How Much Business Are You Missing Out On?

by · October 4, 20138 comments

What is a reactive purchase? It’s a good question, and one that you’ll soon have an answer to. Understanding the behavior of your target market and buyer is essential to sales and marketing success. Today the two don’t exist as standalone silos; marketing success is no longer tertiary in determining sales success.

What Is A Reactive Purchase?

You might have some idea of what a reactive purchase entails from the wording of the phrase. There doesn’t seem to be one clear cut definition, but I define a reactive purchase as: “A purchase initiated by a spontaneous need, or desire, for a product or service”. The key word here is ‘reactive’, which means to respond to a stimulus.

Why Are Reactive Purchases Important?

Humans are impulsive by nature. The majority of us, contrary to what we’d like to believe, aren’t all seeing, all powerful decision makers with the kind of clarity usually bestowed upon deities. A purchase will only generally fall into one of two categories, a meditated purchase, or a reactive purchase. A meditated purchase is exactly the opposite of a reactive purchase, but we’ll talk more about the distinctions between the two shortly.

The key question is why are reactive purchases important and why should you care? The simple answer is, the majority of purchases are in fact, reactive.

Is My Product Or Service Considered A Reactive Purchase?

The concept of a reactive purchase is fairly simple, differentiating between a reactive and meditated purchase can sometimes be trickier than you might think.

Let’s use a simple example that any business owner will be able to relate to. The end of the year is fast approaching, and that also means your financial year is coming to a close. You’ve been receiving letters from the HMRC, or IRS, informing you that you need to get your affairs in order and file your annual return as well as all your financials for the year.

Up to this point, you had given taxation no thought and had been focusing on growing and scaling your business, as such, this creates a spontaneous need on your part, a need to either spend a lot of time and effort getting your affairs in order, or the need to hire an accountant, and fast.

The thought process of the individual in question will be simple. I need an accountant, I better find one, and I’ll run a search on Google for ‘accountants’ and start picking up the phone.

 google keyword tool screenshot

Another simple example would be a company experiencing declining sales. They decide on the spur of the moment that they would benefit from SEO Services, so decide to enlist the help of an SEO Company to rectify this.

What Isn’t A Reactive Purchase

The distinction between a reactive and meditated purchase, comes down to subtle distinctions between the two. I will use the same instance of a business owner requiring an accountant to illustrate how this need might fall under the reactive purchase bracket, or be considered a meditated purchase.

The end of the year is fast approaching, which also means your financial year is coming to an end. You’ve had this in mind for several months now and have been considering how best to approach resolving this problem. After attempting to wade through the mountain of financial information at your desk personally, you decided this wasn’t the most valuable use of your time and that outsourcing the task was the best option. You’ve asked around a few times if any of your colleagues could recommend a good accountant, and you’ve been referred to 4 or 5 different providers, which you’ve run a bit of due diligence on and agreed to meet when you have some free time. As the final month of your financial year rounds the corner, you pick up the phone and call one of the accountants you were referred to and agree to outsource the task to them.

As you can see, the defining factor here isn’t the type of product or service itself; rather it’s the buying process and the stimulus that prompts the buying decision.

When the decision is meditated, the route to purchase is often very different. Recruitment is a great example of a B2B service that is very often, a reactive purchase. A company makes a huge sale and as a result needs to hire more skilled workers to cope with the work; they immediately need the services of a recruitment agency to handle this quickly and efficiently. Queue a reactive route to purchase.

Many B2B services may in fact actually be meditated purchases, however, the route they take to market is often the path most commonly taken by the reactive purchaser, which is a Google search then a point of contact. As such, SEO services and SEO companies play an increasingly important role in helping businesses capture these purchases, as they effectively hold the keys to reactive sales success.

From these examples, you can see how important it is to effectively understand what a reactive purchase is and why they are so important to the sales strategy of any business.

How To Capture Reactive Purchases

Now that we’ve covered what a reactive purchase is and the distinctions between a reactive and meditated purchase, it’s time to look at how you can begin capturing reactive purchases if you aren’t already.

A reactive purchase is a warm lead, it’s a qualified buyer, and it doesn’t get much better than this. The buyer knows what they want, they want it now and if you can give it to them at a price and delivery point they are happy with, you’ve got a sale.

Reactive purchases are primarily only captured in one of two ways, in my opinion.

Search Engine Optimization

The way we buy things has changed dramatically over the past 10 years. Today the buying process for a reactive purchase usually looks like this.

  • Spontaneous need for a product or service, triggered by an impulse.
  • Open Google, run a search query for the desired product or service.
  • Open product or service provider websites in tabs, usually only the first 3 or 4 links on page 1 of Google will be opened.
  • The buyer will briefly assess each provider then make a decision to contact them for a quote, or a purchase.

Search Engine Optimization is an industry that has been ubiquitous in the business world for over a decade. However, it’s also the fastest changing and evolving online marketing industry in the business world, and one that is misunderstood by 90% of those who believe they understand it.

We’ve probably all approached, or have been approached, by an SEO Company, or SEO Agency, at some point in our professional career. This experience may have been good, it may have been bad, and in some occasions it may have been soul destroying. Ahem, blanket sales pitch for position 1 Google success for all your keywords within a month or your money back.

The point I am trying to emphasise here is that a huge chunk of purchases are reactive. 90% of these reactive purchases use Google as their route to purchase. This means that when there’s a reactive purchase, 90% of the time it’s going be Google that wins you the business, unless it’s a proximity driven purchase, which we’ll cover under footfall next.

The next point to emphasise here is that almost 50% of the traffic for any search query goes to the top 5 keywords. If you’re familiar with click through rates, more commonly referred to as CTR’s, you might have come across material on this previously on resources such as Moz. If not, the CTR study carried out by Slingshot is a great place to start.

The image below illustrates how clicks are distributed when somebody types a key phrase into Google.

CTR Curve

To use the accountancy example again to illustrate, were you to type the key phrase accountancy into Google right now and your company wasn’t ranking in the top 5 positions, chances are you’re going to reap very little reward and win little to no business.

This is where things get tricky; thanks to local search, many business owners and marketers may believe they are achieving a high level of search success, when in reality they aren’t ranking for their keyword outside of their local area. The best way to determine with any level of clarity if you are ‘ranking’ where you think you are for a key phrase is to use Moz’s Keyword Ranking Checker.

If you combine this with regular review of your Google Analytics and Webmaster panel, you’ll be able to get an accurate picture of how you are ranking and which search terms are driving traffic to your site and trigger purchase, or contact decisions.

Proximity

The second primary driver of reactive purchases is of course, proximity, or more simply, footfall. We walk past something shiny; we walk into the shop and buy it. Footfall is the lifeblood of many B2C industries. Food, fashion, entertainment, health and beauty, these industries and others are still primarily powered by proximity and footfall. It’s rare, but not uncommon, that a buyer will run a Google search for ‘café Boulder’ for example, before deciding to grab a coffee.

The other end of this spectrum is of course the meditated purchase, a family planning a vacation, holiday, or just a special night out for the family. This buyer might do their research and read up online about the best places to eat or dine out.

Capturing proximity based reactive purchases is a separate art in itself, but one that can also be driven by other marketing initiatives, such as a well thought out social media campaign designed to funnel social media visitors from a Facebook page into a café for example. To prevent myself from diverging too much, I’d recommend you check out SME’s own Social Media section for more on this.

I’m sure there are other effective methods of capturing reactive purchases out there, and I’d love to hear feedback from you all on which you have found to be the most effective.

Conclusion

In conclusion, a reactive purchase is a purchase initiated by a spontaneous need or desire for a product or service. The majority of purchases if you look at the bigger picture could be classified as ‘reactive’, so it’s extremely important to have a strategy in place to capture these reactive buying decisions.

I’d love to hear your feedback on how you qualify, and as a result capture, purchases and sales.

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About James Thomas

James Thomas

James is the CEO of Square Social, a company that helps businesses grow using Social Search. Square Social use a hard hitting combination of social signals and search engine optimization to deliver an unbeatable return on investment. Contact James and his team here.

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  • http://www.socialmediachica.com/ Stacy-Ann Hayles | Social Medi

    Hey James, this post was really insightful. I have a question for you. When you initially said ‘reactive purchase’, I immediately thought of someone reacting to product they didn’t realize they need until they saw it.

    In keeping with the accounting example – a business owner sits all day trying to figure out his taxes, then he goes online to check Facebook, for example, and an ad pops up about last minute tax filing services. *lightbulb* I’ll use them!

    My question: If that’s not reactive purchasing, what would it be called?

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