retailer, you might have heard of this thing called “The purchase funnel”. Fortunately, most of us haven’t heard of that, which if you haven’t just leave it that way. The concept here is that when we’re making a decision to purchase, to hand over that money, we go through this sort of process, right? We learn about something and get an awareness going, then we sort of become educated and then eventually we cross the finish line and we do what those marketers want us to do and if they could just expose us to enough ads, certainly we would get over that finish line.

 

We have a hypothesis that this was actually an outmoded way of thinking about customer decision-making, particularly in a world in which we have so many different inputs coming in from all of these places.

We’ve got our mobile phones, our apps, social media, video games. We felt like this idea of decision-making being linear was really not the case anymore, it didn’t seem like decision-making has ever been really a logical process and it didn’t seem like we were kind of moved bumping along, just in a sort of straight path. We felt that it was actually more like a heat map or like a neuron firing in the brain, that’s what maybe decision-making might look like. This is actually real data that we use to create this idea of where people were going for information, how long were they thinking about their decisions, where were they going for information, what sources of information were most influential.

 

Several years back we were talking to brands and retailers all the time who asked us again and again: “Should I build an app and is that going to move more product? Should I get a Facebook campaign going? What should I do?” We didn’t really have an answer. We were like: “Well, you should definitely do this neat stuff”, but we didn’t have any proof to say if it was actually influencing people to buy.

 

Consideration analysis

We started our journey into studying shoppers across all different categories, thousands of shoppers 50-60,000 shoppers and we looked at all of these issues that caused us to say “Yes!” What are those things? We revealed some really interesting patterns.

 

Customer Consideration Data
Customer-consideration-data

 

 

For example, I can tell you that shoppers use an average of about 10.4 sources before making a decision and that’s true for high and low consideration.

 

Actually what we’re seeing is that there really isn’t anything such as low consideration anymore. Even the smallest decisions, whether you’re going to buy a new Gluten-free cookie, I mean if you care about gluten-free cookies, you might spend a lot of time researching that. And the numbers of sources that you use we think are a proxy for how considered that purchase is.

For example before buying a car, on average people use about 18 sources of information, before giving their child and over-the-counter medication, they use almost 10. It is a little scary that they actually use more sources of information to inform them to pre-shop when they’re buying an iPhone then selecting who they’re going to vote for for president.

These numbers are an amazing way to evaluate how decision-making is changing. We saw year-over-year that this these numbers of sources that shoppers were using were growing quite dramatically. In fact from 2015 to 2016 we actually saw a doubling in the number of sources shoppers were using. It makes sense, there are more sources, we have more opportunities, we can do all the research we want. Since the internet never closes we can just go online for hours at a time and we can research all of these things, and and that research helps us get to a place where we can say “yes”.

 

The Shoppers journey

Customer Journey

An example that I like to give of this sort of changing-shopper-behavior, is that I’m quite a neurotic shopper ????. Didn’t know that in the past but have learned through studying, that I’m one of those shoppers that actually takes a long time to make up my mind. I thought I was a quite decisive person but I actually like to spend a lot of time reviewing and researching and making sure that I feel good about my purchase. My wife will spend hours before we go to a theme park looking at all the videos associated with the different rides in the park. She will do this so that every time she passes the camera when we fall down the Splash Mountain she knows exactly where the camera is and what face to make and she always has the best faces. She’s done the research to do that and that’s because that’s something that she values and that research itself is actually becoming a form of entertainment.

 

We’ve got to look at this portrait and say how can we map that? And that’s exactly what we did. Since we’re learning more about shoppers than we’ve ever known, because we’ve got new tools that enable us to map what they’re doing, we can track social media in real-time, we can talk to shoppers at scale in a way that was never before possible right, you could do a few focus groups and if some ladies say they didn’t like something it can be the end of that product. Right and now we can scale that process.

 

You might think that brands like Intel, Microsoft, Apple, I mean you name it, with all of the bright people that they’ve got working and with all of their resources, would know the answer to this very simple question “Why do shoppers behave the way they do?

The truth is when you get them over a beer they will tell you that they actually have no idea. All the research they do, the flavor profiling, all these personas they create and they actually don’t know what causes you to say “Yes”.

 

So as we were studying this, we began to create a visual output of that shopper’s journey.

 

Customer Journey

 

 

What you are seeing here is an example of one. What this does, is it takes what we like to call traditional media, like television radio and print, online digital media and then in-store effects like associate that you talk to or perhaps a banner that you see in a store and we map that process out – where do shoppers go first? Where do they go after that and then where do they go? Which of those things are most influential? Which of those things tips the scale? And if I were to ask you about a recent purchase decision that you might have made you could probably say “Well yeah, you know, actually it was my mother-in-law telling me that I don’t need to make homemade cakes anymore, I can just buy the cake mix”.

 

We wanted to understand that, so this is a map drove some great results for our clients and we were quite proud of it. But it actually wasn’t enough, because all this is doing is mapping what’s already happened. Which is why we were introduced to a little, so-called “line of code” in the POS brand that about 80% of retail stores in the US use.

 

This “little line of code” ,when turned on, communicates with the cloud and it sends data of what’s being purchased, here’s what’s not being purchased, here’s what’s coupons are being used, here’s what offers are being redeemed, and that little line of code delivers a ton of data about what we’re buying in real time.  

 

Transitions

Just this little line of code enables us to actually move from mapping shopping to predicting it. So there is a changing sentiment that’s happening. Shoppers are moving from this place of “Well, okay, I’m going to work to cut out my coupons and do my research and get my deals” to a place of “You know what, my life is complicated, I’m busy, I don’t have a lot of time, so please make it easy for me, don’t make me work for deals, don’t make me count points or collect bottle tops. I’m not interested. If I shop at your place, you should know who I am, and you should be good to me, if you’re not I’ll take my business elsewhere”.

 

This starts to sound a little bit like Amazon. So as I talk about some of these things sometimes people start to have panic attacks and they’re like “Privacy!!! What’s going to happen to my data and you’re going to know that I buy red meat and I eat lots of it!”. But when Amazon does it, suddenly it’s not so creepy anymore, it makes sense. They see what you buy, they see what other people buy, they make associations about what people like you, who buy things that maybe you’re not buying today, and what that might mean about you and what you might like to buy and they serve you up recommendations. And when that happens you go:

 

“Well, that’s pretty cool!”

and when they get it wrong you actually get pretty annoyed, right? You’re like

“Well, my wife accidentally used my Amazon account, now I’m getting all these jewelry making things I don’t want.”

 

Those you get annoyed right get it right so in that context it’s not creepy, it’s not weird, it doesn’t feel invasive, it makes a lot of sense. In fact what we’re seeing is that Amazon has now displaced a company like Nordstrom, which was like the pinnacle of customer service. How can it be, that a company, that you never ever meet an actual human, being they could have cyborgs working there, we wouldn’t know right? How can it be, that that could be best-in-class customer service? How could it be that we would consider best-in-class customer service to be from a company whose 1-800 number is hidden? How could that be best-in-class customer service? And the reason is is that our expectations of what good service means are changing. What we say is “I want you to know about the products that I care about and you should have them in stock. You should recognize my buying patterns and don’t give me a coupon for dog food if I don’t have a dog. Why are you doing that? Stop it!”

Final thoughts

I had a colleague call me up recently and he said:

Andrey, tell me about the retailers that are doing it right. Tell me about the coolest augmented reality execution you’ve seen or a new social media campaign”.

I said:

“Well, I’m sorry to disappoint you, but I don’t actually see that the future of retail to be in some shiny new kiosk or social media campaign that a retailer does. I don’t want new shopping experiences, I want better customer experiences.”

That is the future of retail for me and it actually takes us back to something that we might have known in the past.

This idea of the local store, where they’d reserve the products they knew that you came in every Saturday. We can’t do that at a scale at retail. Any retailer, who has more than a store or two will tell you that it’s incredibly challenging, but we can do it through data and if we can apply some of the data that we take in from that “little line of code” and some of the learning that we’re starting to understand about shopper behavior across thousands and thousands of shoppers,  maybe we can create this sort of new golden era of retail, maybe we can lay bare the walls of the retail store, tear those down grab the data that’s floating around us in the air like shoppers commenting on products, their reviews of you know different stores that they like and don’t like. If we can do this, we move as marketers from a place of manipulation and gimmicks to a relationship that’s a lot more about listening. I don’t have to guess what your needs are, I don’t have to trick you, I can just simply listen to what you’re doing and respond in kind, and that my friends – is the future of retail.

 

 

 

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