Scientists say the average person makes about 35,000 decisions per day. While you may not deliberate long over which socks to wear or how much coffee to pour, you’ve likely found yourself mulling over the choices that matter most. As an ecommerce business owner, you’re likely faced with impactful decisions every day. But how do you know which choice is best when faced with complex business decisions and several options?
When faced with these types of difficult choices, you can use decision-making tools to take the right direction. One of these tools is a decision matrix. Learn more about how decision matrices work and how you can make one for your own business to improve your decision-making process.
What is a decision matrix?
A decision matrix is a decision-making tool that breaks down your choices and the various criteria impacting your decision to help you calculate the best option, using a rating scale. The scale usually ranges one through five, with higher numbers indicating better ratings. In a simple decision matrix, you rate each option based on each criterion, then add up the ratings. The option with the highest score is the best choice.
Decision matrices can be used to make many types of decisions and are known by a variety of other names, including:
- Multi-attribute utility theory
- Grid analysis
- Pugh decision matrix
- Multiple criteria decision analysis
- Decision template
- Solution matrix
- Criteria rating form
- Decision grid
What is a weighted decision matrix?
A weighted decision matrix offers an additional layer of analysis to inform your decision. Unlike a simple decision matrix, a weighted decision matrix uses two rating scales. There’s one scale for how each option ranks based on each criterion, and one for the importance of each criterion. You multiply these two ratings to arrive at weighted scores for each option.
Consider this weighted decision matrix example. You’re choosing a new supplier for your dropshipping business. To make a weighted decision matrix, you list all of your potential supplier options, rate each option along a list of criteria like cost, shipping duration, past customer reviews, and product quality. Then you assign scores to each criterion given their relative importance. You decide product quality and cost are more important than shipping duration or past customer reviews, so you assign a higher number to those criteria. You then multiply the rating of each option by the rating of each criteria, and the choice with the highest score is your best option.
3 use cases for a weighted decision matrix
Weighted decision matrices might not be the best option for making some of your company’s most important decisions, like hiring a new team member or naming your business. However, they are particularly useful tools for complex decisions with quantifiable factors, such as cost and time. Here are a few use cases in which a weighted decision matrix could benefit your company’s decision-making process:
1. Choosing a vendor partner
Imagine you’re running an ecommerce company selling cosmetics and you need to partner with a manufacturer to create a new product line of spray deodorants. You’ve narrowed down your search to five options, but you’re struggling to decide which is best. You could use a weighted decision matrix analysis to prioritize the criteria most important to you—such as purchase order lead time (POLT) and setup fees—and make a decision based on which option ranks the highest given those weighted priorities.
2. Purchasing a new software tool
Let’s say you need to select a customer relationship management (CRM) system to help your business manage communications with existing and potential customers. Using a decision matrix, you would list out multiple options and select your criteria (such as cost, features, free trial options, customer support quality, and integration capabilities with your ecommerce store). You would then add weight to the factors you value the most—in this case, features and integration capabilities—and use your final weighted score to decide on the most helpful tool for your business.
3. Deciding on a marketing strategy
Imagine you need to develop a new marketing campaign to increase brand awareness. You conduct a whiteboard brainstorming session with your team about potential strategies and cull your list down to five primary options—organic social, paid ads, SEO content marketing, affiliate partnerships, and email marketing.
You then list out the most important considerations for your decision (including how much each campaign will cost, how time-consuming each will be for your marketing team, and how each campaign aligns with the marketing channels your target audience uses the most). By using a weighted decision matrix, you can determine which marketing idea has the most potential to pursue based on a numerical ranking.
How to make a weighted decision matrix
- Select a weighted decision matrix template
- List your options
- Define your evaluation criteria
- Assign weight to your criteria
- Rate each option
- Multiply your ratings
- Make your final decision
Here are seven steps to follow when creating a decision matrix for your business:
1. Select a weighted decision matrix template
An easy and effective way to start your own decision matrix is to find an existing template. Shopify offers a free one to help you get started. Once you have your template, you can add information based on your specific options and criteria. These templates typically use a spreadsheet format with cells and columns that you can fill out.
2. List your options
Write down your list of choices vertically along the left side of your spreadsheet template. For example, if you’re considering which ecommerce platform you want to choose for a new business, you would list the names of the platforms across the top. Each platform will then have its own column.
3. Define your evaluation criteria
In the leftmost column of your decision matrix, list the evaluation criteria for what you need in an ecommerce platform. Choose criteria that directly impact your business and are easily quantifiable, like cost, scalability, SEO features, ease of use, and technical support. Now you should have a row of options running along the top of your decision matrix and a column of criteria running along the left side of your matrix.
4. Assign weight to your criteria
Identify the most important factors for your business, then give each of your criteria a rating on a scale from one to five, with one signifying the least important and five signifying the most important. For example, you might decide ease of use is the most important factor for your business and assign this a five. In contrast, you might decide that SEO capabilities are not as important to your company and assign this a one or two.
5. Rate each option
Now you can begin rating each of your potential choices based on the criteria you’ve selected. Perform in-depth research on each option, then fill in your template by scoring each choice on each criterion. For example, to assess ease of use, you might read merchant reviews, review features, and even test out different platforms for yourself on free trials. You would then rate each platform on a scale of one to five for ease of use. The same process applies for each criterion.
6. Multiply your ratings
Find your weighted scores by multiplying your options’ ratings for each criterion by the number you’ve assigned for each criterion’s importance. Let’s say you assigned one ecommerce platform a score of four for ease of use, a criterion you ranked with a five. You would then multiple four by five to arrive at a weighted score of 20. You would then perform this calculation for each criterion, then repeat the process for each option.
7. Make your final decision
Once you’ve calculated each option’s weighted score, add up all of the weighted numbers to find a total score for each option. Then compare the total calculated scores of each option and identify which one has the highest overall score. The choice with the best weighted score is your best option.
Decision matrix FAQ
Why is a decision matrix an important tool?
A decision matrix is an important tool because it creates a qualitative framework for decision-making by displaying options alongside numerical ratings across relevant criteria. This can help you make a rational and informed decision.
What is the Pugh decision matrix?
The Pugh decision matrix is another name for the weighted decision matrix, named after a British product designer named Stuart Pugh who developed the method in the 1960s.
When would a business need to use a decision matrix?
A decision matrix is a useful tool for situations where you need to choose one option from multiple choices based on a set of quantifiable criteria.
