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Optimise your sales funnel by knowing your customer.
In this article, I will try to break down the mechanism of decision-making. After that, we can build theories of decision-making depending on factors such as context, moderation and framing, the product itself and most importantly the demographic and sociographic of the customer itself.
The two Systems
Our brain processes 11 million sensory impressions (bits) per second. Only 40 bits of these enter our working memory or consciousness. The majority of all information is processed subconsciously or implicitly. Implicitly saved information or behavioural patterns can be re-activated in the form of spontaneous behaviour, spontaneous affectivity, and intuitive behaviour if we are running on autopilot. The autopilot is geared for speed and replays of already-known patterns with a predefined result.
Check-in Have you ever driven your car and at one point you suddenly realised that you are not paying attention but didn’t build an accident somehow? That’s your autopilot right there.
To illustrate this phenomenon, Nobel Prize winner and psychologist Daniel Kahneman has identified two systems that illustrate the differentiation between these two events.
System 1 is a long-standing system in the human brain responsible for the subconscious processing of sensory perception, advertising, brand image, emotions, rules of thumb, stereotypes, motives, attitudes, etc. Language learning takes place within this system. Here, explicit learning of language creates implicit knowledge of grammar which after a while is non-verbal communicable knowledge. The knowledge that was learned, once explicit knowledge that was verbally expressible gets stored in the pre-consciousness. Once stored there, it is implicit knowledge which can’t be verbally expressed without a trigger such as a reminder.
Check in The Answer to a question is at the peak of your tung but you somehow can’t express it. Then you hear the answer and you suddenly know what you have learned in Biology class 10 years ago. That’s a neuronal network re-activated through the activation of some of those neurons (memorised knowledge)
System two refers to the rational level of thinking. Here our reasoning and the ability to process facts and act on them take place. We can equate this with the decision-making process of rational thinking according to Roth. Although rational thinking takes longer and is more prone to errors, long-term consequences can be foreseen through rational perception, consideration of facts, and prior knowledge.
As shown in the graphic above, there are different decision paths depending on the state of mind of the customer.
Notable is, the subconscious autopilot or system 1 is taking up over 98 Percent of decision-making. Behaviour or knowledge saved here is implicit, therefore we can not verbally express it. If you ask most people, they will give you a rational reason why they behaved the way they did. Our psyche always tries to make sense of processes we aren’t aware of and has the goal of preserving a positive self-image such as that we are perfectly rational beings.
Now, this is why market research is so difficult as people sometimes aren’t able to express themselves or if they are, sometimes aren’t even aware that they try to reason a decision totally different than the emotion or learned implicit behaviours which lead to questioned outcome.
But why is that? The Autopilot is there for a good reason. As we think about something, we need time. The more we enter the realm of the subconscious, we re-activate known and pre-programmed behaviour based on evolution. Those pre-programmed behaviours were vital for human survival in the past. Today, we have to practice overcoming those impulsive decisions as in our day-to-day life, they are most probably not useful. Depending on the sociographic, psychographic or demographic of your customer, you can predict whether they are operating on system 1 or system 2 in their daily behaviour and decision-making.
Spontaneous affectivity refers to known fight, flight or freeze reactions. Those are deeply embedded behaviours. From there, we are going to intuition which is learned behaviour that is based on past learnings through teaching, self-experience or role models. Intuition sometimes shows itself as a “gut feeling” in certain situations. From intuition, we go to rational thoughts. Thereby we must remember that the amount of information and rational thoughts are limited and most likely always influenced by our intuition and deeply embedded and learned behavioural patterns.
The stage between Intuition, which mostly is based on feelings, emotions and rational thoughts is called Input-Output-Mapping. This is the stage where Intuition is mixed with rational thoughts such as the future consequences of a possible decision.
The biggest influence here is time, the context and your product.
If you have a commodity product such as clothing which has a normal price-point as big labels, depending on the context your product is bought or not. Here prices are most likely to not be compared if the customer is in a peer situation where the bespoken clothing brand is trending. The intuitive decision to buy the product is based on the pre-programmed bias of wanting to be part of the group to find a point of identification. This also can be explained by Maslow’s hierarchy of needs.
The purchase decision can also be based on your branding. If your customer has learned to associate a positive image and emotion with the clothing brand, the intuitive decision would tell that person to buy the product. Thereby the customer feels part of that positively labelled clothing brand.
the only factor that could alter his decision here is time. When the purchase process is taking a long time for example or the customer is leaving the shop to come back on his way home. Chances are he is entering the Input-Output-Mapping state and rethinking if he actually needs that piece of clothing.
To avoid this, strategic manoeuvres such as providing some extra financial benefit that somehow justifies the purchase in a rational manner. This could be a promised discount on the next article when a customer reserves a clothing piece and buys it later. The possibilities are endless once we know the psychological background. It is trial and error at this point.
For high-priced products, it depends on the demographic, sociographic and psychographics of the customer. For luxury products, we stay in that same pattern as described.
For products that are based on a specific use and the customer sees the product as an investment that should pay off over time, the product is the selling point. Non either the less, it is important to highlight the benefits customer specific. The customer should be able to assess the positive investment into your product as quickly as possible. The quicker and the easier the experience with that, the less probable he is questioning the product itself. But at this point, there is no simple answer. If we are talking about a family car it is different as when we are talking about a 600.000 thousand industrial machine in the B to B sector where the purchasing process is probably way more rational and takes a longer time than the car on a 20 minutes test drive.
The state of mind of your customer has to fit your way of selling. The state of mind depends on many factors which need to be filtered out and analysed over time. This theory and model should help us to optimise the sales process as much as possible as well as identify other flaws within the sales process