Ever since Wal-Mart began offering nearly every product known to man, the prevailing thought in retail has been that more is better. More products mean more opportunities for sales.
If someone isn’t interested in one product, they may be interested in option two or three. Whatever the case, you need to give customers more choices.
But is it possible that the more options customers have been given, the more confused they’ve become? Is it possible that businesses are losing sales by giving customers too many choices?
The answer is yes. Let me show you the proof.
A Marketing Study About Too Many Choices
In 2000, Sheena Iyengar from Columbia University conducted a study to see what impact the number of choices had on sales.
She believed that the current psychological theory and research led to a common belief that more choices are better. However, she also wondered whether or not this was actually true.
In order to test her hypothesis, she set up a table full of jams outside of an upscale grocery store in Menlo Park, CA. Over the course of two Saturdays, she and her research assistants hourly rotated between 6 and 24 flavors of Wilkin and Sons Jams (an exotic jam brand from Great Britain). During the first hour, 6 flavors were on the table; during the second, 24 were present. The flavors were then rotated on the hour.
During these time periods, Sheena and her assistants recorded the behavior of 502 shoppers—242 who encountered the 24 flavors and 260 who encountered 6 flavors. The results were astounding.
The Effect of More Choice on Sales
Based on the prevailing thought at the time, more choices would be better for sales. Since 24 flavors give customers more options to choose from, 24 flavors would result in more sales.
The results couldn’t have been more different.
Of the 242 who encountered the 24 flavors, 60% stopped to sample the jams. This is compared to 40% who stopped when 6 flavors were offered. However, of the 60% who stopped for 24 flavors, only 3% purchased, and of the 40% who stopped, an astounding 30% purchased.
Breaking the math down further, if 100 people walked by the table when it had 24 flavors, 60 stopped but only 2 purchased (technically 1.8). But when 6 flavors were offered, 40 people stopped and 12 purchased.
Based on those numbers, how many choices would you want to give customers? 6 or 24? It may not make sense intuitively, but Sheena Iyengar proved that more choices doesn’t always equal more sales.
Why Don’t More Choices Lead to More Sales?
A lot of people after hearing about this study want to know why more choices don’t automatically lead to more sales. It seems like they should, so why don’t they?
One theory is that modern customers face a new problem—decision fatigue. As customers are presented with more and more options, they have more and more trouble deciding what to buy.
When Ford started making cars, people could have any color they wanted as long as it was black (one of Henry Ford’s favorite sayings). But now, people not only have to choose which color they want, but they also have to choose which make, which model, and which package. This makes it more and more difficult to make a decision.
Let’s consider another example—tooth paste. When customers visit a local Wal-Mart or Target, they’re inundated with a hundred or so tooth-paste choices. Each brand alone has 5 or 10 choices to choose from. How are customers supposed to know what to pick? Which tooth paste is better than the other? And why are some more expensive and some cheaper? Should I buy an expensive one or a cheaper one? Is there even a difference?
The list of questions goes on and on.
Now, instead of trying to decide between two or three choices, customers have to decide between a dizzying array of options. Often, it’s hard to know what to choose.
So what Should You Do About This Study?
What should you do after learning about this study? Should you cut product choices in half, giving customers less options to choose from? Or should you be even more drastic and cut products by 75%, as was the case in the study?
Before doing anything, you first need to realize that testing is the only way to go. Before you decide to cut any products, you have to realize that this study will be applied differently in every situation and every market. There may even be times when more choices are better.
But for sure, you need to test.
You need to test how different numbers of choices affect sales for your business. If you remove two options, do sales increase or decrease? If you cut out your least successful products, will sales increase for your most popular products?
So again, the first rule is to test and see how this applies in your situation.
But just in case you’d like more options for how to apply this study, here are a few more ways you can consider responding:
- First, evaluate how many offers you provide customers in each sales pitch. If you’re sending a sales e-mail to a 10,000 addresses, consider whether you should pitch three different products or focus on just one. Often, focusing on less products in direct marketing campaigns results in more sales.
- Second, see if you can find ways to eliminate choices for customers. If you’re on a sales call, instead of giving a customer more options, consider eliminating choices to help customers make a decision. In the case of a computer salesman, instead of listing more and more laptops a customer might want, the salesman should eliminate options, helping customers to select the one that’s best for them.
- Third, consider the number of social sharing options you provide on your website and blog posts. Do you really need 25 options? By providing that many choices, are you getting more shares, or are you distracting people from the most popular sharing options: Twitter, Facebook, LinkeIn, Google+, Tumblr, etc.? In this case, more sharing options is not always better.
The number of ways this study can be applied goes on and on. It can affect the number of offers you show on your homepage, the number of recommended products you show on a product page, and the number of pricing options you give customers for a SaaS product. Again, the list goes on and on.
No matter what you decide to do, testing to find the optimal number of choices is the only way to go. Sometimes more choices are better, but more often than you previously though, less choices will result in more sales. To find out what’s right for your business, testing is the only way to know for sure.