Value of Variety and Choice Overload in Customer Psychology – When Too Much Choice Can Decrease Sales?

In this post, we explore the psychology behind offering customers too much or too little choice.

You are going to learn:

• What is a Choice Overload and Choice Paradox?
• How to offer a greater variety of products without making customers anxious?
• Why the variety is not always the best sales strategy?

If behavioral psychology is your cup of tea, let's dive in.

It’s good to have choices, especially if that means you have a lot of variety to choose from. Intuitively, this feels very true, and given the push to provide products and apps that fill every niche possible, it seems that many companies share this intuition. But is it always true? How much do your customers really appreciate the variety of choices you offer them? And how much do they really need?

Variety Seekers – how the idea of variety translates into sales?

People think they like having variety much more than they actually do. A clever 1990 paper by Itamar Simonson, then at Berkeley’s Haas School of Business, demonstrated this fact. For three weeks, students in various classes were offered the chance to get free snacks. Each week, they got to have one snack, and they were offered six types of name-brand cookies or chips to choose from. The students in some classes got to choose which snack they wanted at the beginning of each class, while students in another set of classes were asked to choose the snacks they wanted for each week on the first day. In other words, some students got to pick what they wanted to eat that same day, while others had to plan out what they would eat later. Simonson likens this to going grocery shopping when you need a specific meal versus when you’re stocking up for the rest of the week.

Students who chose the snacks ahead of time picked a wider variety of products than students who chose a same-day snack. In fact, only 15% chose the same snack for each day when they were planning ahead, but 38% chose the same snack each day when they were deciding what to eat more immediately. Likewise, 64% of planners chose a different snack for each of the three weeks, but only 9% of same-day snackers chose so much variety.

Why is it that these students thought they wanted a lot of variety when they were thinking more abstractly, but really just wanted the same thing when they had to make an immediate choice? Simonson suggests that consumers just really like the idea of variety: they want to keep their options open, but when it comes time to actually consume something, they tend to stick with safer, more consistent options.

Choice overload and the paradox of choice

So is it better to offer more variety to your customers? Unfortunately, there isn’t a straightforward answer. For over a decade, behavioral economists have suggested that offering customers a lot of variety makes them more attracted to a store’s offerings, but also less happy with them.

In 2000, Stanford psychologists Sheena Iyengar and Mark Lepper published a notable paper documenting what many now call “choice overload” or a “paradox of choice” (which is also the name of a related book by Barry Schwartz). One of their studies is the now-famous Jam Study, in which shoppers at a supermarket in Menlo Park, CA were offered the opportunity to try free samples of uncommon jams carried by the store. The catch was that on some days the experimenters offered six samples of jam, while on others they offered twenty-four options.

What happened? First of all, the 24 jam display was far more impressive: 60% of customers who saw it decided to stop and look at the selection, while about 40% stopped to look at the 6 jam selection. A wide selection with lots of choices tends to draw in customers, but that doesn’t mean they are more likely to chose anything. Regardless of how many jams were on display, customers only tasted one or two flavors, and when it came time to decide what to buy, only 3% of customers bought one of the 24 jams, while 30% bought one of the 6 jams!

Since this paper was published, the idea that too much choice can be demotivating has been one of the strongest warnings to come out of behavioral economics, whether for consumers, companies, or policymakers. However, as more researchers have explored the effects of choice and variety, a more clouded picture has emerged. In 2010, a review of this literature concluded that, while too many options or too much variety may hinder people’s choices, it’s not at all a universal phenomenon.

When and why might many options be worse than fewer? There are a number of reasons that can conspire to make a large number of choices discourage consumers. For example, Barry Schwartz and colleagues argue in a 2002 paper that some consumers may worry that they will make a poor choice, and this causes them anxiety or leads them to fear they will regret their choice. Another line of reasoning suggests that people may become cognitively overwhelmed by the mental effort it would take to make a complex decision among many options, so instead they choose not to choose.

Given these theories, we can guess that having more options will make customers less happy with their choices when…

They are faced with products for which they believe there is the best option, and…

They don’t have the time, resources, or patience to figure out which choice is the best.

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Offering the right amount

Is it wise to give customers a lot of choices? Probably not just for the sake of giving them variety. If you want to add extra options, it would probably be better to construct Compromise and Decoy Effects out of your products rather than simply try to increase the choices. Although more choices can make it seem like your store or website is more attractive, ultimately it may not outweigh the risk of discouraging customers from actually choosing and buying.

On the other hand, if you already have a wide variety of products and/or options (such as opportunities for customization), it might be a good idea to stress that there is no “best” final outcome. This can reduce the stress on customers who would otherwise feel anxiety over the need to make the optimal choice. If this is not the case, and for some customers, there is a best option, then you should either try to match them to that option as seamlessly as possible, or at least reduce the number of choices they need to consider at a time.

Also recall that it matters when your customers plan on needing or using your product. If they are buying a one-shot product (like a camera or a perfume), they will likely just want to pick the “best” option or their favorite option, and if they come back to make this same type of purchase later, they will do the same thing. However, if they buy several things at once because they plan on wanting them later (such as articles of clothing or groceries), they may prefer to have more options and to choose a wider variety of products. Thus, it is important to tailor the variety of products you offer to how your customers will plan to buy those products.

Other various uses for variety

There are also some creative ways to influence how much variety your customers may want. In one particularly creative example, a 2009 study out of the Columbia Business School suggested that shoppers in a grocery store may tend to prefer and choose a wider variety of items if they were in narrower or more cramped aisles. In one study, participants were also more likely to choose new, unknown, or unfamiliar options when they felt confined. The reason? Possibly it’s that consumers (at least in the U.S. and Canada) may think of choosing a wider variety as a way of pursuing an abstract idea of “freedom” (to balance out the confinement they feel in the cramped space), so it could be the case that encouraging your customers to seek more freedom or to be more adventurous (perhaps just by showing them images and messages that evoke these ideas) may improve the odds of them responding positively to variety.

Lastly, you can also play with the amount of variety you offer in order to influence how your customers feel about your products. While it’s true that more options can make customers worry about making a bad decision, the presence of variety can also cause consumers to get more enjoyment out of certain kinds of products. Because of the funny ways our brains are wired to get tired of things (like the way we slowly stop enjoying a song we’ve heard several times), the presence of variety can disrupt the usual processes that lead us to get bored of products or experiences (in the short run). A 2009 paper suggest that simply being reminded or aware of variety can make this happen: participants asked to eat jellybeans were willing to eat more when they simply thought about other kinds of candy. In other words, customers may consume more and longer when they are reminded of how much variety exists within the product space.

The implication here is that the variety of choices you offer to your customers may have further reaching impacts than just whether or not they make a purchase. Once a purchase is made (using whichever level of variety is best), remind your customers of just how many options you have so that they will enjoy your product more, and want to come back again.

Takeaways

• Customers tend to think that they like having a lot of variety to choose from, but they don’t always respond well to it if they feel it is hard to make a smart choice.
• Be mindful of whether your customers are making one-shot purchases or are purchasing many products which they plan to use later. In the one-shot case they may prefer less variety than in the planning case.
• In general, if there isn’t a “best” option for a customer, make sure they know that so variety doesn’t intimidate them.

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