Politicians talk about a lot about choice. Ice cream parlours sell huge varieties of flavours. It seems obvious that more choice is a good thing, whether this means more products, the same products with more options, or more services.
Do customers want more and more choice? Well, if you ask them they say yes. Why would they not? In addition, each individual customer will have a slightly different mix of preferences, and when all the different customers’ requirements are added together you end up with a lot of options and variety.
However, asking this question is very similar to asking customers what they are prepared to pay for a product or service; they always want the lowest price possible. In reality, when their behaviour is examined, customers really buy on value and a number of other psychological factors, which is much more complex.
So what is a customer’s actual behaviour when faced with too much choice?
Two researchers at Columbia University, Sheena Iyengar and Mark Lepper, tested this in a number of different ways. In one example, they set up a sampling table in a supermarket with either 24 jams or 6 jams. Customers who tasted the samples were given vouchers to buy the jam they had tried. Afterwards, 30% of those who had tasted one of the 6 jams bought a pot compared to only 3% of those who tasted one of the 24 jams. This same behaviour has been observed in all sorts of markets and circumstances, from consumer goods to education and financial services.
A customer wants to be sure they are making the right buying decision. If there are too many choices then that can lead to confusion, and confused customers either defer a decision until later or find an alternative supplier who can simplify things for them.
What does this mean to your business? Perhaps it is time to examine your product or service portfolio again, and to weed out the poorly performing products. If you have some products or options which are very similar to others, can you combine them or drop the less popular one? Do you need to focus your promotional materials on fewer products or solutions?
Portfolio analysis is an important activity for any business, and it needs to be done regularly. Done properly and it can increase your sales.
Of course, if your whole proposition is about offering a huge choice and this works for you, then stick with it. So, if you are an ice cream parlour offering every flavour under the sun, feel free to add that exotic ‘roasted leprechaun dusted with fairy wings’ flavour.