Ever since Amazon, Target and Wal-Mart began offering customers every product under the sun, the prevailing thought in retail has been that “more is better”. If shoppers are not interested in one product or service, then surely they may be interested in option two, three or four? According to Rhondalynn Korolak, author of Sales Seduction and small business marketing expert, “this mistake has led to an insatiable compulsion to offer too many choices. When the economy and sales are down, business owners tend to increase the number of products, services and offers they put out there, hoping that more choice will mean more opportunities to close sales.”
But often with more options comes more confusion. Scientific evidence exists to suggest that most businesses (large and small) are actually losing sales by giving customers too many choices.
In 2000, a researcher from Columbia University conducted a study to determine what impact the number of choices had on sales. Her team set up a table full of exotic jams outside an upscale grocery store in Menlo Park, CA. Over the course of two days, they offered a selection of either 6 or 24 flavors for sale to 502 shoppers —242 encountered the 24 flavors and 260 were presented with only 6 choices.
For every 100 prospects that passed the table when the display had 24 flavors, 60 stopped to look but only 2 purchased. Surprisingly, when choice was reduced to 6 flavors, 40 shoppers browsed and 12 purchased. That’s an increase of 600%.
So why don’t more choices lead to more sales?
According to Korolak, “the part of your brain that decides is a very primitive beast which is only concerned with solving pain and your survival. In order to keep you alive, it has been hard wired to make decisions very quickly and it is easily overwhelmed when too many choices are presented.”
In fact, short term memory only allows humans to process about three to four chunks of information at once in the form of letters, words, digits or numbers. On most websites or in-store environments, consumers are now presented with ten or more options at every encounter. This is exhausting for the brain.
“And when the old brain (the decision maker) cannot decide”, says Korolak “it kicks all the information it sees up to the new brain for processing. And all of this thinking and processing takes up a huge amount of energy which prolongs the decision making process.”
Does this mean that every business should cut the number of products, services and offers by 75%, as was the case in this study?
Not necessary but every small business needs to test how different numbers of choices affect total sales. If two options are removed from an email campaign, what is the impact on sales? If five of the least successful products are removed from the website or shelves, will sales of the most popular products increase?
Choice is wonderful in theory but in most cases, less choice will actually mean more sales.
To learn more about Sales Seduction, visit:
Rhondalynn Korolak and Imagineering Now Pty Ltd
Rhondalynn Korolak is a Melbourne-based lawyer, chartered accountant, business Coach, speaker, best-selling author and small business marketing expert. She provides advice on profitable growth to corporations, sporting clubs and government agencies and she contributes to well-known publications such as Yahoo, CNN ireport, Kochie’s Business Builders, bNet, Fast Thinking, Cosmopolitan and Marie Claire. Her recent books include Financial Foreplay and On The Shoulders of Giants. Contact her at: [email protected] 1300 892 984 (in Australia)
P: 1 300 892 984