Why Offering Too Many Options is Detrimental to Sales: The Paradox of Choice

It is a common mistake for a business to think that the more products and services they offer, the more revenue they will make. An increasing body of studies indicate that this isn’t actually the case.

It all has to do with choice. Intuitively we consider choice to be largely beneficial as it indicates that we have autonomy over our decisions and it ultimately gives us a sense of control. However, the relationship between choice and well-being isn’t so straight-forward. The paradox of choice was first discovered in 2000 by two Sanford psychologists. Their study was conducted at a local food market. On the first day there was a display table with 24 different kinds of jams. The following day at the market, people were only given a selection of 6 jam flavours. The larger display attracted more interest than the smaller one however, when it came to purchasing, people who saw the large display were one-tenth as likely to buy as people who saw the small display.

This study, as well as others, has provided evidence for the idea that choice ‘paralyses’ consumers. Overloading a customer with choice will lead to them being far less likely to make any purchase at all. What is more, if they do end up making a decision, the choice overload will reduce their satisfaction with that decision. Even if it was the right choice!

It is important to ask yourself whether or not you are offering too many choices to your clients. Ultimately, there is a diminishing marginal utility in providing alternative choices. If you can understand that each new option will subtract from the feeling of well-being your client walks away with, then you may realise that you’re offering too much. Psychologists have shown us that more options to decide between requires increased time and effort and can lead to anxiety, regret, excessively high expectations, and self-blame if the choices don’t work out. By reducing the amount of choice you offer, these impacts become negligible.

Obviously choice does provide some benefits, the more shoe sizes a store offers, the wider their customers base will be. However the paradox of choice requires us to think about the balance of how many products or services businesses create. You can overwhelm your customers with too many options and this could lead to indecision and consequently nothing purchased. A business that can understand the fickle balance of choice will be amply rewarded.