Why too many choices are bad for business

In this TED Talk, author Barry Schwartz points out some uncommon sense – that having too many choices leads to analysis paralysis and dissatisfaction. In contrast, common sense tells us people love options and that the following logic works:

maximize choice -> maximize freedom -> maximize satisfaction

We’re all aware of the upsides of offering our customers choices; the downsides are less obvious, but they can have huge, negative effects on your business. For example:

  1. Analysis paralysis. The more choices you offer, the harder it is for customers to make a decision. Not only are there more variables to consider, but also anticipated regret increases. That is, customers are afraid of making the wrong decision and a laundry list of choices magnifies that fear. They may choose not to buy anything rather than make a mistake.
  2. Opportunity costs. The more choices there are, the easier it is to imagine that one of them might have met our needs better than the one we chose. When we imagine these alternatives, we undermine our satisfaction with the choice we made, even if it was an excellent one.
  3. Anticipation of perfection. When there’s only one choice, we don’t expect it to be perfect. However, when there are dozens, hundreds, or thousands of choices, any imperfections in the choice we made lead us to kick ourselves. After all, one of the alternatives surely would have been perfect! Ironically, as Schwartz points out, when you anticipate perfection, the best the world can ever do is meet your expectations – there is no chance of a pleasant surprise.

When you’re designing your products, your portfolio, your services, your website, your pricing structure, your call center options, your ___, keep it simple and limit the choices. Just because you can add features, functionality, variations, etc., doesn’t mean you should. Customers may always say they want more choices, but offering too many may depress sales and customer satisfaction.

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This entry was posted in Customer behavior, Pricing, Product design, Usability. Bookmark the permalink.

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