A model of human decision making

By Anthrolytics Ltd

At Anthrolytics, we have been focussing on what motivates consumers to make the decisions that they do; why do they decide to buy? and how do they decide which brands to buy from? The decision-making model below illustrates some of the factors that influence how customers make those decisions:

Firstly, you need to consider the stimulus and context of the consumer’s intention; what prompted them to think about making a purchase and whether the time, location, method, etc. have a bearing (we will discuss this in a later article in this series).

Next, identify which selection criteria are ‘needs’ (that are rational/functional); for example, what it should do, and whether price is a factor, and so on. Needs are often consciously considered, and consumers deliberate on them, weighing up their options. They are also typically ‘bounded’, i.e., they can be completely satisfied (if I am hungry and I eat, I satisfy the need).

You should then consider the ‘wants’, that satisfy other criteria that the consumer may not even be aware of. These wants are often emotional; for example, a desire to feel safer, or belong to a group and, whilst not ‘logical’, they are very powerful. ‘Wants’ also tend to be ‘unbounded’; for example, it doesn’t matter how happy a customer feels; they typically believe they could feel happier.

The neuroscience is clear here: all decisions contain elements of both needs and wants. In a following article, I will elaborate on some of the specific criteria that make up the motivations of a decision, but suffice to say, it is more complex than ‘I need to make a decision’.

For now, we can also assume that consumers strongly prefer products and brands that other people have used and recommended (rather than do their own detailed research – we will also discuss this in a later article). So, they often look to external influences (or ‘influencers’), such as star ratings and online recommendations, to simplify their selection process.

However, consumers often also have some history with a brand or product (yours or your competitor’s), and their recollections of prior experiences strongly influence the expectations they have of the future. Consumer expectations, heuristics and habits are all formed from prior experiences. But, because every person has a different history, this has hitherto been very difficult to predict its influence on the next action of individual consumers.

Interestingly, it’s not necessarily logical to rely on prior history to inform future decisions; as investment firms constantly remind us “past performance is no indicator of future performance.” Nonetheless, we rely on these prior experiences to help us form an expectation of what is likely to happen in the future.

Also, customer experiences are not evaluated by consumers against a commonly agreed and objective scale: rather they are comparisons between what they expected to happen and then what actually happened. It is the difference between the two that determines whether they think the experience was satisfactory or not. We need to remember though that these expectations may not be logical or realistic.

Finally, whilst most consumers would like to think that they are clever, logical, and rational decision-makers, the reality is that their decisions are deeply influenced by their internal biases. In our model, we assume that these biases fall into two domains: unconscious biases (e.g., prejudice, heuristics) that are beliefs and attitudes formed from personal experience or societal norms, and ‘cognitive biases’ which is where the consumer thinks they are being rational, but where flawed logic leads them to an erroneous conclusion or action: for example, assuming that ‘family sized’ products always represent better value for money.

All through their lives, consumers are constantly updating their internal model of the world, based on their expectations and actual experiences, and whilst some interactions with your brand may be powerful enough to directly influence their behaviour (especially negative ones), for most consumers, it is the accumulation of experiences that determine whether they think a buying experience is (or will be) satisfying.

The importance of history

If a consumer has had predominantly positive experiences, they tend to be more loyal and open to new sales; the reverse is also true: if they have more negative experiences, they are less likely to buy again. However, for many consumers, their experiences with a brand tends to be some combination of both positive and negative experiences.

We know that when other factors are broadly equal, it is how a consumer feels about your brand that ultimately leads them to decide whether to buy from you or not. But, considering the influences described above, and the unique nature of individual consumers’ lifetime experiences, it has proven impractical until now to try and use these insights at the consumer level.

At Anthrolytics, we use advanced analytical techniques to understand what customers really care about (which is not always what they say they care about) and why. In calibrating our predictive models, our research ultimately results in a predictive model that establishes cause and effect, i.e., ‘This stimulus is likely to trigger that response’.

Because of this, we can answer questions like “if we do something we know our customers don’t like, how many of them will defect?” or “how many of our customers are ready, willing, and able to buy our new product?”

If you would like to know more about how to apply the findings of Anthrolytics’ whitepaper on this subject, or about delivering compassion with your brand’s competence, we would be delighted to arrange a personal briefing, just email Anthrolytics at success@anthrolytics.io.

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