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Hidden Forces That Impact Your Buyer - A Cheat Sheet

How psychology and group dynamics play a part in their decisions

I've often wondered why people sometimes struggle with decisions as an individual or in groups. Group dynamics are very interesting to me and personal behavior that seems to be fueled by fear or embracing life/opportunity is equally intriguing. Regrettably, you will see in certain groups that people will move in the direction of fear-based living. That being said, this is a short list of behavior terms that psychologists/researchers use to describe what goes on with people when making decisions. It’s part of the research I have done for my book. When you’re having a bad day because someone did something that made no sense or “the group” is being strange, perhaps one of these terms will give you some short-term comfort. Humans seem to do the same things over and over – they just attach different names to it.

Adjustment Heuristic – When people tend to rely on specific information or a value and can focus so heavily on this that they ignore other valuable information. For instance, an person may be looking at buying an enterprise application and focus so heavily on its initial price that they ignore its performance or return on investment.

Availability Heuristic – People predict the probability of an event based on how easily an example comes to mind instead of real statistical probability. For instance, if a friend of mine buys a specific car and I hear his harrowing story about how the gas line broke, I ignore all other data and his story becomes my representative of the whole story and not a single instance. In short, the buyer ignores data that might point out this particular car as being the safest on the road from a statistical standpoint.

Bounded Awareness – When people fail to see, seek, use or share relevant, easily accessible, and readily perceivable information during the decision-making process.

Bounded Rationality – A behavior model in which human rationality is very much bounded by the situation and by human computational powers. Obviously, every organization will fluctuate in their collective abilities.

Confirmation Bias – People tend to seek out and assign more weight to evidence that confirms what they already believe and ignore information that would contradict what they believe. As a recent example from 2008, think of the way people gathered information to support a view they already had about a presidential candidate they had already chosen. When looking for information, they tend to search for those things that support their need to be right. Some of the most interesting and intellectual people I have met have the ability to suspend their bias to hold their options out in front of themselves. It is a rare trait and highly valuable.

Contrast Clarity – When people can visualize the obvious contrast of their current situation vs. the promise of the decision. This helps crystallize the thinking toward a decision since it helps them visualize what the decision means. Tables are very popular for this since they are very visual and relevant. Photos can also be used in a before and after theme. The question that is being asked by the buyer is, “what will change?” It also helps them effectively explain their decision to others. Buyers tend to stall when they can’t visualize this clearly.

Critical Thinking – Going along with executive function, this is purpose-driven, deep reflection based on all information and experiences that should result in a thoughtful decision. Many people lack the discipline and rigor to do critical thinking. Unfortunately, this may be the most valuable of all skills.

Emotional Responses – Occurring at the rear regions of the brain. This is where many people will work from since it’s easier than critical thinking or using executive functions. This is where people can make some of their most regrettable buying decisions.

Executive Functions – This happens in the prefrontal cortex of the brain and it focuses on the long-term goals of the buyer instead of any intuitive decision-making. It is the an

tithesis of emotional responses for short-term reward and for many people, not a consistent strength.

Group Polarization - The tendency of people to make decisions that are more polarized when they are in a group, as opposed to a decision made alone or independently. Study of this effect has shown that after participating in a discussion group, members tend to advocate more extreme positions and call for riskier courses of action than people who did not take part in any such discussion. If you have ever been in a user group setting, it becomes quite easy to think of examples where someone would hijack the meeting with an extreme opinion when normally their behavior would be more balanced.

Value Confusion - People tend to focus their attention on things that have little value but receive a lot of attention from others. This can be costly since it can pull resources away from things that deserve more attention. Helping them sort out these areas can shed new light on choosing options intelligently. This is one of the most difficult concepts to get across to people and why metrics can be the provider’s best friend.

Imagine how this feels for the buyer. They have concerns they do understand being influenced by unrecognized forces. Add to this the confusion created by the provider by either coming in at the wrong point with information or having poor information.

Based on the aforementioned, we can now easily see the value of great salespeople and the monumental task in front of them when marketing leaves them unarmed. Whether they know it or not, they are constantly battling some aspects of these issues.

Marketing must stay an active participant in helping the salespeople aid the buyer in navigating their way to a superior decision. The provider needs to understand these influences on decision-making by the buyer. Some psychological and social influences can short-circuit the best of efforts by providers to help buyers. By anticipating them, the provider can create the proper response to keep a buyer on track. Since there seems to be too much information in the world, humans have come up with shortcuts to speed up decision-making. The provider’s job is to help the buyer use their critical thinking abilities when they are tempted to act too quickly. By helping them perform better in their decision-making, we will find that our own story improves for the long term.

More Stories By John Ryan

John is an experienced leader with a strong background of defining and executing company strategies. He is especially skilled in channel management, market analysis, brand marketing and selling technology products and services. He has successfully served in a number of executive positions and has been in management for 20 years. John is currently writing a book on increasing revenue generation. He has been a co-author of a comprehensive marketing methodology for high tech companies and has helped venture capitalists and private equity firms gauge their technology investments. In 2004, John served as Vice President of Marketing for the NA arm of the $6B IT Services division of Siemens, AG. John served on the board of directors at WebTrends, purchased by NetIQ (NTIQ) for $1 billion in 2001. WebTrends was highly successful dominating the web site analysis and reporting space. Prior to WebTrends, John was the Vice President of Marketing for Tivoli Systems. John has worked as a contracted consultant for established companies, start ups and top analyst firms. John can be reached at john@johnwryan.com or you can follow him on Twitter @buyersteps

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