Less Choice Can Be Good For Sales

Even though we now have the capacity, via the Internet, to research vehicle listings endlessly, it doesn’t mean digital marketers can assume that the more choices they offer, the more likely shoppers will be able to find just the right car.

You can see evidence of the more-is-better approach in many car buying websites that list anywhere from ‘tens of thousands’ up to ‘several million’ vehicles for sale. The belief is the larger the online inventory the greater the likelihood that shoppers will find a car they really like.

However, research shows that there can be too much choice; when there is, consumers are less likely to buy anything at all, and if they do buy, they are less satisfied with their selection.

The Jam Study is one of the most famous experiments in consumer psychology. The Study’s conclusion found that offering consumers less choice can be good for sales.

The study which was conducted at Draeger’s Market, an upscale Bay-area supermarket by psychologists Sheena Iyengar and Mark Lepper, found that consumers were 10 times more likely to purchase jam on display when the number of jams available was reduced from 24 to 6. Less choice, more sales. More choice, fewer sales.

This phenomenon, replicated in a variety of product categories from chocolate to financial services to speed dating, has come to be known as ‘Choice Overload’. It’s a paradox because rationally speaking the more choice you offer your customers, the more sales you should make simply because you’ll be satisfying more needs better. But research has showed that choice actually can be demotivating and get in the way of sales. Why?

Psychologically, the more options you give people, the more time and effort they have to invest in making a choice – something they may not be prepared to do. Moreover, giving people a smorgasbord of options puts a psychological burden on them because what you are actually doing is giving them more opportunity to make the wrong choice, regret it and blame themselves.

Nevertheless, the Jam Study and other follow-up studies like the ‘Choice Overload’ analysis by Kellogg researchers at Northwestern University has identified 4 criteria to assess whether reducing choices for your customers is most likely to boost sales.

  1. When people want to simplify the act of making a choice (effort-minimizing goal)
  2. When making the right choice matters/you are selling complex products (the decision task is difficult)
  3. When you show options that are difficult to compare (greater choice set complexity)
  4. When your customers are unclear about their preferences (higher preference uncertainty)

So the Jam Study lives on; more choice can harm sales – but probably only when one or more of these four conditions are met.

These studies and others have shown not only that excessive choice can produce “choice paralysis,” but also that it can reduce people’s satisfaction with their decisions, even if they made good ones.

Without a doubt, having more options enables us, most of the time, to achieve better objective outcomes. Again, listing thousands of vehicles for sale as opposed to hundreds increases the likelihood that customers will find a car that meets the shopper’s wish list.

This separation between objective and subjective results creates a significant challenge for digital retailers and marketers that look to choice as a way to enhance the perceived value of their goods and services.

Incorporating a real ‘Shop-By-Payment’ filter (based on a soft credit pull) to your website is a great way to help the shopper distill the entire online inventory to a more custom, subset of cars that meet their monthly payment goal.

Innovative Dealers, OEMs and Aggregators should focus on making choosing a vehicle easier for their consumers. One way to accomplish this is be to showcase a limited range of the best available vehicles for sale, based on the shopper’s payment goal.

Curated choice = More sales!

 

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