“Limit your options (even if you get someone else to do it for you).”
My husband and I have a little game we play if we decide to open a bottle of wine with our dinner.
One of us goes to the wine fridge (our pride and joy) and takes out a ‘shortlist’ of three bottles. These are then presented to the other person, who selects the one we’ll be drinking.
It allows us to both feel in control.
Before this, I’d always complain that he only opened a Shiraz and he’d always complain that I only opened a Pinotage. With our new method, we’re both happy.
Well, the person initially selecting the three bottles only selects bottles they wouldn’t mind drinking themselves (allowing for some variety – that is, they can’t all be Pinotage) and the other person gets to make the final call (even though all they’ve really done is help the first person make the final decision).
At the root of this little story is the concept of choice. We don’t like choice. We pretend that we want many different options, but we actually don’t – it stresses us out too much.
Studies have shown that when you increase the number of choices, the consumer is less likely to make a purchase.
In 2000, Sheena Iyengar and Mark Lepper showed that people were more likely to purchase gourmet jams when offered a limited array of six choices rather than a more extensive array of 30 choices. The participants in their study also showed a greater satisfaction with their choice when their original set of options was limited.
Three years later, Sheena Iyengar teamed up with Wei Jiang and Gur Huberman and looked at this same concept, but in terms of contributions to 401(k) retirement plans.
They confirmed that participation rates decreased as the number of funds increased.
Going back to my little wine selection game …
For the first person choosing: to select one bottle from our collection would be quite stressful. What if it’s not complementary to the food, or doesn’t appeal to the other person?
Picking a shortlist of three, however – no problem. Quick and easy; you don’t have to make the final call.
For person number two, they approach the selection of one bottle fairly stress-free. They’ve only got three bottles to choose from; it’s hardly a tough decision.
So my advice is to limit your options (even if you get someone else to do it for you).
When painting your house – don’t grab every pamphlet of different shades of brown – just take one.
And if you’re on the “selling” side, be wary of giving your customers too much choice.
It might hinder their motivation to make a purchase. ❐
Author: Gizelle Willows CA(SA) MCom Finance is a Senior Lecturer in Financial Reporting at the University of Cape Town