Thursday, July 31, 2014

Fewer Options for Customers Can Mean Bigger Profits

If you haven't seen it, you should watch Sheena Iyengar's TED talk about how to make choosing easier for your customers. Based on her and others' research, she provides several mechanisms for improving the chances that you won't overload your customers with options and they just walk away. One of those concepts we could adopt is to reduce the number of choices.

Aldi is a fast growing, worldwide, Germany-based grocery chain. They only offer one or two types of any food, not the dizzying array of options you find in most stores. Because of this, they are also top-ranked in customer surveys for appealing price points.

If you offer fewer choices, customers are more likely to buy. Even in customizable environments, like ordering features on an automobile, it's helpful to start with the features that have the fewer choices and progress towards the options that require the longer lists from which to choose the option you want. We won't suffer from decision-making fatigue like we would if we started with the longer list first. With fewer choices, sales can increase 15% over the strategy of trying to offer something for everyone like Baskin Robbins' 31 flavors. Or even worse, the paint store that has 600 shades of off-white, all with clever marketing names like Belgian Vanilla Lily and looks an awful lot like Beach Sand Brilliance.

Two other techniques Iyengar discusses is how to make the choices more concrete, more vivid. And how to categorize the choices, which is another way to reduce the number of options initially before your customers move into more specific individual options. You might consider it a combination of cutting the number of choices to avoid obfuscation and allowing your customers to go from low-count options to high-count options without becoming fatigued.

In a lot of ways, this feels like common sense. If we put ourselves in our customers shoes, and think about the experience we would have and how we would feel and how we think if we were buying our company's products and services, we might understand these concepts. Then we might be able to simplify and create the kind of delightful experience that generates customer loyalty because we've made their experience of dealing with us effortless. The more obstacles we create, the more likely we're going to lose them.

A non-profit I know realizes this. They talk about reducing the number of clicks or actions a donor has to take in order to contribute to them. The easier they make it, the more likely they will donate.

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