Requirements Elicitation and Validation

Buyer needs elicitation and qualification is a critical process focusing on understanding a potential buyer’s desires, constraints, and motivations. This process leverages techniques from behavioral psychology, decision theory, and information theory.

N_t = Σ w_iN_i, where N_t is total need, N_i is the need at level i in Maslow’s hierarchy, and w_i is the weight assigned to each level by the buyer.

By identifying the dominant need level (N_i with highest w_i), tailored questioning can address specific anxieties and desires.

People tend to prefer avoiding losses to acquiring equivalent gains. Avoid emphasizing what the buyer might lose by not purchasing. Instead, focus on potential gains, aligning with value function v(x) in Prospect Theory, where v(x) exhibits loss aversion.

Awareness of biases such as confirmation bias and anchoring bias during questioning.

Tversky and Kahneman’s (1974) anchoring bias experiment demonstrates how initial information❓ (the “anchor”) can influence subsequent judgments. Mitigate by asking open-ended questions.

Reference: Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124-1131.

H(X) = - Σ p(x_i) log₂ p(x_i), where H(X) is the entropy of a question (representing uncertainty), x_i are possible answers, and p(x_i) is the probability of each answer. Questions that yield a response which reduces the agent’s uncertainty are favored.

Closed-ended questions generally reduce entropy less than open-ended questions if the distribution of outcomes isn’t highly predictable.

P(A|B) = [P(B|A) * P(A)] / P(B), where P(A|B) is the probability of the buyer being qualified given their response (B), P(B|A) is the probability of the response given the buyer is qualified, P(A) is the prior probability of a buyer being qualified, and P(B) is the probability of the response.

After each answer, P(A|B) is updated, representing an evolving understanding of the buyer’s qualification level.

Affordability = Income - Expenses ≥ (Mortgage Payment + Property Taxes + Insurance + Maintenance)

Payment = L[i(1+i)ⁿ/((1+i)ⁿ)-1] where n is the number of payment periods.

Conduct sensitivity analysis by varying interest rates (i) and property values (L) to determine the buyer’s price range elasticity.

Time to Purchase (TTP) in days, calculated as the difference between the desired move-in date and the current date.

A shorter TTP indicates higher urgency and qualification. Correlate TTP with historical conversion rates.

Represent the decision-making process as a network, where nodes are individuals and edges represent influence. Assign weights to edges based on the perceived influence.

Centrality measures (e.g., degree centrality, betweenness centrality) to quantify the influence of each individual. Focus effort on high-centrality individuals.

Calculate Pearson’s correlation coefficient (r) between responses and buyer conversion rate.

r = Σ[(x_i - x̄)(y_i - ȳ)] / [√(Σ(x_i - x̄)² Σ(y_i - ȳ)²)], where x_i is the buyer’s response, x̄ is the mean response, y_i is the conversion outcome (0 or 1), and ȳ is the mean conversion rate.

Logistic Regression: log[p(x) / (1 - p(x))] = β₀ + β₁x₁ + β₂x₂ + … + β_nx_n, where p(x) is the probability of conversion, x_i are the responses to qualification questions, and β_i are the coefficients to be estimated.

evaluate❓ the model using metrics like AUC (Area Under the Curve) and Brier score.

Reference: Hosmer, D. W., Lemeshow, S., & Sturdivant, R. X. (2013). Applied logistic regression. John Wiley & Sons.

Employ DISC (Dominance, Influence, Steadiness, Conscientiousness) or similar personality assessments.

Dominance (D): Direct, results-oriented communication.

Influence (I): Enthusiastic, relationship-focused communication.

Steadiness (S): Patient, collaborative communication.

Conscientiousness (C): Precise, detail-oriented communication.

Tailor the communication style to match the buyer’s behavioral style for better rapport and more accurate needs elicitation.

Clearly communicate the purpose of qualification questions. Protect buyer information and comply with data protection regulations. Avoid questions that could lead to discriminatory practices.