buying decisions

5 Factors That Effect Small Business Buying Decisions

Kurt Graver Business Start-up Advice

Knowing the reasons why your customers buy your product or service is the key to sales success. When you know what their fears, problems and challenges are it gives you the ability to tailor your sales process to provide them with what they want and alleviate any concerns they objections they have.

I in a previous blog post, How To Get Your First Customer & Sales I briefly mentioned “buying triggers”. A “buying trigger” is an action or instance that makes a person buy a particular product or service.

Unfortunately, the buying process isn’t as simple as just one trigger or action.

The buying decision-making process has five phases. Let me go into them in a bit more detail.

1. Need Recognition / Problem Awareness

 

This is when a person realises something is wrong or could be improved.

For instance, if your car broke down and you needed a method of transport to work.

 

2. Information Search

 

As soon as the buyer recognises they have a problem the next stage begins. They search for a solution. The length of this phase depends on how complex the problem is and the solutions available.

You might buy a new car, buy a used car, take your car in for repair, ride the bus, ride a taxi, or ride a skateboard to work.

3. Evaluation of Alternatives

 

At the same time as the buyer searches for information, they evaluate alternatives solutions by the process of elimination.

For instance. A bicycle is inexpensive but maybe not be suited for long distances and rainy days.

When the buyer has found an appropriate way to solve the problem, they will spend an indefinite time choosing suppliers. They have to filter alternatives based on their budget, ease of purchase, timeframes, technical knowledge and emotional triggers (social status, family).

4. Purchase

 

Finally, the buyer reaches the purchase stage. It’s the end for most transactions. However, the buying journey may not end there.

5. Post Purchase Evaluation

 

If the buyer is not satisfied with the product, they may return it.
E-commerce has increased the importance of the Post Purchase Evaluation stage as people will buy a product they haven’t physically seen before. The simplicity of the return policy has become a key consideration in the product evaluation process.

The first three stages are the most important for your business, but they can be affected by many factors which you need to be aware of.

In reality, people may go back and forth between the stages.

Below are five factors that are affecting how people buy from a business.

1. Economy – Lack of ability to spend

 

Uncertainty around Brexit, high inflation, high unemployment, increases in taxation and a reduction of public spending has caused many commentators to forecast sluggish growth for the economy over the next few years.

The downturn in the economy is affecting businesses because consumers have less money to spend, and companies have more modest budgets.

2. Search for Value

 

Challenging economic times and the growth of price comparison and consumer review websites is driving this behaviour mean your business has to offer customers value.

Consumers and businesses are taking longer in their purchases decisions because they are looking for value for the money.

Getting your value proposition right is crucial to your business’s success.

3. Changing Customer Demands

 

Consumers and businesses are becoming more demanding, and their needs are growing more sophisticated.

They want:

Better customer service – Customers wish to helpful, knowledgeable staff.
Personalisation – Products and services that are tailored to their needs.
Control – Customers want to control how and when they consume products and services.
Quality – With increased options and plenty of fake products on the market. People value quality more than ever. are more conscious of quality
Ethical – People are also more aware of the environment and social responsibility. Most people also prefer to spend their money with companies that share similar values as they do.

4. Technology

 

The emergence of virtualisation, cloud computing, online collaboration has rapidly changed how business is conducted globally.

Businesses that cannot be found online are frequently overlooked.

5. Social Media

 

Businesses who ignore social media are risking their business survival.

Social Media is playing an increasing role in purchasing decisions for consumers and businesses. People share information, recommend or criticise businesses on social media. One bad review can ruin your business, but a positive one, from an influencer, can skyrocket sales to levels you could not imagine.

Conclusion

 

Things are increasingly difficult for startups; most marketing channels are becoming less effective, increased competition means puts your business under price pressure, changing consumer behaviour buying cycles takes long and more complicated. Understanding why and how your target market makes a purchasing decision puts you in focus your marketing campaigns and sales processes, ultimately increasing your chances of making a sale.