Choice Overload: Why simple so often triumphs26-02-2020 Author: Jan Tissler
Offering more means ultimately selling less: Various studies have proven this apparent contradiction. The cause: With the best intentions, one can overwhelm prospective buyers. Then it becomes too difficult for them to make a decision. We will explain how to counteract this effect in the present article.
Theoretically, it should be a good thing to offer a large selection of products and services. After all it increases the likelihood that prospective buyers will find exactly what they are looking for. Apart from that, isn’t it better when your own range boasts a long and impressive list of functions and possibilities? Since, whoever offers the most will also sell the most at the end of the day – or so one might think. The truth of the matter is quite different. Various studies have shown: Too many options and too much information can have the exact opposite effect. This is because the choice becomes so arduous for the prospective buyers that, in the worst case, they reach no decision at all. “Analysis paralysis” is the name of this effect or also “choice overload”.
What science says
A famous study on this topic was published in 2000 under the title “When choice has a demotivating effect”. The authors acknowledge on the one hand that people like having a choice. Many studies have demonstrated this is the past. At the same time, however, the test subjects in these cases were only offered a limited number of options. The question is: What would happen if these people didn't just have half a dozen various things to choose from, but instead two dozen? In a practical test, the authors of the study experimented with a tasting stand in a supermarket in Menlo Park, California. On offer: exotic jams. At one point there were 6 different types to discover, at another point 24. Result: While the stand with the bigger selection did attract more prospective buyers (60% instead of 40%), significantly fewer people actusally bought anything (only 3% compared to 30%). A surprising result that has since been elaborated on by subsequent studies, whose figures were admittedly not always as unambiguous as their predecessors. Why this is became the subject of a meta-analysis of various investigations. Its conclusion: The extent of the impact of choice overload is dependent on the situation. They found four essential criteria for this:
- How difficult is the decision? If, for example, a prospective buyer is pressed for time, this makes the process more difficult and simultaneously increases the likelihood of the customer being unsatisfied with their choice after the fact. A long list of criteria for comparing the various offers also has a negative effect.
- How complex is the range? Is there one option that is clearly the best out of the selection? That facilitates the decision making process. The most important elements/characteristics should ideally be present in all options on offer to simplify comparison.
- How clear is the prospective buyer about their own needs? This includes: How familiar the person is with the topic and how well they understand what factors are important? The less knowledge someone has, the more likely it is that a large selection will lead to them experiencing choice overload.
- What is the goal of the decision? It's not always about immediately buying something. Sometimes it's about a more general choice or learning more about a type of product. This instance involves much less stress.
What this means in practice
It is possible to derive guidelines from these findings:
- It is good to give prospective buyers a selection. But the number of options should still be limited so they can be easily compared with one another.
- The criteria for the decision should be presented so as to be immediately apparent. It is no accident that many websites use tables to compare the functional scope of several products and offers with one another. Criteria which are of central importance to the prospective buyers should be highlighted accordingly.
- Initially present the essential differences between your products and offers in a simplified manner and then, in a subsequent step, give prospective buyers the possibility to go into the details.
- Often times, companies do this by particularly highlighting a few offers with labels such as “especially popular” or “best-seller”. This also facilitates and guides the decision.
- In any case, the subject knowledge of the prospective buyers should be considered. Are they already familiar with the product or range? Then you can expect them to be able to deal with more selection. Is their knowledge limited? Then a smaller selection is better.
- And last but not least, it depends on the stage of the customer journey in which the person finds themselves. If they want to familiarise themselves with a type of product, then a large selection may be helpful. If it's about the final decision, the variations should already be clearer.
- So the one with the most options and the longest explanation for their own range doesn't always triumph – on the contrary. It is much more important to clearly and immediately convey the differentiating aspects. When doing so, always take into account your prospective buyer's prior knowledge and their particular situation.