I finally broke down. I joined Costco. The ravings from my friends, the super deals and amazingly healthy options, including organic produce I saw through my online reels, finally did me in. As did the great gas prices.
You don’t have a choice
Outside of its breadth of products and services, including great values, what I found most interesting was its lack of options. You want to pay with MasterCard? Sorry, can’t do that. Paper or plastic? How about none. Pepsi, not Coke, at its dispensers. That middle-tier in gas choices? It doesn’t exist. Only regular and high-octane. But who chooses the middle one, anyway?
And from what I observe, customers are not ruffled. In fact, I believe they somehow understand that Costco made these decisions to obtain the best deals and pass on the savings to them. It’s a tradeoff that customers not only understand but appreciate.
Keep it simple
But there may be something more at play than just value. Choice is a good thing. But like with most things in life, too much of a good thing is not beneficial. One thing that Costco is famous for is providing samples, though the samples are just that, a single sample of one item.
Psychologists have long understood that giving people too much choice makes it harder for people to decide. When that’s translated into consumer behavior, it can hurt your ability to sell your products or services. It started when researchers Sheena Iyengar with Columbia University and Mark Lepper with Stanford conducted the now-famous jam test (published June 2000).
In the jam study, consumers shopping at an upscale grocery store encountered either a tasting table that offered samples of either 24 or six flavors of gourmet jam. Consumers could taste as many as they liked and received a $1 coupon off their purchase, which they could use after they picked up their jam of choice in the aisle. Therefore, even those who were exposed to only six flavors would encounter the full spectrum of 24. They measured both customers’ attraction to the booth and purchase behavior.
Interest does not lead
to purchase
Sixty percent of shoppers stopped by the booth with the 24 flavors, with only 40 percent stopping at the booth when six flavors were on display. An extensive choice selection was clearly more attractive. However, nearly 30 percent of consumers with the limited choice purchased a jar of jam, vs. only 3 percent of those who were exposed to a broad variety of 24 options. Other studies have confirmed this behavior and purchase pattern.
This may fly in the face of some of our beliefs about having choice. Choice is good for us, but at some point, its relationship to satisfaction and our ability to decide decreases. More choices requires increased levels of time and effort on the part of consumers, potentially increasing the level of anxiety on what to do — so as in the example above, the consumer doesn’t make a choice.
When deciding upon a marketing strategy on how to increase sales or expand your business, remember that more isn’t necessarily better. Adding another SKU, introducing new products, or providing consumers with multiple ways to configure something may not help you achieve your goals. There is no easy answer, but as usual, focus on the objective, conduct your research, and if you get the balance right, you will be rewarded.
Dean Ilijasic is Co-founder of Long & Short of It.
