When Fewer Choices Mean Bigger Returns

One of my deeply held beliefs regarding Customer Experience and Loyalty is that if you act as an advocate for your customers, they will reward you, not only with their business, but by advocating for you to their network of friends and family.  There are many ways to be an advocate for your customers (and potential customers).  One of them is to find ways to keep them from becoming overwhelmed with choice. 

American society has become all about choice and most of us believe that all this choice is good.   After all, it seems reasonable that we live better lives than we did 20 or 50 years ago, when the American economy was less advanced.  Thanks to the ever-increasing pace of business, enabled by PCs and the internet; along with changes in business models, social values & government policies, choices now dominate the activity of our every day lives.  We should get satisfaction from all of this choice, but the fact is, it is making us unhappy.   It’s what the folks at Blackfriars Communications call “The Tyranny of Too Much“. 

Think about how it feels when you open a restaurant menu and see dozens or even hundreds of items from which to choose.  Almost makes you lose your appetite, doesn’t it? There’s a reason why all of the big fast-food chains now feature a handful of combo meals on their menu—they’re more profitable for them, to be sure, but they also make their customers’ lives just a little bit simpler.

This approach has been a part of Costco’s success for years.  They have a small but high quality selection of just about everything.  Their buyers do the work of selection a handful of high quality items across several pricepoints so I don’t have to decide between 18 different toasters (for example).

According to a story at BusinessWeekOnline, WalMart(WMT), which has not historically been known as a great customer advocate beyond offering low prices, is currently running a radio commercial in which boasts about how small its selection of HDTVs is.  The spot wasn’t apologizing for Wal-Mart’s lack of selection, nor was it saying the fact that Wal-Mart carried fewer options than the competition didn’t matter.  The commercial actually touted the fact that Wal-Mart had improved the HDTV buying process by limiting its selection to only the most popular models.   That perked the author’s attention:

“I have been pondering the purchase of an HDTV for some time now, but dreading the long hours of research I was going to have to put into the process. I’ve read a few articles that explain the differences between plasma screens and LCDs, between $3,000 starter models and $10,000 big dogs. And I’m more confused than ever.”

“What Wal-Mart did was counterintuitive, but like AOL’s strategy during the early days of the Internet, it’s right on the mark.  Conventional wisdom suggests that having more HDTV options under one roof is better for consumers.  After all, if a retailer carries all of the options, it’s more likely to be able to meet the needs of every customer who walks through the door.” 

“What Wal-Mart has recognized, however, is that most people’s purchasing needs aren’t merely tied to product features.  Early adopters aside, most people don’t need or want to not spend hour after hour sorting through product reviews and comparison charts to find out which model is best.  Most need to know that when they plunk down two, three, or four thousand dollars (or more), they’re going to be happy with their purchase.  And they need to know that in two years they won’t be stuck with obsolete technology. (Betamax, anyone?)  If they can go to Wal-Mart and choose from a handful models that will do the job just fine for the average person, they will be happier than if they are required to sort through 40 or 50 models at Best Buy (BBY) or Circuit City (CC).”

Wow, that’s powerful stuff and I think they may be on to something.   More isn’t always better.  Too many choices are often too confusing, and too much selection can become a burden, not a benefit.  Whatever industry you’re in, if you can avoid the Tyranny of Too Much, you are acting as an advocate for your customer.  That will drive loyalty, and simplify your own life as well.

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