Online Business // August 12, 2013Why Giving Customers Fewer Choices Results in More Sales
Posted by Fuze
Americans live in a world of unfathomable possibility. We possess the coveted freedom of choice, and are presented with seemingly unlimited options for virtually anything we want or need. In fact, we are faced with so many complicated choices, that the aforementioned freedom can quickly become a prison of frustration. Today, we’ll explore the impacts of presenting people with too much choice, and how to streamline the decision making process to generate more profit and customer satisfaction.
Walmart sells 776 breakfast cereals on its website. Verizon offers 46 smartphones from 12 different brands. The Ford Focus is available in 7 different models, each available in 9 color options. That’s a lot of choice!
We’ve all been there. Whether shopping for olive oil or a new car, the sheer volume of available options can be overwhelming. This often results in unwanted stress, causing us to abandon the purchase or buy something out of haste, only to regret it later. Unfortunately, many companies and brands focus on quantity over quality. Striving to offer something for everyone, they neglect to consider how offering too much choice can have adverse consequences.
A few months ago I was shopping for a new sofa. After carefully considering important factors like size, style and color, I was ready to begin my search. To my dismay, the process was more than I had bargained for. The websites of larger retailers had dozens of pages of sofas, many of which were out of stock, on backorder, or available for shipping anywhere from 2 to 10 weeks after the date of purchase. This didn’t help.
Finally, upon locating what I deemed to be the perfect sofa on an unnamed retailer’s site, I discovered that the sofa came in 14 fabric types and 16 colors, only to be further complicated by the fact that only one fabric/color combination was available for immediate shipping. Going this route would mean a complicated decision making process followed by a long wait to receive the sofa. The result was a “paralysis” that stopped my path to conversion dead in its tracks. After all of that searching, I decided to buy nothing and start from square one.
When faced with too much choice, buyers will commonly make purchases they end up regretting. I’m sure you’ve all second guessed a purchasing decision, whether it be the color of an iPod, options for a home computer or a hotel for a weekend getaway. Often, the excitement associated with buying something new is deflated by doubts over whether you should have gotten something better. When presented with a more refined set of choices, we are more likely to be confident that our final decision is the best decision, and not be haunted by the choices you didn’t make.
Too much choice creates the false expectation that you will obviously be happier if you are given so many options to choose from. With 46 smartphones to consider, shouldn’t the one you choose be the right decision? After all, you did all of that research and selected a phone perfect for your needs. Typically, when presented with so many options, the excitement of variety soon turns to fear of making the wrong decision. This removes all joy from the process, and a creates nervous apprehension that causes many consumers to freeze up and take no action at all.
A former client of mine once told a great story about the power of simple choices. Being a corporate executive, he was often in need of shiny new suits. After growing tired of retailers that offered 200 types of suits, yet did not provide personal shopping assistance to help streamline the process, he discovered a small suit shop with a unique approach. The owner of the shop would call my client on the phone and ask him to come in for a private fitting. Upon arriving, the owner would present three suits, all hand-picked to match my client’s personal preferences and body type. In the words of my client, “I never left that store without buying at least two suits. Knowing how little time I had, the owner eliminated difficult choices and wouldn’t allow me to roam freely around the store, wasting time and making non-decisions.”
Simplification also works for big brands. In fact, Proctor & Gamble saw a 10% spike in sales after reducing Head & Shoulders shampoo varieties from 26 to 15. Additionally, a cat litter company called the Golden Cat Corporation, increased profit by 87% by eliminating their 10 worst selling products.
Columbia Business School Professor, Sheena Lyengar is an expert on the subject of choice. In her Ted Talk entitled “How to Make Choosing Easier”, she outlines a few simple steps that can dramatically improve the decision making process.
In the Proctor & Gamble example, cutting was the key to focusing consumer’s attention on a less complicated set of choices. Too many options will often result in a non-decision, which is the worst case scenario for any retailer.
Wegman’s Grocery Stores have magazine isles that display anywhere from 331 to over 600 kinds of magazines. Studies revealed that dividing 400 magazines into 20 categories resulted in shoppers believing they had more choice than a scenario where 600 magazines were divided into 10 categories. Adding more categories provided an easier pathway to making a decision, while simultaneously giving the illusion of more options.
3. Show consequences associated with choices:
It’s critical for consumers to be educated regarding how their choice will affect them post-purchase. This eliminates buyers remorse and and sets expectations up-front. Lyengar and her colleagues tested this theory by adding a slight nuance to the 401K enrollment process for employees of the financial services company ING. Lyengar kept the enrollment process in tact, with the exception of adding a single slide that asked people to imagine the possibilities that open up when they save for the future. This small change resulted in a 20% boost in enrollment and increased the average amount of employee salary contribution by 4%.
Psychologist Barry Schwartz gave an insightful talk called “The Paradox of Choice”, which is chalk full of witty observations that prove the theory of reducing choice is good for both retailers and consumers.
I’ll leave you with a cartoon and a quote from Barry.
“So to conclude. You’re supposed to read this cartoon, and, being a sophisticated person, say, “Ah! What does this fish know? You know, nothing is possible in this fishbowl.” Impoverished imagination, a myopic view of the world — and that’s the way I read it at first. The more I thought about it, however, the more I came to the view that this fish knows something. Because the truth of the matter is that if you shatter the fishbowl so that everything is possible, you don’t have freedom. You have paralysis. If you shatter this fishbowl so that everything is possible, you decrease satisfaction. You increase paralysis, and you decrease satisfaction. Everybody needs a fishbowl. This one is almost certainly too limited — perhaps even for the fish, certainly for us. But the absence of some metaphorical fishbowl is a recipe for misery, and, I suspect, disaster.”