Psychology of Choice


Do your sales go up or down when you offer more products?

Amazon thinks they go up.  In their internal studies, they found a 70% correlation between the number of products offered and sales.   If you extend your product lines by 10%, expect sales to climb 7%.

But there are researchers that disagree finding that sales can go down, not up, as a customer is offered more products.  That premise is a darling sales psychology right now.

So what’s retailer to do?

We’ve bought into the Amazon premise and have added new products at every opportunity.

Then we read of the now-famous jam test done in a California grocery store by two professors, one from Columbia and one from Stanford.   At one tasting booth, they offered six jams.  In the other, they offered 24 jams.  Same brand and both were on a Saturday.  It was a controlled experiment—at least as controlled as you can be in a grocery store.

Which performed best?   The display with 24 choices had a conversion rate of 3% while the display with 6 jams had a 30% conversion rate. 10X.  That’s enough to get any retailer rethinking their website.

For me, it didn’t pass the smell test.  We sell jams.  They don’t act that way in our store or online.  In our experience, 24 jams will definitely outsell six jams.

So I looked up the paper written by these two professors.  As I read the paper, the first thing that crossed my mind is that one test does not prove a hypothesis.  Then in the notes to the test, the authors explained that it was only one test and there were variables beyond their control.  In another place a researcher said that the results of the jam experiment were hard to replicate.

I read several other articles.  It was evident that the psychology of choice is not “settled science.”

And I happened across a program on TV, a Harvard professor discussing the psychology of choice.  He said that the choice was contextual, that in some cases a very few choices are better than many and vice-versa.  It was based on the complexity and the “risk of loss.”   If you’re going to the store and buying spaghetti sauce, you’ll find rows of choices.  Fairly quickly, you’ll choose one and move on.  What if you choose the wrong one?  Well, your spaghetti may not be quite as good but your risk of loss is low.

But what if you’re buying a new car?  Now 24 choices is a problem.  And the risk of loss is high.  If you pay too much for the car it doesn’t suit your needs, you’re an unhappy camper.

For me, the Harvard professor makes sense.  If the product or decision-making process is complex or if the risk of loss is high, don’t offer too many choices on one page.  (One author said a max of five.)  Conversely, if you’re selling fairly simple products, stack them up.  (As I’ve worked through this, I’ve decided that 24 products to a page is max even for simple products.  (Am I right?  It’s my best guess.)

But what it you have many more products than that?  We have over 100 bread mixes.  If you’re in my camp, use navigation and categorize  your products into groups of eight to 24.  Direct the customer to the category of his or her choice.

That’s more work and it introduces another layer in the navigation tree and for search purposes, we like to keep our offerings high.

And we do have some products that are complex enough (baking kits) that we’ll only have three to six on a page.

Will all this work?

Be patient.  Wait a year and I’ll tell you how well it worked.

————–

Here are some links if you want to start digging on your own.

“When Choice is Demotivating: Can One Desire Too Much of a Good Thing?” Sheena S. Iyengar, Columbia University and Mark R. Lepper, Stanford University

http://www.psychologytoday.com/blog/behind-online-behavior/201410/the-psychology-choice

Too Many Choices: When Less is More, Psychology Today

http://www.psychologytoday.com/collections/201105/too-many-choices/when-less-is-more

Too Many Choices: Lost in the Aisles, Psychology Today

http://www.psychologytoday.com/collections/201105/too-many-choices/lost-in-the-aisles

Print