The consumer is viewed as rational, calculating, and objective in the traditional economic model. The common assumption is that consumers can evaluate and make buying decisions based on costs and benefits.
However, the science of behavioral economics, which combines psychology with economics to understand purchasing behaviors better, says otherwise. According to behavioral economics, humans are emotional, irrational, biased, and may develop purchasing habits that threaten their financial wellness.
In this article, we’ll uncover how exactly buyers make their purchasing decisions and look at the ever-changing buyer’s journey.
How has the Purchasing Process Evolved?
The days of proximity commerce where buyers went to brick-and-mortar shops, relied on brand loyalty for quality, browsed, and bought products with little options and information are long gone.
In the era of digital commerce, all products and services are readily available 24/7 at our fingertips. Today, with the use of digital platforms, the purchasing process is more convenient, with a great variety of products available worldwide. Consumers can make better-informed decisions as all products have a comprehensive product description and reviews from other users.
This transformation in the purchasing process practically gives the consumer unlimited options and freedom. However, this choice overload significantly changes the complexity of the buyer’s journey. An abundance of options may be overwhelming and make it harder to reach a purchasing decision for many consumers.
What is the Buyer's Journey?
The standard decision-making process, also known as the “buying journey” or the “purchase funnel,” goes through several stages:
- Awareness stage – Recognition of need or problem.
- Consideration Stage – Information search & evaluation of alternatives.
- Purchase decision
- Post-purchase evaluation
The internet’s wealth of options fundamentally changed consumer behavior in the buying journey.
According to a study released by Google, the purchasing funnel is not as linear. The researchers determined that there are no “typical” purchase funnels but that most people engage in two distinct mental processes.
- Exploration involves a group of expansive activities where people research and explore their options and learn about products or services.
- Evaluation involves a group of reductive activities where people evaluate and narrow down their options.
The term “messy middle” was coined to describe how users navigate this space of abundant information between trigger and purchase.
Consumers rely on a range of cognitive shortcuts to reach a purchasing decision faster. We can identify which factors help consumers move more quickly from the exploration & evaluation phase and commit to purchasing.
What Factors influence the Buying Decision?
A set of triggers are responsible for moving consumers from a passive state to an active purchase. In many cases, the factors that trigger an active purchase state are psychological, cognitive, emotional, cultural, or social factors. The most common and powerful biases that influence the way consumers behave in the purchasing journey are:
1) Category Heuristics
These are logical shortcuts that help consumers make quick and satisfactory decisions within a given category.
Short descriptions of product specifications and relying on these guidelines for choice simplifies the purchasing decision process. An example for this category would be, focusing on the megapixels (MP) the camera has when purchasing a smartphone or the amount of RAM a laptop has.
Business Intelligence (BI) Tools
Browse and compare 1000’s of vetted vendors.
2) Authority Bias
Consumers tend to change their minds and opinions to match those of authority figures. This means consumers can be swayed by someone they consider an expert, a trusted source, or an influencer.
By following the lead of credible people, consumers “offload” the decision-making process to someone else, therefore using authority as a mental shortcut in the purchasing process.
3) Social Proof
Like the authority bias, buyers tend to copy other people’s actions in situations of uncertainty. People rely on recommendations and reviews from others to shortcut their own decision-making. Social proof can be intentionally reading user reviews or unconsciously clicking on a popular product with a five-star rating.
Users do not want to wait for products or services; they want them quickly. In fact, the longer consumers have to wait for a product, the weaker the proposition becomes. “Power of now” explains the success of instant downloads and registration and 24-hour delivery instead of waiting for a product.
5) Scarcity Bias
A universal bias is when something has limited availably or is scarce. It automatically becomes better and more desirable. Consumers feel attracted when something is limited, and this scarcity usually appears in three forms:
- Time limit – creates a deadline and calls for fast action.
- Quantity limit – triggers a reaction of wanting access to a rare supply.
- Access limit – to features, information, or spaces makes people value exclusivity and feel privileged.
6) The Power of "Free"
There is a reason why consumers are more drawn to “Buy one, get one free“ and not “Buy two products, get 50% off“. A gift or incentive can be a powerful motivator, especially when making complex purchasing decisions. Like a free sample or free shipping, an appealing perk is a powerful trigger to move buyers from a passive state to an active purchase.
On a Final Note
The buying decision process has become more complex and continues to evolve. Succeeding in the “messy middle“ is possible only by embracing and understanding the key factors that drive buyers to make decisions.