You’ve probably heard of Sheena Iyengar’s famous “jam study.”
She and her fellow researchers at Columbia Business School set up a tasting booth near the entrance of a store, putting out either six different choices of jam or 24 choices. They found that people were six times more likely to buy a jar of jam if they had only six choices versus 24.
What are the implications for business leaders? Iyengar has observed three major negative consequences to offering too many choices. First, people are more likely to procrastinate in making a choice. Second, they tend to make worse choices. Third, they’re more likely to choose things that make them less satisfied because they can’t effectively compare and contrast when there are so many options.
She proposes four simple, tested techniques you can apply in business:
1. Cut. Example: Procter & Gamble cut its Head & Shoulders line from 26 products to 15 and saw its sales rise by 10%. More dramatically, when Golden Cat Corp. eliminated its 10 worst-selling cat litter products, its profits rose 87%.
2. 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,” Iyengar says. And those consequences need to be felt in a concrete way.
Example: In a study with ING employees, Iyengar toyed with the way employees were told about their 401(k) plan. The information session was the same as usual, except they asked people to think about the positive things that would happen in their lives if they saved more. Enrollment went up by 20% and contributions higher.
3. Categorization. “We can handle more categories than we can handle choices,” Iyengar says.
4. Condition for complexity. Start people off by presenting information where there are fewer choices to make, so they learn how to choose. Build their engagement, then gradually move them toward more complex choices.
“It turns out we can actually handle a lot more information than we think we can,” she says, “we’ve just got to take it a little easier.”
— Adapted from “How to make choosing easier,” Sheena Iyengar, TED.