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In the Western world, we pride ourselves on our right to choose. From voting for political leaders to purchasing an automobile, we have a say in just about every decision in our lives. The average grocery store displays 45,000 items for our shopping pleasure, while a typical big box store has about 100,000. There are over 27 million books on Amazon and an increasing number of available singles on dating sites.
We thrive on having a number of options available at our fingertips, but does that variety lead us to make the best decisions? The experts say no. Though it may be appealing on the surface, it turns out too much choice can be downright crippling in the end.
Back when Columbia University professor Sheena Iyengar was a graduate student, she undertook an interesting experiment about choice. With the cooperation of a high-end grocery store – the kind that has 75 different kinds of olive oil – she set out to determine whether having more options available makes a customer buy more or less of a product.
She set up two tasting booths, one with 24 flavors of jam, the other with six flavors. While the table with more options attracted more samplers, the conversion rate was lousy – only two out of every 100 people ended up purchasing jam. Compare that with the 12 people who tossed a jar into their cart after stopping at the table with just six flavors. The results said it all: those faced with fewer choices were six times more likely to make an actual purchase.
It’s not the only study to draw such conclusions. In another instance, Iyengar and a handful of peers analyzed retirement savings choices made by 500,000 employees and found the more investment funds available, the lower the employee participation. People were opting out – and missing out on free money from their employer – simply because they were overwhelmed by choice.
Iyengar has identified three main negative consequences to what she calls our “choice overload problem.” First, we’re likely to procrastinate and put off making a decision as long as possible. When we do finally make one, it’s probably not the best choice. Finally, we experience a sense of dissatisfaction with our decision, forever wondering if we could have found something better. Instead of being liberated by choice, we are suffocated by it. The whole process can be absolutely unpleasant.
Business leaders often have to make tough decisions under a great deal of pressure. The average CEO makes almost 140 decisions in a week, nearly half of which are made in nine minutes or less. The good news is we can fine-tune our process to ensure the choices we make are appropriate and without regret.
Iyengar suggests adopting the following four tried-and-tested techniques to make better decisions in business and life:
1. Cut. By reducing redundancies and limiting choice, many brands – from Proctor & Gamble to Campbell’s – have witnessed costs plummet and sales increase. On the consumer side, it’s easy to be bombarded with too much information when researching a potential purchase. Some experts suggest shoppers limit themselves to reading three websites when looking up product information online. Remember, less is more.
2. Concretization. Visualizing the outcome of a situation can be a powerful tool when making decisions. Iyengar found more people sign up for 401(k) plans when asked to consider the positive outcomes of saving more money. It’s been proven people spend less when carrying cash as opposed to using a debit card. Making something feel real can change the choices we make.
3. Categorization. If the “chooser” does a good job of categorizing the options, it makes it easier for the person making the choice. Our brains are able to process more information if properly sorted into logical categories, which is something to consider when ironing out your own decision-making process or marketing your product or service.
4. Complexity. When faced with a number of complex choices, research shows people are able to make better decisions when they progress from a simple choice to something more complicated. Conditioning yourself and your customers for complexity can increase engagement and produce big results.
Chances are the amount of options available to us won’t decline anytime soon, but by taking a disciplined, thoughtful approach to the decisions we make, we are better able to manage our choices. We may even enjoy it more, too.