It’s been long established in marketing research circles that the more choices you give a consumer, the less likely he or she is to decide on one.
Sheena Iyengar, a professor at Columbia Business School and author of The Art of Choosing, addressed a roomful of marketers at BRITE ‘11 about how to navigate the problem. Her work has implications for selling anything online or offline.
The paradox of information overload on smart purchase and decision-making also gets front-and-center attention this week in Newsweek.
The article goes over the territory from a slightly different angle examining what happens when Twitter, Facebook, apps and the internet make it possible to research something virtually forever and still make a bad choice when last-minute info is thrown at you from left field.
Seems the more you know about certain topics, the less likely you are to make a decision you find satisfactory. And the brain literally shuts down its intuitive unconscious guidance system when information just keeps coming.
Columbia’s Iyengar and her colleagues found way back in 2004 that participation in 401(k) plans dropped from 75% to 70% as the number of choices rose from two to 11. It fell another 9% when 59 options were presented. Those who did participate, chose plans with lower returns. In an online store, Iyengar found shoppers given 50 rather than 10 options chose lower-quality options.
Beyond the magical number of 7, the mind is not able to keep track of things. So too many choices decreases:
- Commitment (the willingness to make a choice and stick to it)
- Decision quality (doing things that are actually counter to what you believe)
- Satisfaction (less confidence in the choice made being the best choice)
One area where this rule does not apply is with experts. An expert can properly prioritize and see order. Mastery of the subject allows an expert to zero in on the most relevant option and eliminate the distraction of the unimportant. In a sweeping understatement, Iyengar says:
“Most of us aren’t experts in everything. We say we want more choices because we want the opportunity to find the perfect choice. But in reality, what we really want is a great choosing experience. To have the confidence in our preferences. To feel competent rather than questioning ourselves, 'Did I really get it right ?' ”
OK. So how does a marketer improve the experience?
Lots of times people are worried about cutting options. Careful trimming can increase sales, lower costs and improve the choosing experience. One online grocer reduced choices by 54% and saw an increase in sales of 11%.
How do you know you have too many choices? Not only can't customers differentiate the choices; your employees can’t either.
What experts do is categorize the options to make it easy to figure out. Merchants can help the novice shopper by categorizing in an understandable way.
Best Cellars displayed the 100 best value wines and divided them into eight easy-to-understand categories. Customer feels good. Knows why they chose it. Can show off knowledge of the bottle of wine.
When categorizing, pay careful attention to the name you give the categories. Jewelry collection names like Jazz and Swing might appeal to the creator but are useless to the chooser.
We can’t handle more complexity and choice than we're able. Throw a shopper into the deep end and only a handful will be able to get to a decision.
Iyengar’s research shows that walking the shopper from shallow information into the deeper end in a methodical way allows that shopper to handle more information on their own terms and leads to a more satisfying experience.
This is more likely to result in a purchase. (And no car maker needs to offer 56 color options as one German automaker she studied did.)
So with this research well-publicized why do marketers still feed the problem?
The way you make it into the news is by talking about new sets of options. That’s what gets people in the door. At least that's Iyengar's theory.
I’d write more on this topic, but it's time to resume agonizing with my child over which high school is the right one for her to attend.
What's your experience been with information overload and making choices?