Could you use the idea of telephone trees in social media to drive your word of mouth?
January 5, 2011Customer Experience, Everything counts, Depeche Mode and Big Hair
January 10, 2011
When thinking about growing your business or developing your customer base, one of the most common strategies that companies employ in order to drive growth or increase customer spend is to offer their customers greater choice and more options.
I was thinking about that over Christmas and if it was always a good thing or not when, coincidentally, I came across The Tyranny of Choice, a feature article in the bumper Christmas and New Year edition of The Economist, about the growth of choices that we face in all aspects of our lives.
The article starts by saying that choice and having the ability to choose is and has been a good thing over the last century. However, it does start to question whether too much choice is now leading to indecision, confusion and under-performance. Here’s a few out-takes from the article along those lines:
The more that options multiply, the more important brands become. Today, when paralysed by bewildering choice, a consumer will often turn to a brand that is cleverly marketed to appear to be one that others trust.
Tropicana’s extra fruit-juice varieties boosted sales by 23% in Britain in 2009. But now the company puts colour-coded bottletops on sub-categories of juice to help customers “navigate what can be a difficult range”, says Patrick Kalotis, its marketing director in Britain.
In Nudge, Richard Thaler and Cass Sunstein quote a study of company pension plans that when a default investment option was included in the pension product choice, saving employees the task of going through picking or structuring their own portfolio then participation in the company schemes shot up from 9% to 34%.
In 2009, Glidden, an American paint brand, reduced its palette of wall colours from 1,000 to 282 because they were seeing a change in “Americans’ priorities from ‘more is better’ to ‘less is more’”.
Pascal Barbot, the chef at L’Astrance, a three-star Michelin restaurant in Paris offers no choice at all on his menu which is driven by what he has picked up from what was available in the market that day.
According to Sheena Iyengar in The Art of Choosing, when Procter & Gamble trimmed its Head & Shoulders range of shampoos from 26 to 15, sales increased by 10%.
A 2006 Bain study suggested that reducing complexity and narrowing choice can boost revenues by 5-40% and cut costs by 10-35%.
So, what does all this mean?
Well, here’s my two-penneth.
I think offering more choice can help you grow but only up to a point.
Beyond that offering more choice can hinder rather than help your your customers and may start to dilute your brand.
However, finding that balance is tricky.
If you want my advice, I would suggest that you err on the side of “less is more” on the basis that simpler things are much easier to explain, pitch, share, talk about and buy.
What do you think?
Thanks to frankh for the image.
23 Comments
How many choices we are given and the impact on decision making has been all the rage since Barry Schwartz published The Paradox of Choice. Your P&G example is a good practical one.
We need to remember that the degree of choice we like to see has a lot to do with the context and the mindset of the person faced with choices. In the consulting business, there is an old story of the executive who will only hire a one-armed consultant. Why? Because when the consultant offers advice, he never wants to hear that consultant say, “On the other hand”. Sometimes two options is even too much; it depends on the situation.
Hi Marc,
You are right that it is important to take mindset and context into account when presenting choice. However, without even doing anything, I think the very act of being mindful of this choice dynamic would be a step up for many businesses as extra choice seems to be the default and easy option when less would often be the best way to go.
What do you think?
Adrian
A very interesting article Adrian.
I think you have to gauge you market and follow their interests. If they have a need for a new product you can increase your range, if they feel like they have enough or too much choice and it is getting confusing, give them less choices.
//Daniel
Hi Daniel,
I think you are spot on. However, I think the trick is to knowing when you need to extend your range and when your offer is getting too confusing.
How do you keep a track of when your customers or potential customers feel like they have too much choice and your portfolio is getting confusing?
Adrian
Great counter question Adrian 🙂
What I would do is ask my customers using both quantitive and qualitive methods to figure out what they think, if they are missing anything and if they feel like they know what they should buy and so on.
But it is always hard to figure out, another more costly method would be trial and error, which is something we sometimes have to resort to.
Hi Daniel,
Great suggestions. I would also suggest that you keep an eye on your own historic sales and customer data for feedback, uptake and comparison information as well.
Adrian
Having a database of information from many different sources is the best 🙂
Agreed!
Modesty speaking a great and interesting article. Keep the good work on.
Thanks John.
Glad you liked the post 🙂
Adrian
Very well said. It’s funny how people sometimes take too much time deciding when you don’t give them any option but you get the same reaction when there are too many choices, too. I guess when it comes to brands, fewer options will be better but it will be best if you can make and market your product in a way that customers will never think about looking at others.
That’s absolutely right. Brands can really help narrow our choices but making yourself stand out so that there is no choice is the ideal position to aim for.
Adrian