Value of 5 Step Decision Making

Originally proposed by John Dewey back in 1910, his 5 step problem solving and decision making model is now widely adapted as a marketing theory.  It's used to understand and improve your customers' 'buying journey'.  Despite over a century of changes in commerce, the simple 5 step model remains relevant and helpful for analysing the steps your customers take in deciding  to purchase.  This is important not just for marketing efforts to bring in new business, but for customer retention.  Its simple structure can also be helpful with making decisions about your business.

How 5 steps can help

Like other decision step decision making processes, using the 5 step method can help you look competent by giving the impression that your decision has been well considered – especially if you need to impress or convince financial backers or to protect your career! Of course in reality whether a decision has been made with care and competence depends on how you use the model rather than the model itself!

The decision making 5 step model can be helpful when it’s appropriate to involve others in the decision, for example by getting their input with gathering data, or their buy in through being involved in making the decision rather than resenting it being foisted upon them. If you want to delegate the whole decision making process to someone else, it’s useful to have a clearly structured process for them to follow.

Mostly now the five step decision making model is considered a good guide to understanding your customer’s decisions. It can be a useful framework for marketers to analyse how their products are bought or passed over.

5 steps in your customer's journey

1.  Need recognition

Yes, some buying decisions are spontaneous spur of the moment choices. It’s worth catering to this – the things displayed by shop and supermarket check outs are there to take advantage of instant impulse decisions. The prompting need is likely to be for a personal treat and reward after the arduous process of shopping and standing in line to pay! Smart marketers monitor such purchases, trying out new lines and expanding best sellers regularly. Would really smart marketers eliminate this particular need trigger by making the shopping process an absolute delight? That’s another question!

Most purchasing decisions involve a longer process and are triggered by a need your customer becomes aware of. The trigger can be internal – physical (hunger, thirst, discomfort), or emotional (greed, grief, fear, ambition, aspiration). Often there’s a need to replace something that no longer works which the customer relies on or which no longer satisfies an important aspect of their lifestyle. Of course marketers usually focus on external prompts they can create with advertising or carefully crafted PR or product placement; but it’s well worth remembering your customers weren’t a blank sheet before they encountered your marketing campaign.

From a marketing perspective it’s helpful to know the triggers which prompt different sections of your customer base to begin their purchasing journey. You can then speak directly to their needs and dovetail your approach to make each step relevant and engaging for them.

2.  Search for information

Once propelled to take action by a perceived need your customers’ instincts will usually prompt them to get information to help make their choice. As a business you need to make the information they’re likely to seek easily available.

According to a 2016 study 82% of shoppers now do online research before buying, but most still prefer to go to a store to make major purchases in person.

Unfortunately for high street stores some shoppers do this in reverse. They like to browse shops where they can physically see and examine items they’re considering buying, even questioning shop assistants to get as much information about their potential purchase as they can. Armed with their new knowledge they then go online to find the cheapest deal for the products in question. To avoid this trend hurting your business it’s worth having a plan to incentivize them to buy from you whether on or offline.

Word of mouth recommendation or condemnation by friends is usually given more weight than reading online reviews, and other off line sources of information can be important too. Just think of the damage one dissatisfied customer can cause! How much information your customers will make the effort to gather is often said to depend on the relative expense of the purchase, how important they feel it is, and how much is at risk.

Not all customers will follow this rule though. If the information they start to find becomes too dauntingly complex they may take a short cut on the process and decide by instinct rather than information. Having a recognisable brand they can trust can be especially relevant then.

Discovering what information your customers seek and where they look for it can be like discovering a gold mine. So worth doing your research!

3.  Evaluate alternative options

Through their research customers will usually arrive at a few possible options of products or variations on one product that meet some or all of the criteria they have in mind. If you provide ways of comparing the different options you sell this may keep them focused on your offers rather than the competition. Customers like to feel they are making a choice between options, but remember too much choice can be a bewildering deterrent to actually making a purchase.

It can be valuable to research the key criteria you customers are using to make their choice – and align these with your marketing. Do the features and benefits you believe are important reflect priorities your customers have?

4.  Purchase / decide on preferred choice

You might suppose this is just a simple step. But, as marketing guru Phillip Kotler pointed out, things can intervene to halt the decision – such as negative feedback from a friend or even a change in your customer’s circumstances. The decision process may be restarted or abandoned altogether. While you can’t control many of the external factors that can disrupt the final decision to purchase (normally you can’t help it if your potential customer gets fired!) it can be worth examining the purchase process itself. How can you make it as easy and hassle free as possible?

Statistics reveal that nearly 70% of carts that customers place one or more items in are abandoned. Of course your customers may be using your cart as part of their step 2 research, sometimes it’s the only way they can get vital information like shipping costs. But perhaps they get to the tipping point and pull back because they don’t feel secure enough in taking the risk to buy. So an easy purchasing process that instils confidence is a profitable priority.

5.  Post purchase experience & behaviour

Smart businesses recognise that making the sale is not the end. The experience their customer has with the product or service they purchased is a crucial factor in customer retention and even new product development.

Don’t bank on your customer always telling you if things go wrong, although you can probably be sure they’ll tell someone else! And remember sadly people are often more likely to share complaints than praise. Some firms even assume customers will only get in touch to complain and make it difficult for anyone to give positive feedback! Making your customer service proactive as well as responding to queries or complaints can lead to valuable insights as well as happier customers who feel valued.

Value of the 5 step decision making process

The 5 step customer decision making process is simple, don’t let that fool you into treating it simply. It can be used as a good starting point for planning your marketing by prompting you to get information on what’s happening at every stage in someone’s journey to become and remain your customer. The better your research to uncover this information, the more valuable use you can make of what you learn.

The 5 step process can also provide a working framework for making business decisions. It can be used as a basis for presenting your decisions when you need to impress - either the bank or the boss. The process can provide clarity when several people need to be involved in making a decision or you want to delegate one or more stages or the whole decision. You can read more about the 5 step decision making process from this perspective.

When you have an important business decision to make, taking time with Decision Treehouse to think it through creatively and constructively in complete confidence can be of real value.