The Effect of Too Many Options On Customer Decisions

I recently read an article in the business magazine, Fast Company, that talked about the impact of too many options and choices - in essence, too many decisions - in our lives, which may sound like a good thing, but in reality can sometimes paralyze customers in their decision-making efforts.

Case in point: When I was a REALTOR, if buyers were presented with too many homes at one time (either on paper or in person), their decision to buy was hampered at multiple points, and by several factors:

Information overload. With too many choices, buyers couldn't decide where to begin or how to limit visits to the most appropriate homes. Of course, I could help them by highlighting price points, features, convenience to their desired work or school locations, etc. However, if too many choices still existed that fit all those criteria, it remained difficult for buyers to limit what they saw... and their ability to decide to buy.

How to overcome this issue: We must help buyers by listening carefully to their needs, selecting several great options based on those needs, and holding other options in reserve - to be brought out only if the first set of options doesn't work for them.

What if there's something better out there? No matter how many options a buyer is shown, something nicer, bigger or better will always come along. This doesn't mean that they could (or even should) buy it, but the possibility of buyer's regret often rears its ugly head and paralyzes buyers because they're afraid of buying the wrong item - or that the perfect item will appear the day after they buy their chosen one.

The decision-making ability of your buyers can be stifled because they're convinced that the "best deal" is right around the corner ("If there are this many great options now, just imagine what's coming!"), causing them to lose out on a great deal right in front of them.

How to overcome this issue: We must help customers understand that simply because something nicer/newer/better may come along later, it doesn't mean they're not getting a great deal now. I find it helpful to draw parallels to similar situations that have probably occurred in their life, using stories they can relate to in order to demonstrate this phenomenon's occurrence in other areas of their lives. One great example is that of advances in technology, which occur so quickly that our new, cool laptop is obsolete and overpriced about 3 months (sometimes 3 minutes!) after we purchased it!

I shouldn't buy the first thing I see. While it is prudent to do your homework and research your purchases, sometimes the first home a buyer sees (or the first offer a seller receives, or the first "whatever you have to offer in your industry") is the best one and should be acted upon.

When options are limited, whether due to the current market (such as when real estate is booming), high demand (such as when everyone must buy a "Tickle Me Elmo" doll for their child or grandchild at Christmas) or when a product is new (as with the iPhone last year), buyers have no problem making quick decisions - whether it's the first thing they see... or even the ONLY option available!

But when options are plentiful, inventory is high, or time is not of the essence, buyers are sometimes stifled, allowing great deals to slip through their hands, simply because it's the first one they see.

How to overcome this issue: Be sure to highlight the benefits of acting on the purchase being considered now. Asking buyers what their current situation is costing them helps them put a value on the solution being offered. In addition, putting a time limit on an offer, or offering it exclusively to a particular group helps buyers make the decision to buy. There are many options available to help you limit the offer, let buyers know that time is of the essence, or limit inventory in order to take advantage of the principles of supply and demand that will help you prosper and your buyers win.

Obviously, we should never limit a customer's choices based on our needs and desires, nor can we make decisions for them. But when we focus on and offer appropriate choices, clearly articulate the value and benefits of acting in a timely manner, and communicate those benefits through stories and parallels our customers can understand and relate to, we create a win-win situation... and make the decision-making process easier and quicker for all involved.

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