Consumer Choice: Beating Decision Paralysis

While the simple act of buying something has gotten easier these last few years, courtesy of 24hr delivery and the kind of service that means customers never have to leave their homes, the number of products out there means that things have got a little bit harder too. After all, the number of stores catering to any one market increases almost daily, with bold start-ups emerging like mushrooms in the shade of shopping giant Amazon. This raises a unique problem, namely, overwhelming choice. 

Decision Paralysis

Let’s look at an example. People interested in sports equipment, for instance, may gravitate toward brand websites to reduce the number of choices they have to make. This might include Nike and/or Adidas. However, beyond the gaze of Amazon, larger stores have popped up in sports too (Amazon doesn’t even make the top ten of this $200bn industry), meaning that an expansive catalog can be a universal part of the modern shopping experience. Dick’s Sporting Goods, Bass Pro Shops, and Hibbet Sports are just a few examples.

As all of these shops offer completely different things, albeit within their narrow niche, customers can fall victim to something called decision paralysis. In such a scenario, shoppers are unable to make a decision because there are too many similar options to choose from. The only logical one is to do nothing, an outcome referred to as the “ostrich effect”, whereby customers simply hide from whatever it is they’re supposed to be doing. This problem is typified by The Cheesecake Factory, which has 34 varieties of cheesecake on its menu. 

The world of entertainment suffers from the same problem, as well. Just look at streaming services like Netflix that offer a raft of similar TV shows and movies. There may be no immediate difference between Mindhunter or NCIS or the Pablo Escobar series versus Narcos for a newcomer to the platform. This means that word of mouth can serve a role in getting people interested in one thing over another. How many times has the average person been recommended Breaking Bad or The Wire, for instance?

On a similar note, the huge number of online gaming sites (casinos, sportsbooks, and bingo pages) out there has forced the creation of comparison sites to make customers’ decisions easier. Gambling.com ranks the best bingo sites in the UK – more than forty of them – by the quality of their offering, inclusive of a site’s regulatory status and the kind of payment options they accept. These sites have found a novel way of making themselves stand out on their own though. 

How? Many of these companies offer freebies. Of course, just like buy-one-get-one-free type deals and free shipping, this kind of introductory offer isn’t alien to any industry. Shoppers still have to deal with the idea that everybody wants their custom, which leads us right back to the earlier concept of decision paralysis. Is there ever a way around this for retailers and customers?

Fear of Missing Out

Well, yes. Quoting a study by Lepper and Iyengar, the MailChimp website revealed that the way of doing business championed by The Cheesecake Factory can be a huge turn-off for buyers. Given a choice of a stand filled with 24 jars of preserves versus one with six, shoppers always went for the latter (31% conversion to 4%), resulting in more sales for what some might consider a less attractive stand. In fact, the loaded stall did get the most attention from visitors but, evidently, they had no idea what to do with 24 tubs of jelly. 

Competition and decision paralysis go hand in hand so stores have to find ways to force (in as gentle a way as possible) shoppers to make a choice. In an ideal world, this will be a decision that benefits both parties equally. For example, the previous source also cites a National Geographic study that looked at the sometimes pricey hellscape that cinemas present filmgoers with. When presented with small or large popcorn options, small ones always won out. Adding a medium choice created an equitable balance.

It might sound a little dystopic but this kind of manipulation is key to getting shoppers to part with their money. Most famously of all, FOMO, or the Fear of Missing Out has a long history of tricking customers into making a purchase that they may not otherwise want to make. FOMO is especially prominent in video gaming today, where pre-order bonuses and microtransactions come with the promise that you’ll never be able to acquire something if you don’t buy it now. Unfortunately, this is usually a false assurance, as developers naturally want to keep saleable items in circulation. 

The value of FOMO is in how it reduces the amount of thinking the customer can do. For example, asking somebody what their favorite color is may get a snap response – unless they have the time to think about what color their bedroom wall is or how their wardrobe is a single shade of black. These unwanted thoughts have a way of muddying what should be an easy decision. The Shopify website suggests reducing immediate risk, i.e. lower prices, faster shipping, etc., as a way around this problem. 

Granular Packages

Helping customers avoid decision paralysis can be an easy way to beat the competition and improve conversion. Of course, for a well-established company, this can require a complete re-think of how they conduct business. A restaurant like The Cheesecake Factory arguably thrives on the publicity its bloated menu brings (how many different ways can there possibly be to make a cheesecake) but holiday companies with a range of granular packages might see half their product line-up scrapped overnight. 

In the latter case, any wanton cuts might alienate established customers whose needs are being met by one particular package. Overall, decision paralysis may fall somewhere between a necessary evil and something truly monstrous indeed, meaning that it’s important to have an understanding of what your clients actually want before taking the hatchet to anything. For now, try to keep customers from thinking too much. It’s better for everyone that way.