Decision-making styles are different for every customer. Understanding why customers arrive at their decisions is crucial for your small business’s success. To know why someone makes a choice empowers you to create beautiful experiences for them. Crafting the right experiences for the right people, after all, is one of the goals of marketing.
I touched on many of the factors that determine consumer decision-making styles in prior posts. If you haven’t had a chance to read them, Consumer Behavior 101: People are Weird, Markets are Weirder will introduce you to many of the concepts I’ll be reviewing below. When you complete that, I Choose You: How Consumer Decisions Work in Small Business zeroes in on the elements of the decision-making process.
Today’s goal is simple: talk about different consumer decision-making styles. We’ll talk about the elements that lead a customer to specific decision-making styles. We’ll also talk about what decision-making styles look like in practice and how you can respond to them.
Before we start, here is an outline of this article’s content:
Influences on Purchase Decisions
- Emotion and Motivation
- Beliefs and Prior Experiences
- Culture and Subculture
- Socioeconomic Class
- Reference Groups
- The Perfectionist
- The Image-Conscious
- The Hedonist
- The Frugal
- The Novelty Seeker
- The Impulse Shopper
- The Confused
- The Loyal
Influences on Purchase Decisions
Emotion and Motivation
In Consumer Behavior 101, I first shared Maslow’s Hierarchy of Needs. Shown below, it’s a well-known framework in psychology, showing how people perceive their needs. The bottom needs are the basest of human needs and need to be met before you can start to worry about financial security, long-term health, friends and family, and especially self-actualization. Because you, like most people reading this post, probably live in a wealthy industrialized nation, most needs you will be meeting will be in the top three parts of this pyramid.
Business boils down to fulfilling needs. If you don’t fulfill someone’s need, you go out of business. Marketing helps us communicate with people that we understand their needs and have what they require to fulfill their needs.
When you have a need, it alters your emotional state and you are motivated either positively or negatively. If motivated positively, you want to go from a state of boredom to stimulation or something similar. If motivated negatively, you want to make an annoyance, fear, disappointment, or conflict go away. Keep in mind your customers’ emotional states – they change the entire shopping process!
Beliefs and Prior Experiences
If your customer has preconceived notions about what your product, service, brand, or industry, that will change their decision-making style. Sometimes, your customer has a good reason to believe what they do – prior experience. Sometimes, they act from prejudice or hearsay – an unfounded belief. Still other times, they have notions formed by research they found through friends or on the internet, which may or may not be accurate.
This is all to say that what your customers see and hear changes their decision-making style. What’s more, what they pay attention to and what they remember also changes their decision-making style. Often, we tend to find evidence to fit a pre-existing belief, instead of the other way around. This is called confirmation bias, and it is the mother of all cognitive biases.
The takeaway for you is that customers are not a blank slate. Customers come with all kinds of ideas – right and wrong – loaded into their heads.
Culture and Subculture
There’s no pressure quite like peer pressure. The country you live in, as well as the people you associate with, will greatly impact your decisions whether or not you intend for that to happen. This is also the case with your customers. Your decision-making styles that your customers use will at least partly be determined by where they live and who they’re friends with.
If you live in Manhattan and you work in the high finance industry, you will be expected to have a nice car. It’s just a part of the subculture. A Ferrari has no additional value over a Honda in a purely utilitarian sense, but the need to keep up with your peers would be pretty immense. (No judgment here – social ostracism is very bad for you).
Likewise, if you take that very same car and give it to someone in a low-income rural area, it would create an uncomfortable amount of attention. Yes, the Ferrari would be very fun for a short time, but ostentatious displays of wealth in places where that is not the custom will make people treat you strangely. In some subcultures, like the high finance industry, you buy in a brand-conscious way. In other subcultures, you buy strictly for utility – point A to point B.
As a small business owner, realize that people from different backgrounds see the world in different ways. If you want to see this in stark relief, go to an international airport and talk to some strangers. You’ll see lots of different attitudes toward unexpected conversation, a good deal of which has to do with culture.
The previous example touches on this, but it bears further explanation. Your socioeconomic class changes your needs. People living in poverty need to get by. People living in the middle class need to live within their means while having a certain level of comfort. Lastly, people living in the upper-class need to protect their investments, live comfortably, and – possibly – meet the needs of their social stratum.
You may say “impressing other people isn’t a need.” It isn’t, at least not strictly speaking. In marketing, however, impressing others or fitting in is considered a need. It’s just a different kind of need, higher up on Maslow’s Hierarchy.
When you are selling as a small business owner, understand that people have different needs based on their incomes. People with lower incomes feel constantly squeezed and have to consider utility more than others. People with higher incomes feel different pressures, which may seem odd if you’re not a part of their social class, but it’s very real to them!
A reference group is a group of people that customers look to when making a decision about a purchase. Some reference groups are aspirational – experts or thought leaders who the customer wants to be more like. On the other hand, some reference groups are to be avoided. “I don’t want to be like them!”
Like it or not, people compare themselves to others. This changes customers’ decision-making styles and you need to be aware of it when selling things for your small business.
Last but not least, you have no idea what kind of day your customer is having. If their basement flooded, they probably don’t want to buy tickets to the water park. If they had a bad day at work, your subpar chocolates might be just the pick-me-up they need. Bear this in mind when you’re a small business owner. There are some situations you cannot control.
Decision-making styles are different approaches that customers can take toward making choices. You can make choices based on a variety of different factors, such as price, brand, quality, your emotional state, and simple habits.
In the following sections, I’ll be drawing from A Methodology for Profiling Consumers’ Decision-Making Styles by George B. Sprotles and Elizabeth L. Kendall. You know, light reading! Their research has been around since the mid-1980s and it remains relevant.
The Perfectionist is very careful and deliberate in their purchasing decision. Of all the decision-making styles, this is the one that most values quality. We like to imagine the Perfectionist as the most common kind of shopper, though they probably aren’t. They systematically search for new information and make very deliberate choices. They act almost purely with System 2 thinking.
After going to ten different dealerships, sitting in dozens of cars, and test-driving at least six, the Perfectionist is ready to make a purchase. She buys a 2015 Honda Accord with 40,000 miles on it for $16,900. Every detail is perfect, from the fuel economy to the interior space. Furthermore, the Perfectionist chose to buy this gently-used four-year-old car because it knocked about 25% off the MSRP but far less than that in terms of the actual life of the vehicle. Well done, Perfectionist!
If you want to appeal to the Perfectionist, that’s going to be tough. Everything about your product, service, and the experience around it needs to scream “quality.” Otherwise, this customer will turn and leave.
The Image-Conscious shopper is buying to impress people, whether they admit it or not. He can be a bit of a price snob, and he believes “no matter what they say, the higher priced stuff is usually better.” He wants to turn heads and he has a lot of friends he wants to impress.
He doesn’t care about the fuel economy or the comfort. It’s purely about brand name and the image that it evokes. He goes to the dealership and buys a brand new Jaguar XJ. Perhaps he should have bought two, so he could always drive his Jaguar while the other is in the shop being repaired.
You don’t necessarily have to have a big brand to capture the interest of the Image-Conscious. If you can create an experience that feels luxurious, many Image-Conscious people will purchase from your small business. This is because helping small businesses is trendy. All you have to do is look the part!
The Hedonist is in it for the thrill. She doesn’t care about the cost, or honestly, what anyone thinks! She wants a fun, fast, hot car. You see, she doesn’t think, she simply does. Anybody who doesn’t like it can back off. Would that the naysayers only had the recreation-conscious joie de vivre that she possesses!
She bought a Ford Mustang GT. Yes, some people will balk and say this is a classic move for someone who just came into money. Many of her wealthy friends will snort because she bought a large Hot Wheels car. She doesn’t care. She’s having fun.
If you want to appeal to the Hedonist, you need to make your purchasing process easy. The Hedonist wants joy out of life and too much work would spoil that. Above all, your product or service will need to be an absolute blast to experience.
The Frugal is a customer whose decision-making style is based on price and value. He is willing to search exhaustively for lower prices. He is motivated by the possibility of a great deal. The Frugal may be acting this way because he has a poor financial situation. It could also be that he feels like he should spend his money wisely. For this example, we won’t make a distinction, but you may need to if you want to understand your customers.
After exhaustively searching Craigslist for used cars, the Frugal finds a 1990 Toyota Camry with only 80,000 miles on it. That’s only a third of its life expectancy! Granted, one of the brake rotors needs replacing and the sunroof is leaking, but that’s fixable with a junkyard part and some silicone. The chipped taillight can be fixed with $2 taillight tape. The fading paint and crumpled back bumper aren’t a big deal – it’s only cosmetic. That smell can be covered up with Febreeze. Overall, it’s a great find for $550!
The Frugal speak only one language: dollar signs. It’s usually pretty dangerous for small businesses to compete on price since larger competitors can win by economy of scale. If you wish to win over the Frugal as a small business owner, make sure you communicate that your product or service is a great value. More sophisticated Frugal shoppers understand that sometimes you save the most money by buying something nicer in the first place.
The Novelty Seeker
The Novelty Seeker is always up for something new. She gets a great thrill out of trying something she’s never experienced before. This disposition of hers extends so far that she is excited to try a vehicle from the automotive startup company, Rivian. She buys the Rivian R1T, a pickup truck that runs on an electric engine and can go very, very fast. It’s expensive and it’s not well-known, but it may very well be the future!
If you want to reach out to novelty seekers as a small business owner, you are in a good place. For one, your small business may not be well known, which is appealing to the Novelty Seeker. She is willing to take a risk on you and finds the thrill of discovery exciting. Novelty Seekers are especially important if you’re making a really unusual product or providing a really unusual service. To a lesser extent, this remains true even if you’re just carving out a weird niche in an existing category.
The Impulse Shopper
The Impulse Shopper just drove home with a brand new Cadillac today. I don’t what he was thinking, or if he was at all. Impulsive Shoppers don’t engage with products or services in a thoughtful or even emotional level. They just make a pure snap judgment and stick to it.
To engage the Impulse Shopper, all you really need are two things. You need an amicable price that doesn’t make the Impulse Shopper think twice. The other thing you need is a clear call-to-action. It could be a big red button on your website next to a gorgeous picture. It could be a sale. There are a lot of options.
Car shopping is really hard. There is an enormous amount of metrics to consider and the choices are overabundant. With so much to choose from, the Confused is having a hard time making a decision. Unable to fully process everything that goes into purchasing a car, the Confused falls back on a safe assumption – buy a gently used Honda Civic. You can’t go wrong with a Honda Civic, she says!
If your industry confuses people, you could be a breath of fresh air! This is such a huge opportunity. One of the biggest value-adds I have ever found is simply explaining something complicated in a thorough but approachable way. This is my intention with Marketing is the Product, in fact.
One more thing: if your business itself causes people to swap decision-making styles to the Confused from any other category, then you have an issue. You will need to correct the user experience if you wish to gain more sales. Basically, if you’re doing this, you’re leaving money on the table.
In a way, the Loyal is a cousin to the Confused. They go with simple decisions simply because it’s exhausting to consider all the factors. The Loyal says to himself that “it’s worked before, so it should work again.”
The Loyal has been driving a Ford Focus for as long as he could remember. Since college, in fact, and now he’s married with kids. He knows it’s a pretty good car and he realizes there are probably better choices out there. However, he finds comfort in going with something he already recognizes. As a result, he buys the same car again, just a few years newer.
For the small business owner, Loyal customers are among the best! You want as many people as possible using a Loyal decision-making style when purchasing your products or services. If you wish to attain customers like this, though, you’re going to have to work hard to win them over. After that, you’ll have to work hard to retain them. Your relationships will count for a lot!
There are several decision-making styles which your small business customers can use. In order to win people over, you need to make sure you understand which decision-making styles your customers are using and why. Through better understanding your customers, you can hope to generate new leads and retain loyal customers.
What was the last purchase you made? Which decision-making styles applied to you during that process? Let me know in the comments below!