Lotsa Choices = Less Sales
Discuss amongst yourselves: In the effort to satisfy customers’ every need and want, is it possible to do just the opposite? Giving them too many choices can be both frustrating and confusing, leading to less business.
I got to thinking about this as I was cruising the new gigantic Raley’s just down the street. I counted not one, not two, but at least 10 different brands of canned black-eyed peas. And, within those brands, I could chooose with bacon, without, with jalapenos, with snaps, and so on. This for a vegetable that is not exactly mainstream. Now, I grew up eating black-eyed peas, so I love them; but many of you didn’t and don’t. If you’re not from the South, you probably wouldn’t even give those rows of cans a glance. The only “peas” you know about is the musical group. (And, no, not all peas are created equal, even though they pretty much all look the same. Depends on whether the cans were packed from dry or fresh peas.)
I did buy a can, but not in my first visit - I was in a hurry and didn’t have time to decide among all the choices. And, I also bought only one, thinking well, I’ll try another brand one of these days. So, in Raley’s rush to give me everything, they actually prolonged and reduced their sale.
Compare this to Trader Joe’s, who will be opening right across the street from Raley’s this coming Friday. I anticipate there will be a long line to get into the parking lot and another to get into the store. That’s what happened when they opened in Santa Fe.
But why is T-J’s so popular? Why are well-fed, well-shopped, well-heeled consumers all excited about yet another food market in the Albuquerque heights? Three reasons: 1. They have good prices (not necessarily the lowest) for quality products (”from the exotic to the basic”); 2. It’s fun to shop there, there is a funky ambiance (and the employees seem happy); and 3. They don’t give us 10 flippin’ choices in just one type of bean/pea. There’s typically only about four to five different kinds of beans total, with two to three brand choices max, including their house brand. I don’t have to waste brain cells making up my mind. So, their store foot print is much smaller than the chains and I’d bet their per customer revenue (and profit) is consistently much higher.
Read more: Trader Joe’s: Billions From Nuts, Veggies, and Two-Buck Chuck (Corporate Board Member Magazine, free registration required.)
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March 6th, 2006 at 2:01 pm
This kind of reminds me of the 80/20 rule: 80% of your sales dollars are going to come from from 20% of your products.
That being said, the trick is to give your customers MANAGEABLE choices. In other words, offering 10 brands of black olives is silly, but 3-5 might be better. Especially if the 3-5 have specific differences (whether we’re talking about pricepoints, flavor, or just brand identity: Say… 1) a generic $1.99 jar, 2) an imported “endorsed by the Sultan of Yor” superluxury brand, 3) a hot & spicy cajun deal, 4) old timey authentic old world Greek olives, and 5) Some hip, modern, cosmopolitan microbrand.
Manageable variety.
March 6th, 2006 at 2:05 pm
Exactly! I want choice but clearly-defined choices and not just a whole bunch o’ stuff that overwhelms me.
March 6th, 2006 at 3:56 pm
The other cool thing with TJs, when you buy your black eyed peas or other item, there is a very high chance of that item being very tasty. I get the feeling that TJs wants to sell me high quality stuff that the owner and staff would eat too. Safeway or another big grocery store just wants to sell me a can and they dont really care which one.
March 7th, 2006 at 7:39 am
I own a tiny business
I offer very little choice - I can’t compete with any of the large chain type stores in terms of choice or price point.
I do go the extra yard in customer service - but I read these marketing blogs and I always seem to miss the point somehow - how does this marketing angle help me?
Just curious.
Heather
March 7th, 2006 at 8:21 am
Heather,
Thanks for your comment and question. You just hit on one of my pet peeves - I think bloggers (on marketing or anything else) run the danger of writing for each other (and technorati popularity) instead of writing something that can help others who are looking for - say - marketing ideas.
“tiny” and “limited” can also mean exclusive, rare, to be treasured.
In looking at your blog - it appears you’re already doing a number of things right - the boutique, the personal blog to build a relationship with customers (past, present and future) and careful, caring selection of products.
A couple of down and dirty tactical points, using what I can glean from and about your blog:
1. You should mention the product/idea right up front in your posts and highlight them so I see them easily and link them to the shopping cart from the blog post, so I could immediately buy it, right then, right there, while I’m reading how wonderful it is.
You could be a global microbiz (as talked/ranted about over at gapingvoid).
2. The idea of having perfumes in smaller sizes could entice more people to spend more and faster - while improving your selection, while still keeping it “rare” and “special” without increasing amount of inventory space.
I’d also suggest you call it something other than the soap blog. I love the UK, London, boutique shopping, etc. - and “The soap blog” doesn’t get across your difference (or the range of your products). You’ve got some great differentiation sellling points in “About” and so on.
Good luck!
March 28th, 2006 at 9:24 am
[…] So, my point (and I do have one) is that less choice can actually lead to more and quicker sales. It also makes for happier customers, since they’re not obsessing about if they made the right decision. And, there have been multiple studies to back this up. One recent series “When Choice is Demotivating” included a study of a gourmet food store. Seems the more jams that were available for tasting, the less people bought. 30% of people exposed to six jars actually bought a jar; only 3% of those exposed to a large array (all 24 varieties) did so. Me? Give me three to five choices, concisely explain/demonstrate WIIFM (What’s In It For Me), treat me with respect, and I’m a happy shopper (AND buyer). Read More: The Paradox of Choice : Why More Is Less (by Barry Schwartz) Related Post: Lotsa choices = less sales […]
October 24th, 2006 at 2:35 pm
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