THE CUSTOMER

DECISION
LOOP

by Mary Drumond
TABLE OF
CONTENT

00 01
Intro Casualties of the
page 3 Experience Economy
page 4

02 03
The Customer Decision Loop The One Conclusion That
page 4 Matters
1. Need - page 5 page 10

2. Expetations - page 6
3. The “Worth It” Analysis - page 7
4. Customer Decision - page 8
5. Continous Cycle (Loop) - page 9
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THE CUSTOMER DECISION LOOP

Intro
Any executive worth their salt knows that decoding the motivation
behind customer’s choices – and being able to prove it – is the holy grail
of market research. Everyone’s looking for that proof, but not many can
find it.

Most modern-day companies have a way to measure customer

emotions, as well as customer experience strategies to respond to those
emotions. The problem is, traditional survey methods only measure
emotions after a decision to buy has already been made.

The insights gained from post-decision emotions only paint part of the
picture. They corner your business into being reactive to customers
complaints or compliments. Companies should aim to be predictive.
Anticipating customer needs increases your value to customers and
investors alike.
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Casualties of the Experience

THE CUSTOMER DECISION LOOP

Economy
We have recently seen countless examples of well-loved companies and
customer favorites leaving the market. As much as we try, we can’t seem
to understand why satisfied customers still leave.

The truth is, although customers may have had a great experience with
your brand, are very satisfied and would recommend your company
to others, if their lifestyle or the market shifts, it will affect their
perceptions, expectations, and ultimately their decision to stay or leave
you for your competition.

But what is going on in customers’ minds while they’re making

decisions? The answer is a lot. And it’s both emotional and rational.

The Customer Decision Loop

There is still so little we understand about behavioral psychology.
Truth be told, most of the human mind is still a mystery. But there are
a couple of things we have been able to map out, and one of them is
the Customer Decision Loop. This concept describes the four stages
that each customer goes through when deciding whether to make a
purchase or not.

Let’s look at the factors that are directly tied into our buying decisions.
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THE CUSTOMER DECISION LOOP

1. Need
A purchase decision is always sparked by a need. In Maslowe’s Hierarchy
of Needs, there’s a good summation of every conceivable human need.
The fulfillment of lower levels of the hierarchy open the door to the
needs at the next level.

• Physical needs like breathing, eating, and sleeping make up the bottom.

• Next are security and safety; financial, health, and emotional

security all belong here.

• After this are psychological needs; feelings of belonging and friendship.

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• Then feelings of achievement and esteem; status, wealth, or

THE CUSTOMER DECISION LOOP

personal accomplishments.

• Finally, self-actualization, or achieving your full potential, is at

the peak. This includes any creative activities like the arts, sports,

invention, and other self-expression.

(Don’t forget about superficial needs, or wants. While these

purchases are not essential to us, they definitely have their place in

our wallets.)

Everything we do, every decision or purchase we make, serves at least one

of those needs to some degree. Contrary to popular belief, the core needs

that people have rarely change; new ways to address those needs simply

arise, and there can be many different ways to fulfill the same need.

For example, let’s say I need transportation to get my kids to school and

commute to work. The need has always existed, it’s how we fulfill that

need that has changed. In the past, we traveled by horseback; now we

use cars. In the future, perhaps we’ll teleport.

2. Expectations
There are certain expectations customers carry when shopping around.

Those expectations can be low or high. Whatever the case, they have

them and want them met at a minimum.

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For example, since the technology is available, I may search for an

THE CUSTOMER DECISION LOOP

electric, autonomous-driving car. In doing so, I expect to save money

on gas, be ecological, and not exert energy driving. I immediately go
into search mode to find a solution to fulfill my need while factoring in
my expectations.

As you know, expectations can change at any time for a variety of reasons.

It’s important to remember that customers’ expectations are often

shaped by factors outside of your control. Customers look to the
competitive landscape around them to determine what they should
expect from you. Likewise, industries that may not even intersect
with your line of business can also shape customer expectations. For
instance, once Amazon Prime introduced 2-day delivery, customers
began expecting shorter delivery times from non-competing industries,
such as couriers and logistics. Therefore, it’s important to constantly
keep tabs on what the entire market is pushing out. Equally important is
seeking out the upcoming disruptors of your industry so you can identify
and address future threats.

3. The “Worth It” Analysis

At this stage, customers weigh the costs vs. benefits of their
forthcoming decision to arrive at the “worth it” conclusion: the last and
most powerful conclusion in the decision-making process.

This is when they ask themselves that final question, “Is it worth it?”
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Back to the electric, autonomous-driving car that I’d like to buy. I’ll
THE CUSTOMER DECISION LOOP

assess whether it’s within my budget, the best relative price compared
to other options, if the quality meets my expectations, etc.

This is also the point where I decide on what compromises I am willing

to make. Does the car have to be autonomous? Can I live without those
seat warmers or that nice sunroof?

At this part of the cycle, I must point out an external force that plays a
strong role in this process: influencers.

Influencers are people and factors that influence you along the journey
in the decision-making process. Influencers can talk you in or out of what
you need or expect. This can come in the form of reviews and ratings
that customers might encounter during our worth it analysis. Or it could
be people in your customers’ lives who would either praise or judge the
purchase decision. Influencers help us validate if we’re managing the
decision correctly and add an element of social proof.

4. Customer Decision
Finally, we’ve arrived at the decision on what is worth it or not.

Based on the worth it analysis, customers make their best choice based
on the intensity of their need, their expectations, their available budget,
and the offers available in the market. It’s about finding the balance
between all these elements, giving to priority to the drivers that matter
most to the customers.
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I’ve decided that instead of the electric, autonomous Tesla, I’m buying
THE CUSTOMER DECISION LOOP

a Prius. I’ll still fulfill my expectations of saving gas and having an eco-
friendly car and found it easy to compromise on the self-driving feature
in order to meet my budget.

5. Continuous Cycle (Loop)

Our minds run through this cost-benefit analysis every time we make a
purchase. As long as the need exists, the entire cycle from expectation
to decision will continue in a loop. The urgency may decrease once the
need is somehow addressed, but the expectations will inevitably change
at some point, causing the decision cycle to restart. This is why we, as
consumers are constantly switching up our gadgets, our cars, our clothing.

In order to reduce churn, it is crucial to continuously receive feedback and

monitor your competitive landscape. After a customers’ initial decision to
buy from you, the easiest option is to continue to do so. If you are able
to keep up with their ever-changing expectations through your voice-of-
customer channels, you will have right tools to retain your customers.
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The One Conclusion That Matters

THE CUSTOMER DECISION LOOP

The Worth It Conclusion has long been overlooked, but it’s the last piece
needed to round out your existing Customer Experience Management.
This conclusion has the most impact on customer decisions and it’s the
only one that leads directly to the source of what is causing the money
flow from customers’ pockets to companies’ bottom-line profits.

With the speed of change in today’s technology and expectations, high

customer satisfaction and recommendation levels are no longer enough
to guarantee loyalty. As soon as innovation enters the market, it sets
new expectations, and your customers will leave you if your business is
not quick enough to adapt.

With Worthix’s Cognitive Dialogue Technology, you can dialogue on-on-

one with your customers and find out what makes you worth it to them
– or not. Our AI-powered technology helps you produce self-adaptive
dialogues that allows your customers to tell you what they care about,
giving you actionable insight that can boost your bottom line.

Want to know more about using Worthix is measure how worth it you
are to your customers?

REQUEST A DEMO TODAY