In a 2000 whitepaper titled “When Choice is Demotivating: Can One Desire Too Much of a Good Thing?” Sheena S. Iyengar and Mark R. Lepper from Columbia University conducted a series of experiments that demonstrated how having too many options can be a debilitating factor for customers. This now famous experiment, set up two displays in an upscale grocery store - one which had a choice of 6 jams and one which had a choice of 24 jams.
The result? Customers were 10x more likely to buy from the display that hadfewer choices.
Fifteen years later, the concept of choice has gone through significant evolution, especially for online businesses. This can be broken into 3 phases -
Phase 1: Choice is King (2000-2006)
During the initial dot com bubble and in subsequent years after, the focus was all on the universe of choice available. Data maturity was still nascent and the best organisations were good at managing the data that they directly owned. Content wasn’t necessarily the focus since there were limited big players in most categories. Consumers were not as overloaded and subject to around 150 - 250 pieces of marketing in a given day.
What this meant was that the best way to attract customers was to give them an unparalleled choice. Businesses such as Netflix increased their subscription base from 300k to around 4.2 million by 2005 (even though the streaming service was still 2 years away). Pandora Radio also came into being during this time, and we had access to an enormous library of music, as never before.
For a while, everyone was happy.
Phase 2: Curation is King (2006-2013)
Soon, there was a lot of data available for organisations to mine. And by making initial inroads to understanding this mountain of data, the best organisations were able to start generating smarter recommendations. Shopping carts were tracked. Previous purchases were recorded. Decision making behaviour was better understood.
Also during this time, content was starting to become more important, as marketers realised that they were operating in a noisy environment (by this time the average American consumer was exposed to between 300 - 700 pieces of marketing in a given day, depending on which report you read).
It was becoming harder to stand out.
Decision fatigue was starting to set in for some customer segments and they valued the brands that would sift through the muck and only show them the most relevant things.
Curation became mainstream and the best brands grew their base on the promise that they would only show the things that you would love. And they would constantly improve their recommendations on the basis of your behaviour. This is where businesses with sophisticated recommendation engines, like Spotify and Flipboard made inroads into the market.
For a while, everyone was happy again.
Phase 3: Perfect Choice is King (2013-)
We’ve reached a time when Big Data isn’t just a concept, it is fundamental to how technically mature an organisation can be. Content Marketing is a regularly talked about topic for CMOs. There is a very real battle on to own as much unique content as possible. Customers are exposed to an extensive amount of marketing every day, on all devices – mobile, tablet, desktop and wearable. Decision fatigue has well and truly set in.
We are slowly reducing the choices offered, until we reach the point of singularity, i.e. perfect choice.
To succeed in such an environment, the following must happen:
- Your analytics and data maturity must be top notch.
- You must understand your most engaged customer segments and produce content that matches their engagement cycle.
- Lastly, (and definitely the most difficult to achieve) you need to have your customers’ trust.
Organisations that achieve the above have an opportunity that no one else has. They have the ability to offer perfect choice, which in turn gives opportunities for building even greater trust.
Could we see a day where Coursera tells you which course you will be signing up for next?
Or Amazon puts the next book you should be reading directly on your Kindle?
How your customers choose is changing. Are you?
