Julie Cave
Julie Cave 18 January 2017

How A Purchase Decision Is Made

Do you find yourself wondering how a potential customer makes a purchase decision? You may be surprised at how complex the process of making a purchase decision is – but once you understand it, you can help your potential customers by making their decision easier.

The purchase decision process represents a number of stages that the purchaser will go through before actually making the final purchase decision. The consumer buyer decision process and the business/organisational buyer decision process are similar to each other.

Purchase Decision - Stage One

Stage one is the recognition of the particular problem or need and here the buyer has a need to satisfy or a problem that needs solving, and this is the beginning of the buyer decision process.

Examples of this could be: I have a really sore back, I need some treatment. Or, my winter boots are falling apart. I really want some new ones. Or, I don’t have time to do my bookkeeping anymore. Maybe I need some help.

What problem does your potential client or customer have? Identifying this is key to selling your products/services.

Purchase Decision – Stage Two

Stage two is where we begin to search for information about the product or service. Buyers here begin to look around to find out what’s out there in terms of choice and they start to work out what might be the best product or service for solving the problem or satisfying any need.

How do consumers look around and research their choices? Now, it’s primarily on the Internet: first with Google searches, then with perusing websites. If you’re not part of this stage because you have a poor Google search ranking or if you don’t have a website, you are missing out on a huge chunk of potential business.

Purchase Decision – Stage Three

Stage three sees the evaluation of the available alternatives whereby the buyer decides upon a set of criteria by which to assess each alternative.

Consumers might have narrowed down their choices to a few that suit their budget and requirements. It is likely at this point that they’ll look for testimonials or previous customer experiences with each product/service to find out more about how you do business. This is where social media is crucial. Do you have good reviews? Do people speak highly of you? Do you have a solid set of authentic testimonials? How do you handle yourself online?

Purchase Decision – Stage Four

We buy or select a product/service/supplier at stage four. Individuals or teams of buyers make the final choice of what to buy and from whom to buy it.

You’ve won the deal or sold the product! Congratulations! But the buying process doesn’t stop there.

Purchase Decision – Stage Five

Stage five is called the post-purchase evaluation. The process continues even when the product or service is being consumed by the individual or business. Does the quality of the product or service meet the buyer’s expectations? Is the after-sales support good or bad? This is the point at which a buyer will leave a glowing testimonial or a poor review – so never make the mistake of assuming that the transaction is complete once you’ve been paid.

And remember, that glowing testimonial or poor review is likely to inform other potential buyers at different stages in the purchase decision, so it’s a cycle that never really ends.

The question now is, how can you appeal to a buyer in every stage of the purchase decision?

What Influences a Purchase Decision?

study commissioned by Australia Post and developed, conducted and analysed by the Australian Consumer, Retail, and Services (ACRS) Research Unit within Monash Business School’s Department of Marketing, found just four advertising channels (websites, personalised direct mail, TV ads and catalogues and flyers) influence up to 92 per cent of a consumer’s service-related purchase decision.

The study – which surveyed over 8,500 Australians across seven audience segments – explored consumers’ conscious and unconscious channel preferences, to find the ideal blend of channels for optimal influence at three key stages on the journey to purchase: initial consideration, evaluating options and purchase decision.

The report revealed websites have the greatest influence on service purchases – from choosing a superannuation fund, to switching credit card or electricity providers – driving 35 per cent of the decision overall. According to the study, the importance of a service provider’s website in the advertising mix is indisputable as the primary source of all product, service and company information.

The report also found that as consumers age, the number of channels that influence their purchase decision grows. For example, the youth segment focuses on just four channels, whereas retirees consider up to seven channels.

It’s important to realise that you can’t rely on paid advertising only.

“Consumers know the difference between organic and paid search. They know the banner displays on the top and right hand side of the search are paid for and some will reject those on principle,” said Australia Post’s general manager for customer data and insights, Paul Fanthorpe. “They talk about having ‘blinkers’, they want to feel in control.”

Therefore, you should always focus on organic marketing as well as paid.

The research found that social ads have relevance and effectiveness increases when used in conjunction with other mediums. For instance, finance marketers can improve the effectiveness of social ads by pairing them with catalogues or newspaper ads.

“The report shows that there is an opportunity for marketers to refine the messages they send through their channels to meet different expectations,” he added. “In the long run, this means that advertising and marketing dollars can be better optimised to create awareness, familiarity, trust and finally, lead to a purchase.”

What You Should Do Next

We know that the website is of primary importance – if you don’t have one, or if you have an outdated one, you’re missing out on business. Get a website.

What is the problem or need your target audience has that you can fill? Can you treat a sore back? Can you replace winter boots? Can you do bookkeeping? Identify the problem or need of your ideal customer.

Show your buyer how you can solve their problem or meet their need. This is where advertising and marketing comes into play. You need to talk about your product and service in a way that benefits the buyer, and you’ll need to do so across many channels. We know that your website must be a primary source of this information, so well-written copy and content marketing is crucial. Do you also need to invest in paid search marketing, social media advertising, brochures or flyers? We know that older people are influenced by about seven different channels and younger people are influenced by about four different channels – so relying on one method means you’re missing out. Create a multi-channel marketing strategy that meets the needs of your buyers.

Word of mouth has always been a part of business – whether it’s a face-to-face discussion at lunch with a colleague or whether it’s on social media. Make sure you are part of the conversation by having social media accounts that are relevant to your business. Become a source of interesting and valuable information in your niche. Handle customer inquiries and complaints well, because others are always looking on. Have a social media presence and utilise it.

Customer loyalty and repeat business is the easiest business for you to get – it requires the least amount of investment. So are you communicating well with your buyer post purchase? Do you meet their expectations? Would they be happy to recommend you? Don’t be afraid to ask for reviews or testimonials. And while it’s often tempting to offer your best deals to new customers, think about ways you can reward existing or high-value clients. Create long-term loyalty in your customers.

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