Choice Paradox: Why customers shouldn’t be spoilt for choice

By Dan Monheit, Originally shared to Inside Retail 12.01.20

Today we have choice. Lots of it. But it wasn’t always like this. In fact, until relatively recently, many of the choices we enjoy were actually not choices at all. In their place, we had rules. Rules from the state, rules from the church, rules from societal norms. And the rules told us everything. Where to live. What to wear. What type of work to do. Which days to work. Who to marry. When to marry. Whether to have kids. Who should return to work and who should look after said kids.

But not today. Our modern, democratic, capitalist society is built almost entirely around the idea of choice, and the freedom of an individual to choose. Now we worship at the altar of options.

In a commercial sense, retailers, advertisers and marketers all but dedicate their working lives to giving people more choices, more options, more things to buy.

Intuitively, we think that giving customers greater choice will mean that they’re more likely to find — and buy — exactly what they’re looking for. However, research into the decision making process has found that the human mind is poorly equipped to deal with a large array of options. Instead, our minds become quickly overwhelmed, often resulting in us making the simplest choice of all. We choose nothing and walk away.

Which brings us to the Behavioural Science concept of the Choice Paradox. It’s called a paradox, because while we love the idea of having choices, we are quickly overwhelmed by having to choose.

In 2000, psychologists Sheena Iyengar from Columbia University and Mark Lepper from Stamford University released their findings of the Jam Study, which has gone on to become one of the most famous experiments in consumer psychology.

To test the premise that human desire for choice is unlimited, the researchers set up a jam tasting table and dressed up as employees at high-end Californian supermarket Draeger’s Market, which prides itself on its extraordinarily abundant range of products, for example, offering 250 different varieties of mustard, 75 different varieties of olive oil, and over 300 varieties of jam.

The psychologists’ tasting table featured jams made by Wilkin & Sons, purveyors to Her Majesty the Queen, no less. On the first weekend, they offered six exotic varieties of different flavoured jams, which saw 40% of shoppers stop by for a sample and 30% go on to make a purchase. Pretty good.

The following weekend, at the same table, they set up 24 varieties of jam. Incredibly, the new display resulted in 60% of shoppers stopping by for a sample (a 50% increase on the previous week). However, when it came to conversion, only 3% went on to buy.

The research was conclusive. Less choice meant more sales.

That’s not what we’d expected, so it’s worth asking, ‘what’s really going on deep inside our brains? Overanalyzing options engages the ‘slow thinking’ part of our brain, known as the prefrontal cortex. This area, sitting in just behind our forehead and taking up around 12% of our total brain mass, is where we do anything that we’d consider ‘rational thought’. Its very existence is one of the most meaningful differentiators between our brain, and the brains of every other animal on the planet.

Engaging our prefrontal cortex requires a lot of brain power, which is why we subconsciously avoid doing it most of the time. Instead, we make the vast majority of choices ‘on autopilot’, relying on the more primal, less resource hungry ‘reptilian’ part of our brain.

Surprisingly, it takes a great deal of mental energy to calculate which new flavoured jam you are going to choose, especially when there are 23 others to compare against. When we consider that making a ‘well optimised jam decision’ is pretty unimportant for most of us, it’s easy to see how the choice gets filed in the too hard basket, rather than the shopping basket.

This is why we’re inclined to purchase our regular brand of toothpaste, for as long as they continue making it. Reaching for ‘ol faithful’ means our brain doesn’t have to endure the mental friction that comes with working out if we’re better off getting extra whitening, ultra-fresh breath, tartare control, tartare control plus ultra-fresh breath, or (for some strange reason) baking soda. Instead, we just get to lazily think ‘I bought this brand last time and I’m still alive. Good result. Let’s get it again’.

In considering the Choice Paradox, it’s important to remember that while we’re not very good at handling choice, we absolutely want to feel like we have plenty of it. This means that our focus needs to be on helping customers navigate a range of options more easily, rather than just limiting what’s available.

One way to do this is to plug into built-in, subconscious biases that help people reduce their cognitive load.

One of these is called the Default Bias and I discovered it as a 15-year-old working at McDonald’s. As part of the business’ globally renowned training program, I learnt that when a customer asked for ‘a Big Mac meal’, the only correct response was ‘Is that a large?’. Thanks to the Default Bias, customers simply said ‘yes’ most of the time, knowing that this was far less taxing than actually working out how hungry they were or how much they really wanted to spend on a burger and fries.

Studies have consistently demonstrated that when we’re offered a reasonable default option, we tend to take it. Even if it’s not objectively the best choice for us, we’d prefer to take the chance than waste our limited mental energy on something as trivial as a meal deal.

A classic example of this comes when we’re looking for a new broadband plan. Suppliers will often highlight a ‘suggested’ or ‘recommended’ option, knowing that even something as subtle as a call out is enough to tip many of us over the line.

The Authority Bias is another heuristic we can tap into to help ease the burdon of choice for our customers. Here we lean into the opinions of others, specifically, the opinions of authority figures (perceived or actual) to help one option stand out from the crowd. Whether that comes in the form of a celebrity-endorsements, a testimonial from an expert, awards and recognition, or even staff picks, the impact is the same. We’re more likely to buy when somebody that we respect, admire or has authority tells us that they’ve already vetted all of the options and chosen one. In essence, we divest our own responsibility for making the ideal choice onto somebody else.

Leading us nicely to a third bias known as Social Proof. If we’ve got a product or service to sell, it’s critical to find interesting or creative ways to show the person we’re trying to sell to that lots of other people just like them have already bought it and are thrilled to have done so. Social proof is what causes us to line up outside full restaurants and bars while empty ones across the street longingly wait for us. The safety and certainty that come with making an easy, popular choice is hard for our reptillian brains to resist.

Ultimately the best retailer are able to demonstrate the breadth of offering that customers think they want, while making it quick and easy to narrow down to a handful of viable options. As the great Jam Experiment of 2000 revealed, having more options is great for drawing people in, but we need to quickly shrink this down to a manageable number if we’re going to convert, which at the end of the day, is what it’s all about.