5 Stages of the Consumer Decision-Making Process and How it’s Changed [VIDEO]
Today, we’re going to be diving into the five stages of the consumer decision-making process. A lot has changed. How consumers go about it is completely different, but the five stages are surprisingly exactly the same. Let’s dive into what this new world looks like.
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Now, as a brief overview, the five stages of the consumer buying or decision-making process were established by John Dewey in 1910. That whole process is still very much the same:
- Stage 1: You have a problem or a need.
- Stage 2: They want to do an information search. It used to be ask a friend, ask a colleague, look at the newspaper — but that’s a little different now.
- Stage 3: Evaluation of alternatives. “I have this one option I like, but what about these others?“
- Stage 4: Purchasing decision. “I have to make a decision. Which will I purchase?“
- Stage 5: The post-purchase evaluation. “Was this the right decision for me or did I make a mistake?“
Stage 1: A Problem or a Need
We work mostly with B2B companies and enterprise organizations. They still invest a lot in field marketing. The reason why a lot of these companies invest in field marketing is because that’s where a lot of the VPs — the C-Suite decision makers — are gathering information. They’re looking at, “Okay, where’s the market at today? Where’s it going tomorrow, and what options exist?”
Now, the reality is, that in this need phase, you have a lot of ways to influence how people are deciding what they need. One of those is field marketing, another is your sales team, but an often not-so-used way of helping people understand their need is actually through SEO and paid search.
At this stage, people are trying to figure out how to generate leads. For example, that’s a query, right? — “What problem does your product or service solve? Is your brand discoverable through search engines at Stage 1?”
Maybe you are a time-tracking software. People are searching: “How to manage my employees’ time” Well, if you’re Toggl — or one of the other many apps out there to manage people’s times — it’s critical that you have the right content for the different stages of people when they’re discovering what options exist to solve their problem or need.
An awesome tool that you can use for this is actually called AnswerThePublic. If you’re looking to understand what product or service is out there and what the need is, type in your primary keyword — for example, type in, “SEO,” or, “PPC,” for us — or for you, maybe it’s “cloud security.” Then see what are people searching for when using that keyword. You might see topics like, “The benefits of cloud security” or “Am I hacked?” These are all the needs and problems people have. You need content at this stage of the marketing funnel.
Stage 2: Information Search
Once someone is aware of their own need or problem, they now need to solve it. They need to determine a couple things at Stage 2. “Could I solve this myself? If I need to hire someone, who’s the best option for me to hire?”
For our B2B SaaS clients, this is where the majority of their opportunities, deals, and revenue comes from — at this information stage. This is the bottom of the funnel. People now know that they have a cloud security issue, now they’re looking for top cloud security vendors, top cloud security companies, services, strategies, etc. Here’s where your own website probably won’t rank. In fact, at Stage 3, it probably won’t rank either. You’re going to have a hard time generating these leads through yourself.
Historically, people would gather information through friends, through television, through the radio, through the newspaper, and now it’s changed, right? They’re going primarily to search engines — areas where they can control the entire experience themselves. The reality is, that you need to make sure that your brand shows up not only as your own website, as one of those 10 possible results, or one of those 4 ads, but that you’re also prevalent in the marketplaces.
This goes back to the Yelp and the Amazon effect. B2B customers are now just the same as B2C customers, in the sense that they don’t want you to tell them why you’re so great, but instead, they want to look at other people saying that you’re great. This is why Gardner has a full business model. This is why Forrester has a full business model. It’s because these are “independent,” — now I say that with quotes — research companies that are giving information to targeted consumers who are looking to buy. You need to be a part of that journey.
Stage 3: Evaluation of Alternatives
Stage 3 is the alternatives — it blends right into Stage 2.
Historically, as the marketer, you got to control what people thought about your product. Now, other people control what is being said about your product and you need to make sure that when they’re evaluating alternatives they don’t forget about you.
Now most of the time, I see people address Stage 3 through what I call competitor AdWords campaigns. This is where you launch ads on your competitors’ brand terms so you can show up and say, “Hey, guys. You want to try Zenefits, but you really should know about Gusto.” Now the problem is, is in the last four-and-a-half years, we’ve never seen one of these campaigns perform profitably. So instead of simply trying to take people who have already decided they want Zenefits and try Gusto, you need to go back into that informational search. That’s where Software Advice, Capterra, G2 Crowd — for us, it’s Clutch.co, for your own industry it could be anything.
Usually, you can find these directories and these review sites for your space by doing very simple queries. Take your primary keyword and before that search, “Top” or “Best” or take your primary keyword and after it put, “Reviews” or “Alternatives” or “Competitors.” And now, start to see the ecosystem from which your brand, product, and services exist within and make sure that every conversation, you’re a part of.
Stage 4: Purchasing Decision
In this day and age, Stage 4, the purchasing decision, is such an undervalued part of marketing. I constantly see sales reps going into pitches with poorly designed decks, no real case studies that are designed properly, nothing’s in the proper medium, and everything’s from 10 years ago or 5 years ago. Everybody’s so worried about lead gen that they forgot that you can generate a million leads, close none of them, and nothing matters.
What’s so critical at Stage 4 is that you can lower your cost per opportunity drastically here by affecting your close rate. See, when you look through an entire funnel, there’s so much money that’s being spent in generating the lead that activating the lead and closing the deal is such an after-thought in marketing that it’s not being funded properly.
One of the biggest wins you can do today is to ask yourself, “If I was talking to two other vendors, does my sales team have the best assets compared to those other two competitors?” If not, maybe it’s time for you to invest more into the stage of closing the deal than trying to get more. In other words, what’s the point of throwing all this water into a bucket if there are all the holes at the bottom? Focus on the bottom of the bucket just as much as getting water into it.
Stage 5: Post-Purchase Evaluation
Finally, Stage 5, the post-decision analysis. “Was this company the right choice for me?”
The reality is, is not every customer will love you and those ones that don’t are some of your greatest learning opportunities. Try using a simple NPS software, like AskNicely — which we’ve leveraged here. There are also simple things like quarterly check-ins and monthly check-ins. Here, we do weekly updates. The tighter you can get your feedback loop from customer success or customer failure and then learn from that, the faster you can improve your deliverable, your product, or your service.
The reality is, the thing people pay you for has a huge part to do with how you’re marketing yourself. In other words, if you looked at what Seth Godin preaches, the “purple cow” approach: “Is your marketing just more noise in a noisy environment or is what you’re marketing doing the marketing itself for you?” A perfect example would be Tesla. They can take almost zero corporate advertising budget and still grow at a rapid rate because their product is a purple cow.
So start to ask yourself, “What types of features, sets, or innovations can my service or product pertain to or contain so that marketing it is a natural growth of what happens after someone purchases it?” They can’t help but tell their friend, not one friend, but multiple friends. That post-purchase is going to be critical for you as you go towards hyper growth.
Thank you so much for watching this video. If you can understand the 5 stages of the consumer decision-making process in the new context of search engines and how people are now discovering information, then you can empower your marketing and have successful campaigns that generate terrific return.
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