Many businesses still struggle to align their sales processes with their customers' true potential, often due to a misunderstanding of how buyers make decisions.
Behavioral economics can offer transformative insights into consumers' decision-making processes, paving the way for innovative solutions to your biggest sales challenges.
At Simon-Kucher, we can help you develop decision-support tools that combine product, price, and sales strategies with behavioral economics. These tools enhance your customers' ability to choose the product that best fits their needs and aligns with your company's strategic goals.
What are decision support tools?
Decision support tools help customers make informed decisions when choosing a product or service. These tools simplify the decision-making process by providing relevant information, options, and prompts to guide the customer toward the best choice.
They are often based on principles from behavioral economics, which consider how consumers make decisions and the factors that influence their choices. Decision support tools bridge the gap between consumer behavior and business strategy. They help customers navigate product options, understand the value of each choice, and make decisions that are both satisfying for them and beneficial for your company.
Incorporating behavioral technology into decision support tools
Behavioral economics suggests that consumers do not always act rationally or adhere to a fixed set of preferences. Their choices are influenced by context, how options are presented, and the mental effort required to decide. Understanding these nuances allows you to design better products, set more effective prices, and communicate value more compellingly.
At the moment of purchase, a customer does not always have a clear idea of what they wish to buy. Instead, they often use information immediately accessible during the decision-making process to evaluate the options on offer. One piece of information that is almost always available is the price. Competing solely on price can lead to a race to the bottom and a transactional relationship rather than a loyal customer base.
Other aspects that strongly influence decision-making are simplicity and comparability. Customers often rely on cognitive shortcuts or heuristics when making choices. These shortcuts help individuals simplify complex decision-making tasks by using mental strategies that reduce the cognitive load. For example, customers may opt for the default option or choose the first proposal offered to minimize the effort required to make a decision.
Decision support tools provide clear and relevant information at the right time, guiding customers toward informed choices. By presenting information, alternatives, and prompts in a simplified and comparable manner, they facilitate the decision-making process and lead customers to make optimal decisions with minimal cognitive effort.
A decision support tool should simplify the user’s search for information as much as possible. It should also provide access to everything the decision-maker needs to make an informed and rational choice. At the same time, algorithms can anticipate the heuristics the decision-maker uses during the purchasing process, providing prompts toward the product or service that aligns with your overall strategy.
How to design decision support tools
One of the first key aspects when developing a decision support tool is the design of the interface. You must pay attention to graphics and language, as these are fundamental from a brand image perspective. Attractive colors and illustrations, user-friendly and interactive commands, and rapid and intuitive navigation are all key elements.
However, a well-designed decision-making tool is not limited to effective language and engaging graphics. It must also offer the user the relevant information at the right time, anticipating how the decision-maker will interpret and use it. The navigation logic plays an equally important role.
Price anchoring
One typical way a decision-maker seeks to limit the mental effort involved in finding information is to accept the first proposal on offer. Assessing a series of alternatives can be cognitively demanding, so the buyer accepts what the seller offers. The default option becomes an anchor that the decision-maker tends to stick to.
The decision-making tool's task is to identify the customer's needs and desires by means of simple questions aimed at revealing profile and usage patterns. Often, these preferences are not perfectly well-defined in advance and need to be refined during the configuration process.
Fair premium offering
A “fair premium offering” involves selecting a default option representing the best compromise between quality and price. You can base this on the customer's profile and the additional information you gain during the sales dialogue. This approach avoids extreme assumptions concerning the customer's attitudes and expectations, nudging them toward a choice which will be acceptable. At the same time, it allows them to opt for alternatives by means of a simple and intuitive navigation system.
Availability
Another cognitive shortcut frequently used in obtaining information is availability. People tend to assign additional weight to information that springs easily to mind and undervalue remote or indefinite information. When analyzing the individual value elements, the decision support tool must provide the consumer with an accurate synthesis of key information.
For example, imagine you are selling a credit card. It is important to remind the consumer that credit cards allow them to avoid carrying cash, match the moment of paying out money with the moment of receiving their salary, and avoid changing money when traveling abroad. The goal is to provide such information appropriately, saving the small cognitive effort the consumer is not always inclined to make.
How to implement decision support tools
Implementing a decision support tool means encouraging the largest possible number of existing customers to adopt the "right" offer. You also need to integrate the decision support tool into your sales process for acquiring new customers. Develop a detailed migration strategy, define objectives for each customer in terms of purchasable value elements, and formulate a migration plan.
Determine a set of key performance indicators to monitor the ongoing process. This phase is particularly important because it allows you to formulate precise estimates of impact for different customer categories. KPIs provide clear targets for the salesforce and benchmarks for tracking progress. Any possible discrepancies should trigger timely and targeted marketing campaigns or realignment.
Given the high numbers of customers typically involved in the migration process and the many possible combinations of products involved, it is generally advisable to prepare a simulation model. The aim is to organize the various possible migration patterns within a set of algorithms and simulate the impact on revenue.
Adopting a decision support tool requires a strong commitment from the sales force. Without a true change management program to explain and implement the logic and advantages of the new approach, success chances are drastically reduced. The first true customers of the decision support tool must be your own sellers. Introduce training to convey the logic behind your products and how the tool works. Address the salesforce's concerns and overcome skepticism or practical difficulties.
How Simon-Kucher can help
Ready to revolutionize your product offerings and boost your revenues? We help you develop cutting-edge decision support tools tailored to your customers' needs. Our expertise in behavioral economics and pricing strategies ensures that your products are optimally positioned to attract and satisfy your target audience. We help you empower your customers to make the right choices and drive your company's growth.
Contact us today to learn how we can transform your product strategy and unlock new revenue potential.
