Modern Buying Processes: Opaque and Fiercely Competitive
Only when your company's goals align with the intentions of solvent customers can the entrepreneurial bet pay off. A company can only survive in the market in the long term if it provides a relevant benefit that is utilized by paying customers. Only if customers can recognize a unique added value for themselves will they choose the services offered and not one of the many alternatives. But only when your brand's messages reach the attention of people in your target group can they influence their attitudes and behavior.
What sounds trivial at first is, upon closer inspection, one of the greatest challenges in the context of digital transformation and the acquisition of customers, employees, and business partners: Customer centricity and brand management.
This challenge arises from the dynamics of an increasingly networked world. Two developments appear to be of particular relevance:
- Markets are dense, fragmented, and exhibit high competitive intensity. Digitalization and globalization lead to an oversupply of information and alternatives. The constant availability and unrestricted access to information change the behavior and expectations of customers. This results in the need for a company to bring forth innovative solutions that match expectations and can compete with the ideas of the competition. Progress and innovation ensure market dynamics.
- The customer's decision-making process is opaque, largely autonomous, and difficult for companies to trace. Customer needs are changing due to technological developments, social change, and the increasing influence of marketing and propaganda. Brands must capture the attention of potential customers, awaken their need, and gain their trust as a solution provider. Networking ensures transparency, autonomy, and overload.
In the following, both aspects are examined in more detail to draw valuable conclusions about the importance of customer centricity for the strategic positioning of brands in the digital age.
Dense and Fiercely Competitive Markets
It has never been easier to start a company or launch a new product. The barriers to entry in many markets are very low.
We are therefore all surrounded by a multitude of brands and a vast number of attempts to create them. Today, we come into contact with many brands unasked. Studies speak of 4,000 - 10,000 advertising messages to which we are exposed daily. Fortunately, we can no longer remember most of these encounters because they don't make it through our perception filters. Other brands we forget even before they find a place in our memory. Thanks to the brain. Some, however, seem to be burned in. Even if you were never a customer.
The amount of information crashing down on us daily is greater than ever. The number of alternative offers available to the customer is endless. The consumer's opportunities to make independent purchasing decisions have increased significantly. At the same time, many people are also becoming increasingly overwhelmed by filtering relevant information and selecting suitable offers. Furthermore, a general aversion to advertising can be observed. This dislike stems not least from the heavy proliferation of intrusive marketing charlatans.
To differentiate oneself from the competition in such an environment, it is rarely enough to rely on individual tactics or fall into activism. What is really needed is a deep understanding of human nature, the dynamics of their environment, and the communication processes that connect them.
Dense, fragmented, and dynamic markets with countless alternatives and an endless supply of information require being distinguishable and recognizable to reach the attention of the right people.
To remain competitive in the future, many companies must rethink. In oversaturated markets, quality and customer centricity are necessary prerequisites for economic activity. The maturation of markets means that brands and their offers become homogenized. Technological knowledge and the distribution channels used by brands align over time. This makes them harder for the customer to tell apart.
Important points of differentiation lose significance.
A company's ability and opportunity to demonstrate the value of its own offers to the right people via the right channels with the right messages, and to make them as easily accessible as possible (in short: marketing), are decisive factors for business success.
Particularly in highly competitive markets and in industries with a damaged reputation, customers look for real benefits at fair prices. Only if this benefit is perceived by customers as unique and can be utilized smoothly will value be attributed to the offer and the brand, which manifests itself in (additional) profits.
“Customers are looking for a deeper meaning, for tangible values.”
For customers, this does not only bring advantages. Customers today are spoiled for choice.
- Who understands my problem best?
- Which solution approach seems most promising?
- What categorical options are there to utilize the solution?
- Can I trust that the brand will keep its value proposition and that the purchase won't turn out to be a wrong decision?
Brands thus take on a trust and orientation function: you recognize the provider of an offer and know what to expect based on previous experience. If you haven't had any experience with the brand yourself, the reputation reported by other customers serves as a quality indicator.
The significance of other people's voices for our purchasing decisions is clearly shown by the current importance of influencer marketing.
"Purchase decisions and brand preferences are less often shaped by individual customer needs; instead, they are significantly influenced by the opinions of other customers."
– Elke Theobald
Against the backdrop of the countless choices to which one is exposed as a buyer or consumer today, brands continue to gain importance as providers of trust and meaning.
Autonomous and Opaque Decision-Making Processes
If you want to understand how people make buying decisions in this environment, you should first realize that customers are people who, given the sheer volume of messages, have no choice but to reduce, filter, and select.
For companies, the question arises as to how, despite selective perception, they can succeed in gaining the attention of the right people to make the value of our offer apparent and accessible to them.
For us to give our attention to a person or a thing, it must appeal to our values or our emotional needs. If that is the case, resonance is created between the brand and the customer. With the resonance generated, the probability increases that the potential customer will engage more intensively with the information and possibly decide on our offer.
To create resonance, a mix of consistent and surprising signals is needed. If it is possible to create a feeling of harmony (coherence) across all messages without becoming too monotonous, there is a chance to reach the customer with rational arguments as well.
Once we are aware of this connection between emotional evaluation and our attention, we have come a good step closer to the essence of human purchasing decision processes.
Decision processes are always dependent on the graspable data, the interpretable information, and the available knowledge. Those who have better data, more valid information, and more relevant knowledge can make better decisions than those who still have to search for information.
Through global access to information via the Internet, information power and thus decision-making power have shifted significantly. Today, in most cases, it is no longer the provider but the buyer who decides what is bought and what is not. The customer has the choice. He can usually easily opt for another company should his expectations not be met by the chosen alternative.
This development leads to largely autonomous decision-making processes among consumers. Only when attention and need have been awakened and their own research options have been exhausted does the need to get in touch with the company arise at all. Otherwise, marketing is quickly perceived as annoying advertising. As a company, it is important to take these changes in purchasing behavior into account and once again refrain from pushiness. Rather, relevance should be at the forefront to meet the needs along the customer journey.
Despite digital options for data measurement, the customer journey is difficult to illuminate and therefore can only be recorded fragmentarily. The process of a purchasing decision is influenced by an infinite number of digital and analog factors. One should therefore free oneself as early as possible from the illusion of being able to measure everythingreliably.
To understand decision-making processes in the best possible way, qualitative insights are needed whose relevance is confirmed by quantitative data. Empathic access to the customer and their emotional needs is a decisive factor in whether the company succeeds in designing a consistent customer experience across all touchpoints and thus ensuring positive experiences for buyers.
Purchasing decisions in the digital world are characterized by high dynamics: they can be influenced by weak signals in a short time, but they cannot be steered and controlled.
As a service provider, it is all the more important to use the influence opportunities that are actually available to align product, service, and communication with customers and their needs in a digitalized world. This means supporting decision-making in the best possible way, making the customer journey consistent across all touchpoints, and ensuring a coherent overall impression that remains in memory for as long as possible.
Eight Characteristics of Modern Buying Processes and What They Mean for Successful Marketing Today and Tomorrow
In the digital age, purchasing decisions are subject to several changes that companies should consider to meet the needs of potential customers and digital systems:
#1 Digital Shopping Experience
The decision-making process takes place largely online. Unlike in the analog world, products or services cannot be viewed or tested in real life before use. At the same time, offers can be communicated independently of time and place, so that they are available worldwide and at any time.
For the digital shopping experience, it is essential to ensure a frictionless process, address the right emotions, and answer all the potential customer's questions. Virtual experiences, e.g., in the form of videos, make the offer more tangible.
#2 Multitude of Alternatives
The customer can inform themselves about their problem, evaluate alternative solutions, and identify specific brand offers. In most cases, the customer has significantly more options available than can be processed.
It is essential to be visible, findable, and recognizable to win over new and existing customers for your own offer. To prevail amidst the multitude of alternatives and be remembered correctly, strategic positioning is required, which can only be effectively established with the help of a stable brand identity.
#3 Independent Comparison
As part of their decision-making process, the customer has access to a variety of opinions and reviews that can help them assess, compare, and select potential providers. Unlike in the past, the customer journey is characterized by many independent steps that the customer takes in secret and on their own to prepare for their decision. The extent of preparation depends on the purchase decision and the associated risks. When shopping on Amazon with one-click payment, impulsive purchase decisions are not uncommon. But even in the low-price segment, comparison is rampant in many categories. When it comes to larger investments, such as buying a car, it is an extensive purchase decision. In these cases, research is even more intensive. In addition to information on the Internet, people in these instances rely on the opinions and experiences of people they already trust and who have already had comparable experiences.
Companies that support this comparison process by creating emotional impressions and providing important information gain relevance and trust. Visibility on review and comparison platforms, which people use for many purchase decisions, also plays a crucial role in the success of online marketing.
#4 Digital Interactions
Only when independent research reaches its limits and the need has been sufficiently awakened will the prospect make use of the offered interaction possibilities. Only then do they become recognizable as a prospect. While previously only personal contact with a representative was an option to learn more and get answers to questions, today the Internet also offers the possibility to interact with the company in various ways. Social media, in particular, plays an important role in online marketing here. This is where a large part of the interactions between customer and company take place.
In addition to the company's own website, which can provide a variety of interaction options as a business platform and brand stage, search engines and social media also play a significant role. It is crucial that all interactions are understood as touchpoints with the brand and are designed consistently and coherently. If a logical brand image is created across all touchpoints, chances are good that we will stay in memory and be among the few options actually considered at the right moment.
#5 Sales Intensities
Changes for the sales function have resulted from the far-reaching possibilities for independent research and the increased need for autonomous decisions. Before the Internet era, information and decision-making power lay largely with the providers. To buy a car, a consulting service, or a vacuum cleaner, people were almost always dependent on receiving information from a representative of the respective company. The awareness of the offers was also significantly dependent on sales staff making potential prospects aware of them and convincing them of the value of the offer.
The flood of information, the resulting aversion to advertising, and the ability to make autonomous purchase decisions have significantly changed buyer behavior. Only when the benefit is recognized and the need is felt are we as buyers interested in speaking with a salesperson. Thus, the necessity to spark interest and generate demand moves from the sales function to the marketing function. Marketing has the task of making the value of the offer apparent and accessible. Sales has the task of supporting decision-making and leading to a closing.
#6 Individualization & Personalization
Modern web technologies today make it possible to provide personalized support for the customer's autonomous purchase decision process. In this context, personalization means that companies direct their marketing messages at specific target groups, with the messages tailored to certain characteristics such as age, gender, location, and income of the target group. The customer has a number of options from which to choose. Individualization, on the other hand, describes the tailoring of a marketing message to the needs and motives of the target group.
Generic advertising that does not move us emotionally because it has nothing to do with our needs has long since ceased to be enough to reach desired customers. The selection of providers is too large and one's own reach too small. It is therefore all the more important to communicate individualized, i.e., target-group-specific brand messages and offer personalizable experiences.
#7 Targeted Targeting
The various search systems available to us on the Internet are of great importance for small and large companies alike that want to break through to their target and demand groups in the digital age. With the help of large platform providers such as Google or Facebook, marketing messages can be played directly to specific target groups in specific contexts. Such paid targeting with the help of advertising media platforms makes it possible to specifically activate purchases and create brand awareness in a short time.
Unlike in the past, people today are much more difficult to reach. The choice of channels and marketplaces where people can move is too large. To do justice to this decentralization, technologies can be used to communicate specifically in certain contexts. Central forms of communication, such as playing advertisements via channels with a large reach (TV, radio, etc.), cannot handle this task alone. At the same time, many companies tend to see targeting as a general solution and sacrifice reach.
#8 Digital Success Measurement
By shifting the customer journey from analog to digital channels, a multitude of data points can be collected and used for evaluation. Care should be taken to avoid typical interpretation errors and to validate qualitative insights with quantitative data.
To avoid getting lost in the jungle of digital possibilities, it is crucial to check one's own activities for efficiency and effectiveness. In addition to qualitative data, quantitative data should also be used to evaluate and improve the effectiveness of measures against the backdrop of company goals. Since marketing relies on constant experimentation, a systematic approach to testing, optimizing, and intensifying (digital) content and messages is needed.
Customer Centricity as the Key to Profitable Positioning
Against the background of the challenges presented in the fiercely competitive and opaque market environment, companies must reposition themselves. They face the task of determining and developing a positioning in a highly dynamic environment that brings them the right customers and sufficient profits.
Anyone trying to establish their company as a brand must reliably deliver the expected quality over a long period and, furthermore, escape comparability. This requires a substantial offer as well as differentiation from alternative options.
The strategic positioning of brands in the digital age represents a major challenge, especially for small companies with a small budget. The simultaneously increasing pressure to innovate and save costs makes it necessary to think fundamentally about the actual and the targeted position in the market.
- How do we reach exactly those people who benefit most from our offer?
- How do we succeed in expressing what we are really good at?
- How do we stay in memory and why are we recommended?
Only a few service providers and business owners are aware of the increasing importance of these questions. Even fewer entrepreneurs take the time to answer these questions. Most are still scratching the surface despite increasing complexity. Only a few are truly ready to let go of outdated knowledge and expand their theories. Only a few companies have actually already begun the transformation of their organization. Studies show: customer centricity is a foreign word in many companies.
Why is that?
First, because complexity and dynamics mean that it is rarely clear what influence external dynamics actually have on the needs, attitudes, and behavior of customers and thus on one's own company.
Many therefore still think they are not affected by the change of our time. Yesterday's successes and operational hecticness make many decision-makers blind to relevant developments and necessary changes.
Doing nothing is indeed more dangerous from an entrepreneurial point of view, but it feels significantly better at first than questioning oneself and one's previous successes with an eye to the future.
The fact that more and more providers are fighting over potential and often annoyed customers in overcrowded marketplaces (usually with the help of paid advertisements) also shows how far most companies are from customer centricity as a holistically lived practice.
The idea of simply being able to buy customers with advertisements fits the pattern of our time: complex problems are met with trivial solutions.
Customer centricity? Nowhere to be found.
However, if we become aware of human nature and know the characteristics of modern buying processes better than our competitors, the chances are good that we can prevail as a unique brand despite dense and fiercely competitive markets.
