How Do People Make Decisions Online?

Written by on Monday, April 13th 2015

Everyday we face thousands of decisions that can have a major or minor impact on our lives. We choose between products, brands, flavors, smells, landscapes, and even whether or not to take the risk of trying new products. This leads me to some pertinent questions: how is my product distinguished amongst so many similar ones? What are the most important factors for the decision maker? How do people react when facing a decision online?

How Do People Make Decisions Online?
If you want your product to be a top contender in a purchase decision, you need to understand exactly how your consumers make choices online and what you must do to be a part of their choice. Today I'm going to help you understand the thought process of a consumer faced with a decision and what the primary factors are in that decision. 
 

Making a decision : Past vs Present

Over the past several decades, advertising has held a lot of power in the decision making process, leaving us to make a choice between the product we saw last night on television and the new one recommended by our friend. 

Now in the consumer age, the set of choices has doubled from the past years, as well as the advertising efforts brands are making to capture your attention and get you in the store. This means that the probability of making the wrong choice has doubled as well, and the trust we place in brands has greatly decreased. 

« Sparkling or flat water? Lemon, vanilla or strawberry flavor? With or without ice ?"

This set of choices make us think differently about our decisions—we are more informed, more skeptical and more critical. Our set of choices has changed, but so has the decision process. We demand more information, make comparisons, and seek reviews of every product—especially those of high value.

But having a multitude of choices doesn't necessarily mean that we will make the best choice. It could very well be the exact opposite, driving us to the wrong decisions. Many psychologists agree that too many choices lead us to confusion and frustration, and in the worst cases, drive us to the wrong decision and compromise our well-being.

It's true: advertising still works and strategic packaging too, especially when we can physically experience this in a store. But the opinions of our network of peers is still a powerful factor in our decisions, more so than the influence of brands and their attractive advertising.

According to a study of Dimensional Research, 90% of customers make decisions based on online reviews. 58% of these individuals said that they are now more likely to share their experiences on the web through online reviews and social media communication than they were five years ago. When they have negative feedback, social media is the go-to channel for publishing their opinion (rather than online reviews). This definitely influences the set of choices, but it's not just a matter of reviews—there are other factors that have great influence as well.

What influences the online decision?

Besides product quality and seller reputation, there are other contributing factors in the decision making process :

1) Online References : As I said before, product reviews really matter. We are more willing to trust a stranger who has tested a product and shared their experience online than listen to what the brand itself tells us, and this trust only becomes stronger when we see several individuals making the same conclusion. In some cases, online reviews may be the most important marketing tool. On websites such as Booking Online, TripAdvisor, or even Airbnb, the customer feedback can be so important as to influence the position in the global ranking of your product/service. Additionally, people are more likely to share a negative review online instead a positive one, so your even if your product/service was tried offline, it could still have a huge impact online. 

2) Cognitive Fluency: People are more likely to choose something that is familiar or easy to understand—keeping things simple has never been so important. A good example of this is the unlimited plans offered by many mobile companies. Describing the service as  "Unlimited usage—no limits or hidden fees" simplifies the product and makes it much simpler to comprehend than other plans that are full of restrictions and fine print. This explains Cognitive Fluency—once you have had a positive experience, you are more likely to repeat it than to take time searching for something new and taking a risk. This explains why we buy the same products over and over again at the grocery store, or order the same meal time and again at our favorite restaurant.

3) Emotional Decisions: Sometimes our decisions are subconscious and we don't fully understand why we opted for that choice, but the explanation for that is that we are more inclined to make a decision based on our feelings. If we are shopping for poultry and see one package of chicken displaying an image of the animal surrounded by beautiful greenery versus another sitting in a wooden box, it's clear which one we will associate with a better taste and nutrition level. What we can take from this is that it's very powerful to link your product with something you know your customer is fond of, and will increase the chances of them purchasing it. 

Regarding my personal experience, I can say that the opinion of my peers is very influential in my online decisions. I know that I can trust their opinions and they are not gaining anything from my purchase,  so I always believe that their recommendations are honest and real. Sources from which I obtain the information are also very important. Collecting information from a website that we do not fully trust lowers the probability of choosing that product, so pay attention and be strategic about where you choose to sell your product.

Clearly, we tend to trust the opinion of anonymous customers sharing their experience with a product more than the opinion of the salesman that we know just wants to make a sale from the getgo.
Why do we listen to the opinions of bloggers and products testers? Probably because it is set in our minds that they are experts in the field and know exactly what the best products are—therefore we trust them and allow their reviews to influence our final decisions. This is why it's important in your marketing strategy to be conscious of who your customers are following and looking to for advice. 

How does your brain react when making a decision?

"The brain is a decision making machine " ~ David Redish

Decisions are made in different regions of the prefrontal cortex—the zone responsible for cognitive control and value-based decision making. Depending on the choices that we need to make, the brain starts evaluating all the information it has available. This process works like a "sensory circuit" where the brain starts compiling evidence and judging each piece of information as it is received. When the "accumulated evidence reaches a critical level, the decision is made" Society for Neuroscience. For this reason, several factors influence decision making in even the most trivial of situations—feelings caused by anything such as odor, colors, sounds, etc.

As a company, your mission is to catch the attention of the client during the decision phase, and make an effort to, at the very least, showcase your product as a valuable contender. So, learning how the brain reacts when faced with a choice can be very valuable in understanding the mind of your consumers and helping you to be part of their purchase decisions.

How does the purchase decision work?

According to a study done by Mckinsey, the decision making process for the purchaser follows a circular pattern where the consumer passes through different stages:
How Do People Make Decisions Online?

McKinsey Quarterly


1. Initial consideration: During this phase, the consumer considers different brands that he believes could possibly fulfill his needs. He will build a “mental brand map” and starting selecting which brands he should further consider.

2. Active Evaluation: In this phase the consumer starts gathering more detailed information about the brands and further narrows down the options.

3. Moment of Purchase: In this phase, the consumer finalizes his brand selection at the moment of purchase.

4. Postpurchase Experience: The consumer starts to try the product. The experience will either confirm or discredit his expectations and will influence the next purchase decision.

5. Loyalty Loop: If the experience is positive, the customer enters the loyalty loop, skipping the initial phases and arriving directly at the Moment of Purchase. This is the process that defines the customer loyalty/fidelity to a product or brand. As the manager of a product, you will save money cost per client-wise, but consider further investing time in fidelity programs. In order to manage the purchase decision, think about the ways in which your product could be a choice for your consumer and what you could do to influence his online decision.

How can you start focusing your business on the consumer's choices?

Companies like Groupon, Lets Bónus,  and Momondo saw opportunities in the market, and started making choices for the consumers. Their businesses grew based on the principal of matching market opportunities to customer needs—it's as simple as that. As I said before, people don't want to spend time searching for new possibilities and are more willing to choose companies and products that are familiar, so why not give them the chance to try new products and services based on what they like, and more importantly, at the lowest cost?

They focused their businesses on providing the best choices to the consumers based on their needs, concentrating on displaying exactly what the customer is looking for concerning product, pricing, and location. The top choices are all displayed for the consumer, he just has to make the final choice. Marketing plays a very important role for these types of companies.

Most of them use email marketing to send relevant information to the customer according to data collected from the user's searches on the website. The email marketing strategy highlights focusing on the customer needs, and it results in a higher success rate as the user knows that the company is sending them relevant content.

But it's not all about email marketing, retargeting  is an important tool as well for achieving marketing goals. If you are visiting websites and searching for a certain product or service, the probability of seeing an advertisement regarding the same product is very high.

How Do People Make Decisions Online?

Image credit: Retargeter

These companies display ads specifically customized to the interests and needs of customers based on their online behavior. When you visit a website, the information is saved in your browser and the server knows that you've been exploring that website, therefore you may be interested in receiving information about this product, and voilà—the advertisement appears right in front of you! This marketing tool is quite powerful, as it provides brand awareness, a higher level of website visitors, and a strong lead conversion rate.

Now that you have all the information about the decision making process, step into the mind of your customer and start guaranteeing that your business will be your customer's choice.



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