How too much choice kills your small business

Is too much choice killing your small business?

Uncategorized Nov 15, 2017

Are you a choice-tyrant? Do you overwhelm your customers?

Think of all the choices we make every day. Think of all the little decisions you need to make in order to pick the right clothes. How cold is it outside? Do I need to dress up for a meeting? Does the sweater go well with the pants? I think we can all agree there’s been mornings where you just stand by the wardrobe and feel like nothing you own is appropriate to wear.

The fewer, the better

Researchers have looked into whether people are more likely to make a purchase when they are presented with more or fewer options. Results from a jam experiment by Sheena Iyengar brilliantly showed how we are affected by the selection of choice.

The jam experiment was carried out in a supermarket in California where they set up a tasting booth. The first time the tasting booth had 6 jars of jams and the second time it had 24 jars of jams. They wanted to test how many of the store’s customers came up to the tasting booth and how many of those who ended up buying a jar of jam.

The results showed that when the tasting booth had 24 jams 60% of all customers wanted to sample whereas only 40% chose to sample when there were 6 jars of jam. BUT, it turned out that having only 6 jams lead to more people purchasing a jam.


So how many customers ended up buying a jam?

3% of the customers who sampled from the 24 jams then went along and purchased their favourite.

And from the 6 jam-tasting booth?  

30%!!!

Why is that?

Simply put, choice overload. There are too many choices and therefore it’s too difficult to identify which one is your favourite. Less choice can help the consumer to make a decision. When we buy from a set of 6 jams we are not-buying 5. When we're choosing from 24 jams, we're not-buying 23. And the more things we're not-buying the more chance we have for feeling regret about our choices.

Similar studies to the jam experiment have presented similar results. We are initially more attracted to more choice but when it comes to making a decision, we are more likely to either postpone or not make a decision. Also, researchers found that the choice we make from a bigger selection of choices is of poorer quality and we’re less happy with our decision.  

Why is this important to you?

Consider whether you are offering too many choices to your customers. Make sure your products are easily distinguishable from each other.

Most recently I was looking to book myself a facial but when the salon offered 20 different facial treatments I had no idea where to start. I ended up booking a facial at a different salon that offered a set price where the therapist made the decision for me based on my skin type. That salon made it easy for me as they made the decision for me.

If part of your business relies on providing a lot of choice for the customer then consider categorising your products. For example a wine bar could guide the consumer by categorising wines either by country or by taste (depending on what the consumer would prefer!)

By categorising your products you're guiding the consumer towards the choice they are the happiest with. Make it simple, and make it easy for them to make the choice to buy.

 

 

References:

Iyengar, S. and Lepper, M. (2000). When choice is demotivating: Can one desire too much of a good thing?. Journal of Personality and Social Psychology, 79(6), pp.995-1006.

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