The Choice Overload Effect: Why simplicity is the key to winning customers

Choice Overloaded Succulent

Have you ever experienced analysis paralysis? It’s that feeling of anxiety when you have so much information that any action feels like the wrong one, so you don’t do anything at all. Turns out, there's a psychological principle behind this feeling called the Choice Overload Effect. 

The art of being wise is the art of knowing what to overlook.” — William James

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Too many choices will overwhelm, but just enough will drive sales

In a famous study conducted at Columbia University, a research team set up a booth of jam samples. Every few hours they would switch from a selection of 24 jams to a group of six jams. When there were 24 jams, 60% of customers would stop to get a sample, and 3% of these customers would buy a jar. When there were six jams on display, only 40% stopped. But here’s the interesting part — 30% of these people bought jam. In other words, lots of options attracted customers to browse, but fewer choices got them to buy.

Lots of options gets customers to browse, but fewer choices gets them to buy via @choicehacking

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The negative effects of Choice Overload 

The negative effects of choice can be more severe than a missed sale. Research shows that when there are too many options, customers feel anxious, will disengage, and can even become depressed.

The adverse effects of too much choice is down to a behavioral science principle known as Choice Overload. It’s the idea that while some choice can be good, too much choice will overwhelm customers.

A brand’s good intentions — giving customers lots of options — can backfire and become a barrier to sales. According to recent research from Episerver, 46% of customers have failed to complete a purchase online due to overwhelming choices.

How people choose  and the Paradox of Choice

In his book “The Paradox of Choice,” Schwartz outlines the steps of decision making:

  1. Figure out your goals
  2. Evaluate the importance of each goal
  3. Array the options according to how well they meet each goal
  4. Evaluate the how likely each of the options is to meet your goals
  5. Pick the winning option

The problem is, the more options you have, the harder it is to make a comparison across products. If you have to compare an item across 50 dimensions instead of 3, there’s a risk you’re missing out on “the one.”

That’s the paradox — having a variety of options is good. It drives customer consideration. But once the number of choices gets too high, a person’s happiness goes down.

Having a variety of options is good. It drives customer consideration. But once the number of choices gets too high, a person’s happiness goes down via @choicehacking

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The Paradox of Choice Graph

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The curse of too many options

  1. Anxiety: Too much choice is the cause of mental anguish for some people. Economist Herman Simon theorized that decision-making styles fall into two types:
  • Satisficers: People who would rather make an “ok decision” than the perfect decision. They’ve spent some time considering their options, but haven’t belabored the process. They tend to be more satisfied with their choice because they don’t consider all the available information.

Satisficers settle for an option that’s “good enough” and move on. Gretchen Rubin, author of “The Happiness Project” described them this way:

GRETCHEN RUBIN

“Satisficers make a decision once their criteria are met; when they find the hotel or the pasta sauce that has the qualities they want, they’re satisfied.”

  • Maximizers: These are people who want to make the best possible decision. They can’t choose until they’ve deeply examined every possible option.

Research from Swarthmore College found that Maximizers reported significantly less life satisfaction, happiness, optimism, and self-esteem. They also experienced much higher levels of and regret and depression than Satisficers.

2. Disappointment: The more options people have, the more likely they are to be disappointed in their choice. You never feel that you made the best decision because there were too many options to consider.

As Barry Schwartz writes in “The Paradox of Choice”:

BARRY SCHWARTZ

“The existence of multiple alternatives makes it easy for us to imagine alternatives that don’t exist — alternatives that combine the attractive features of the ones that do exist. And to the extent that we engage our imaginations in this way, we will be even less satisfied with the alternative we end up choosing. So, once again, a greater variety of choices actually makes us feel worse.”

Combat Choice Overload with these strategies

  1. Offer fewer options: It may seem counterintuitive in the age of personalization, options need to be limited to maximize sales. For example, Procter & Gamble found that a decrease in the number of Head & Shoulders varieties resulted in a 10% increase in revenue.
  2. Make it easy to compare features across products: If you want to make it easy for customers to choose between non-equal options, frame the use of each. For example, Calendly uses Basic, Premium, and Pro options to reduce the number of choices. Then, they compare features across products in a table that’s clear and easy to digest.
CALENDLY

Image via Calendly

Now instead of feeling confused and anxious about which version to pick, customers can easily choose the product that’s right for the features they need.

The bottom line

There’s no silver bullet in marketing, but it’s common to see brands undermining their efforts with good intentions.

If you reduce the number of options available, you also reduce complexity for the customer.

In the end, it’s this reduction in complexity that will smooth the way to increased consideration, higher engagement, and more sales.

It takes a brave marketer to suggest a company reduce their product portfolio, but ask yourself, “If this is something that’s worked so well for so many brands, isn’t it at least worth a test?”.

?️ To learn more, check out the Choice Hacking Podcast, Episode 101 "The Choice Overload Effect".


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