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
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.
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?