“The professor suggested that life is so complicated that the complete freedom to make any choice about, say life insurance for example, is in reality less freedom because people feel overwhelmed and end up making a poor choice. He thinks people have an optimal amount of choice, and that at a certain point fewer options are better.”
The psych professor is kind of right, people do feel overwhelmed. I don’t necessarily agree that it makes people make poorer decisions that if they had less choice, but people do take much longer to decide when faced with tons of alternatives.
Too many options overwhelm decision makers. As businesspeople, here is how this effects us. Confused consumers postpone their decisions. If you have a customer in your retail store, and he is confused, he is likely to postpone the decision. That means he walks out of your store and may end up buying on-line or at another store.
If you are a manufacturer and you have 20 different models of your product, your customers will have a hard time deciding and will postpone this decision. During this delay she may end up changing her mind, buying something else.
As a businessman, you want to offer choice, just not too much choice. If you are at all in doubt, go back to the tried and true, proven to work pricing strategy of Good, Better, Best. Three choices. Simple enough for your customers to understand, but enough choice that they may not need to go look at more options.
The key takeaway, you can have too many options. Talk to your customers to see how hard it is for them to make a decision. If they are postponing the decision while they figure out what is best it may mean you are offering too many choices. Make it easy for your customers to decide.
Mark Stiving, Ph.D. – Pricing expert, speaker, author
Photo by Orin Zebest