Today we can buy products and services from suppliers all over the world. In one way, buyers have the pleasant position of being offered an enormous selection and great freedom of choice. But an infinite number of choices leads to a new dilemma: the problem of choosing.
The philosophers Friedrich Nietzsche and Søren Kierkegaard had already elucidated that the necessitation of free choice creates anxiety. The more choices and alternatives people have, the less time they have for making well-thoughtout decisions. And the more things there are to choose amongst, the more things must be rejected, with the risk of actually making the wrong choice.
Psychology professor Daniel Gilbert argues that the mental stress of choosing actually overshadows the advantages.1 In the beginning, having many alternatives is appealing, but the more choices one is given, the more negative feelings are evoked. This can be described as a paradox of free choice, where additional alternatives are not necessarily positive. Freedom of choice is experienced more like being forced to choose.
Let’s take an example from the B2B marketplace Alibaba. Say you are interested in buying an industrial scale and do a search on their website. The result is 66,000 products. This not only creates a challenge for sellers to reach the customer; it is also a demanding task for a buyer to assess and evaluate the different alternatives. Industrial scales have different characteristics, such as the size, color, material, electricity supply, display, data connection and accessories, as well as other product data such as capacity, accuracy, working temperature, certification, etc. Making an objective comparison becomes increasingly difficult, or approaches the border of being an impossible task, for a relatively trivial thing such as a scale. If instead this was about purchasing a mobile network or a complex consulting service, a comparison would be even more complicated.
In addition to time being a limiting factor, our brains have difficulty managing too many alternatives. “Miller’s law” says that humans’ working memory is extremely limited when making choices. This insight was presented in the book The Magical Number Seven, Plus or Minus Two, written by psychologist George Miller in 1956. His research showed that a person has the capacity to rationally compare about seven alternatives. Given more, we no longer make rational decisions.
To facilitate decision making, people create labels that categorize information, with the hope of being able to predict results. The brain can’t start from zero every time. Instead, it builds upon the outcomes of previous experiences. In this way, labels become shortcuts for creating meaning in complicated choice situations. These labels can take the form of, for example, known brands or concepts like “megapixels” for digital cameras. Labels like these are simplifications and don’t contain the entire truth, but can reduce the perceived risk of making the wrong choice.
Another consequence of the free-choice paradox is that decision makers tend to delay making decisions. They do everything to ensure that they have complete knowledge of all of the requirements and alternatives. But more available information results in more questions, more evaluation and longer decision-making processes – if one arrives at a purchasing decision at all. The results of several studies show agreement that an exaggerated number of alternatives strongly reduces willingness to buy, because of the decision-making paralysis that tends to occur.2
To be content with little is hard: to be content with much, impossible. | Marie von Ebner-Eschenbach, writer
Therefore, more choices do not necessarily mean more satisfied customers. Instead, marginal benefit decreases with every additional alternative, which eventually becomes a burden for the customer. It is in the bone marrow of sales representatives to be customer oriented and present different alternatives, and to constantly adjust one’s offers based on the customer’s wishes. One shares all imaginable information, relative data, commentaries from previous satisfied customers, and every PDF one has available. But is that sometimes doing the customer a disservice? According to a study of over 600 B2B buyers, this approach reduces the simplicity of making a decision by 18 percent.3 When asking senior managers which single word best describes complex purchases, the responses were words like “difficult,” “horrible,” “torturous,” “frustrating,” and “a mine field.”
Yet another negative consequence is the risk of “post-purchase anxiety” – anxiety over perhaps having chosen the wrong alternative. Research shows that such feelings occur in more than 40 percent of implemented B2B purchases.4 Sales reps can fill an important function of calming the customer after a contract is signed – anything to maintain a good relationship and further strengthen the brand. A wider selection can also create unrealistic expectations, that can prove difficult to live up to.
As a supplier, one can think about how many alternatives and varieties one offers one’s customers. Reducing the number of choices can be a business strategy per se. In addition to making it easier for customers to choose, this also reduces the complexity of the business through simplified administration, smoother logistical flows, and by reducing the need for innovation. One example of this is the food chain In-N-Out Burger, which only offers three different hamburgers, French fries as the only side, and a few drinks. The customer doesn’t have much to choose from but doesn’t need to experience selection anxiety either. A broader product portfolio doesn’t always equate with greater profits.
1 Gilbert, D.T. (2006). Stumbling on happiness. London: Harper press.
2 Barry Schwartz. (2006). More Isn’t Always Better. Harvard Business Review.
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3 Toman, N., Adamson, B. and Gomez, C. (2017). The New B2B Sales
Imperative. Harvard Business Review. Volume 95 (2).