By Ian Ash
Whilst many have done it tough due to Covid-19 over the past couple of years, the lockdowns have also created some unexpected benefits through increased personal savings and/or ability to reduce home mortgages.
With many of us unable to visit shops, go on holiday or attend functions and hence travelling less we have saved money on fuel and transportation as well. Now that lockdowns are (hopefully) becoming a thing of the past, the opportunity to spend again is here and with it the temptation for impulse buying.
Ever had the situation where you bought something only to find that you could have got much the same thing for a lower price elsewhere or an improved product for the same (or even lesser) price?
This can afflict businesses as well as our personal expenditure, so how can we make better buying decisions?
A good way to do this is to use a ‘Decision Matrix’. The approach is quite simple and enables a more rational approach when you need to make those bigger investments in things such as new equipment, management systems and software support applications.
A matrix is simply a table made of rows and columns so that you can put a value in each of the table elements.
The way it works is like this:
1. Make a list of all the key criteria that you want to use to help make the decision. This might be things like: price, usability, delivery timeframe, reliability, warranty, product size, customer reviews or testimonials etc. It is up to you what you want to use but these are the criteria that you will apply to assess all your options.
2. Next, make a list of all the possible product options you have.
3. Typically in a Decision Matrix the rows make up the possible options and the columns make up the criteria, but I tend to do this the other way round since often the importance of the criteria varies as well and it is worth capturing this. If so, it becomes easier to have the options in the columns and the criteria in the rows, it makes no difference to the overall outcome.
4. Assign a score in the range 1 – 10 for each of the key criteria where the higher the score, the more important that criterion is (so 10 = essential and 1 = isn’t important at all).
5. Rate each of the options against each of the criteria on a scale of 1 – 10 where 10 means that the option meets the criteria exactly and 1 means that it really doesn’t.
6. Finally multiply each rating by the importance score and note the result in the relevant option cell. The higher the total score, the better that option meets all your criteria overall.
This is best illustrated by means of an example so suppose you want to by a new car, then you might have the following criteria for each car under consideration: Price (9), Seating Capacity (9), Economy (7), Warranty (5), Capped Price Servicing (6), Style (4) where the numbers in brackets are the ‘importance rating’.
The resultant Decision Matrix might look as follows (see image).
Clearly, Car C would appear to be the logical choice as its score is the highest.
Ian Ash is the managing director for OrgMent Business Solutions.
