Why options can be detours off the long and narrow road of success

By giving your customers too many options and choice, you may be losing sales. Photo of man choosing fresh produce options, used in blog post by Good Business Consulting about how small businesses can create the right options that lead to purchases.

Why options can be detours off the long and narrow road of success

By giving your customers too many options and choice, you may be losing sales. Photo of man choosing fresh produce options, used in blog post by Good Business Consulting about how small businesses can create the right options that lead to purchases.

Choice is a tricky beast. On the one hand it gives customers the freedom to evaluate and select items that they find suitable for their needs, on the other it can be overwhelming and lead to poor or inefficient decision-making.

 

As a business, it is essential to ensure your range of products or services is balanced between:

1. offering choice
2. reducing confusion.

Offering too wide a range can be costly because it means you need to keep a broad inventory of items that you’re not sure will sell or it may force you to offer services that you may not like as much as, or be skilled at, compared to your core business.

 

Out of range

Consider this famous study by Professor Sheena Iyengar, who researches decision-making at Columbia Business School. As part of her studies at Stanford University, Iyengar devised an experiment to find out whether having more choice led to increased sales. Outside a supermarket in California, she set up a tasting table with a range of jams. On some days she and her research assistants offered a choice of six jams for customers to try; on others they offered 24.

The results showed that shoppers were more likely to stop when offered a choice of 24 flavours with 60% stopping with more flavours on offer versus 40% when there were only six jams to try. However, customers were more likely to purchase when offered fewer choices. Of the customers who stopped when there were six jams on offer, 30% made a purchase; when 24 jams were on offer only 3% made a purchase.

Iyengar concluded that it is easier to make decisions when there are fewer choices, and that affects the sales conversion rate. In a nutshell, having fewer choices on offer makes the sales process more efficient and effective. Not only would the jam business save money on samples, it would also increase its conversion rate with that smaller range.

Similarly, when you give customers too many choices, it overwhelms them and that leads to fewer sales due to ‘decision fatigue’. Being paralysed by selection is not the best frame of mind in which to make a sound decision; in fact psychologist Barry Schwartz, author of The Paradox of Choice, says those who have made a decision after being given a wider choice are usually unhappy with their decision because they feel they have missed more opportunities.

 

How to focus your offering

When you’re a small business it’s tempting to want to be everything to everyone so you can capture all the potential customers. What this actually does is dilute your business.

The more choice you offer, the bigger the risk of distracting potential clients from your business’ core strengths. Once this happens, it also becomes more difficult to market your business around a central product or service. To focus your offering, evaluate the types of products and/or services you believe are the most beneficial and most attractive to clients and develop these. This will allow you to focus on what you’re good at and help you target your ideal audience for marketing campaigns.

If you find your business does have a lot to offer and you’re afraid to cut down on the choices, consider packaging those choices. This makes it’s easier for customers to pick a bundle rather than make a number of smaller buying decisions. Phone companies do this when combining mobile handsets with call minutes and data; often you’ll see a ‘basic’ plan, a ‘best value’ plan and a ‘high use’ plan. Packaging will again require you to identify the most beneficial, most attractive options for potential clients.

Reducing the number of choices on offer makes it easier for customers to buy from you. Making that process easier simply leads to quicker decisions and more sales.

‘Don’t dilute your business by trying to be everything to everyone.’ Tweet: Don't dilute your #business by trying to be everything to everyone: http://ctt.ec/eldf0+ via @Phoebe_Netto

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