Freedom of choice is a privilege that we all feel should be afforded to us. However, some in society think we sometimes have too many choices and we often use these numerous options to make choices to harm ourselves; whether mentally, physically, financial or so on. Do we as a society need to enforce paternalism in the business environment just as the government does in our personal lives? Sheena Iyengar made some very good points with the fact that we as a society seem to think we want the ability to customize experiences and products at our discretion. But the question is this, and it would make a good research topic, “what is the failure rate when we are given the opportunity of hundreds and hundreds of options?” I never gave this any consideration until seen Sheena speak on the subject. Nevertheless, this subject has stared me in the eye even as a child and I never even knew it. Background: When I grew up, my father painted cars for a living and I often worked in his shop. Every week I could remember someone coming into his shop and wanting some exotic paint scheme and color on their car. Many times he would try to talk them out of it, explaining that it was very expensive and if they did not like the color, it would cost them double to have it repainted, but quite often his words of wisdom came with little persuasion. Bottom line is most of them admitted they made a mistake when they saw the final product and ended up choosing one of the colors he suggested earlier.
Sheena Iyengar explains how the businesses environment (and sometimes our personal lives) can improve the understanding of choice. Her perspective on how choice overload rang a bell with me. I now think about how many times I have visited a new restaurant and the menu was busy with numerous items to choose from which in turn caused me to take longer to make a choice. On the same note, when the menu was small and very select what were the time results? I can personally recall the time was quicker on the limited menu. She suggests several ways of assisting us improve our experience in choosing.
1: Reduce the number of choices, “cut, cut, cut”. This might sound counter to conventional wisdom, but she points to business cases (grocery store study) where reducing the number of products on the market actually improved profits for a number of brands. From a professional organization perspective, I work for the government and their retirement plan and the Thrift Savings Plan (TSP) that is offered is very limited in choices. Although limited in choice, over 100% of employees are enrolled in the federal retirement plan; and over 90% of federal employees participate in the TSP with little complaint. I also relate back to my childhood story I mentioned earlier in this blog. They problem is sometimes society does not want limited choices, whether it is good for them or not. They would rather learn through trial and error than have someone take the ability of having many choices away from them.
2: The next option is referred to as “concretization…in order for people to understand the differences between the choices, they have to be able to understand the consequences associated with each choice.” Sheena addressed the financial side of our lives for this option. I can personally relate to the use of the debit card versus carrying cash. I am aware that I am an impulse buyer. Knowing this, I do not carry a debit card and barely carry my credit card around. Knowing I only have limited cash in my pocket, I find myself walking away (not buying) from items I want but do not need, thus saving money. At the same time, I watch co-workers purchase every little thing under the sun with their debit card, even if they already have it at home. It seems like because they have an unlimited choice to use the card, they do. Sheena’s main point in this section focuses on consumers thinking about their retirement savings. She discusses how ING found that they could entice more people to enroll in a 401K program by getting them to focus on the longer term benefits. This is helpful to getting them to buy-in. They say a picture is worth a thousand words; and ING figured out how to help employees see the picture to assist them in their choices. Without this image, on paper the 401K program was hard to appreciate. This also relates back to me as a member of an organization. Referring back to the TSP, there are less than six options to choose from in the program. Each option is not only explained, they provide a performance history of each one while providing software that gives you a performance prediction for the future; thus assisting you in understanding the consequences associated with each choice .
3: Putting choices into categories which assist users better handle the number of choices. Sheena provided support for this thought process in a magazine rack experiment. The final result of the research noted that consumers considered 400 magazine titles broken into 40 categories to be a larger selection (and therefore a better selection) than 600 titles broken into just 20 categories. This makes me wonder about the operations of car dealers. Sheena used this similar example for the fourth choice, but I also see it for the number of choices. Have you ever noticed that some dealers have hundreds and hundreds of cars on the lot while some are specialty shops that only deal in certain models and brands (ex. Sport cars only)? I wonder what would be the visitor to sale ratio if you could compare the two. (Something to think about)
4: Last but not least “condition for complexity.” This refers to the amount and complexity of choices we need to make every day, while analyzing the steps by which we need to make them. Something as simple as going to Baskin Robbins Ice Cream or eating at your favorite buffet can drive some people crazy. The same goes for kids in a candy store. Next time you are there, watch how people will become overloaded as they have to choose how to build the perfect sundae, pick the right choices for their plate or even choose the right bag of candy. By the way Dairy Queen makes an awesome banana split and it is only made one way. When deciding on such item and options, I agree that it needs to be kept simple, having consumers make the easiest decisions first and then increasing the complexity, will eliminate frustration.
So for me the million dollar question is how can you improve your ability to decide? The answer is simple in many ways: prioritize needs before wants, what gives you the best bang for your buck in the long run, and finally did you provide yourself with enough time to consider all end possibilities…if you didn’t take more time. Good luck on your decision and be grateful you live in a country where you have options for your decisions
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