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Updated Apr 01, 2024

The Psychology of Choice: How Your Business Can Leverage Customer Decision-Making

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Jamie Johnson, Contributing Writer

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Imagine you visit two different websites for companies in the same industry. One offers you three choices, while the other presents 15 varied options. Which website do you think will perform the best? Though it seems counterintuitive, the website offering fewer options will likely perform better and successfully convert more visitors into customers.

We may think we must provide many options to ensure an optimal customer experience, but too many choices can lead to overwhelm and analysis paralysis. According to the psychology of choice, the more options we have, the less likely we are to make any decision at all. As a business owner, you can learn to use the psychology of choice to your advantage. We’ll explain how to leverage the psychology of choice so consumers are comfortable taking action.

What is the psychology of choice?

The psychology of choice is the concept that the more options we have, the less likely we are to make a decision. This term was coined in 2000 by psychologists Sheena Iyengar and Mark Lepper and was made famous by a study evaluating consumer choices.

In their experiment, Iyengar and Lepper presented shoppers with 24 jam varieties, giving them a taste test and a $1 coupon off any jar. In a separate test, they gave shoppers six varieties of jam, offering taste tests but no coupons.

Surprisingly, shoppers visiting the larger display were one-tenth as likely to make a purchase.

Since Iyengar and Lepper’s landmark study, ample research has shown that when it comes to consumer choice, fewer options are actually better.

Here’s what can happen if there are too many options:

  • Customers fear making the wrong choice.
  • The decision becomes more complicated.
  • The plentiful options trigger the urge to find additional options.

Though it may sound counterintuitive, consumers faced with too many choices are more likely to walk away than select an option.

Bottom LineBottom line

Iyengar and Lepper’s study found that too many choices can derail the customer journey. Customers are actually happier with their choices when given fewer options.

How does customer decision-making affect your business?

It’s in your company’s best interest to simplify your customers’ decision-making process. Your customers want options, but if you give them too many, they may be unable to make a decision.

The decisions your customers make will significantly impact your company’s profits. If you offer too many products or services, your customers may have difficulty understanding which one is best. If they can’t choose, they may turn to one of your competitors with fewer options. 

Here’s another example: Let’s say you give your customers too many options for contacting you. If you give them 10 different ways to reach you, they’re likely to avoid reaching out at all. This can hurt your credibility and company reputation.

10 ways your business can leverage the psychology of choice

It’s crucial to offer your customers the choices they’ll best respond to, but you may be concerned about overwhelming them. Fortunately, there are ways to leverage the psychology of choice to your business’s — and customers’ — advantage.

1. Eliminate unnecessary choices for your customers.

Evaluate your product and service offerings, and ask yourself what you can afford to eliminate. How can you streamline your current options to make the user experience more laser-focused and increase sales?

For example, an Italian recipe blog reduced its myriad options on two different pages. This small change increased the blog’s click-through rate (CTR) from 2.7 to 12.3 percent on one page and 3.6 to 11.5 percent on another.

2. Create clear categories for your offerings.

If you have an online store or many products and services and can’t eliminate choices, try creating clearer categories. Consumers are more likely to understand multiple categories than many individual choices because categories help them narrow their options.

TipBottom line

Customer analytics show that customers may be more motivated to buy when faced with scarcity. For example, if your store carries a limited number of products, customers may purchase an item so they don’t miss out.

3. Don’t present more than five options at a time.

Studies are somewhat mixed on how many product choices to offer at once. Some say no more than two or three, while others say the sweet spot lies between eight and 15. This variation is likely because the ideal number will depend on your specific products and target audience. As a result, we suggest narrowing your customers’ available choices to five at a time. Any more than that, and you risk overwhelming them with options. 

4. Provide a default or suggested option.

It’s your job to help customers focus and make the best purchase decision. However, being pushy doesn’t work. Instead, offer suggestions when presenting options. Provide default or suggested options that make sense for most users, so customers feel comfortable that their choice is standard and optimal.

Even better, add an element of personalization to your customers’ options; they’ll feel seen and know that you understand their needs. A PwC survey found that four out of five consumers are willing to share personal data (e.g., email address, birthday and age, and sex/gender identity) for a better purchasing experience.

5. Provide social comparisons to help narrow customer choices.

Customers want to know what products others have bought and enjoyed, so social comparisons are effective. Amazon does this well by showing related products that people like or buy:

Amazon comparison

Although Amazon has thousands of products, this feature filters its many options to help consumers narrow down their choices.

6. Simplify your website to streamline the customer experience.

When evaluating your website design, only include essential content on your pages. Don’t offer all your options and information on one page. Consider one or two goals you want to achieve from each page and focus on achieving those goals.

For example, when you start a Google search, you go to a streamlined page with only a search bar. This is one way the search engine drives users toward its intended usage.

Did You Know?Did you know

The About page is one of a website’s most frequently visited pages. A personal, likable and believable About page helps customers feel more comfortable buying from you.

7. Provide three pricing options.

While you don’t want to flood viewers with options, giving them a few options will appeal to their desire for choices and possibilities. When selling product or service packages or tiers, experts advise offering three pricing options to create an instant comparison model. People will usually choose the middle package.

Price tier comparison

Instead of comparing your product or service to another product or service, consumers can compare your three pricing packages, increasing the odds they’ll eventually purchase from you.

8. Choose times intentionally to send correspondence.

If you’re sending promotional offers via email marketing, send them earlier in the day. HubSpot research found that the best time to send marketing emails is between 9 a.m. and 12 p.m.

People must make a combination of simple and complex decisions throughout the course of the day, so they have less mental energy for making decisions toward the end of the day. Ensure your message hits them when they’re most receptive to choosing your company.

9. Present one offer in emails.

Time and time again, expert marketers have emphasized the importance of making just one offer when sending out email marketing campaigns.

When you think about the psychology of choice, it’s easy to understand why a single offer is more powerful than multiple confusing options. Emphasizing one product, service or offer helps the buyer decide without getting caught up in too many choices.

10. Understand that less is more.

Want a quick way to increase your conversion rates? Make the choices easier for your customers. Keep things simple. Less is more.

Focus on how you can reach more of the same customer type. Determine how you can better cater to your target audience and increase the authority and perceived value of your products or services.

Don’t expect customers to do the work. Instead, use these tips to help customers overcome their fears and leverage the psychology of choice to encourage them to make firm buying decisions.

Skye Schooley and Aaron Agius contributed to this article.

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Jamie Johnson, Contributing Writer
Jamie Johnson is a Kansas City-based freelance writer who writes about finance and business. She has also written for the U.S. Chamber of Commerce, Fox Business and Business Insider. Jamie has written about a variety of B2B topics like finance, business funding options and accounting. She also writes about how businesses can grow through effective social media and email marketing strategies.
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