How Your Customers Make Choices: A simple method of improving your offering – and your bottom line

By Wesley Found – President, Linborough Property Corp.

The Business Advocate, page 11 – Fall/Winter 2023 Edition

In another life of mine, I stumbled on an experiment about jams in a grocery store that stuck with me.

One day, at an upscale grocery store, customers would be greeted with a shelf of 24 different kinds of jam. Then on another day, at that same food market, only six different types of jam were on offer. Can you guess which display lead to more total sales? Suffice to say that less is more.

A more interesting finding is that participants of the day with less kinds of jam were happier with their purchase than ones who made a purchase on the plentiful options day. It comes down to a term called decision fatigue. With more choice comes a higher chance of choosing the wrong option.

None of us are immune. All of us are virtue signallers. From the car you drive to the shows you wear you are telling the world something about yourself – how you are one of us and how you are different. How we think others view our decisions is no exception. For myself there have been times where I have made no decision at all to avoid making the wrong one.

You do not want your customers to make the same choice with your product offering. Focus each category of offerings with only a few options. Your offerings are the business model. If they are complicated, then your operations will be, too. Simple means happier customers, lower inventory, easier administration and less staff training.

Within your simplified offering, make the number of choices an odd number. Research has shown customers also like odd choice sets. People’s eyes and desires tend to focus on the middle of the offering. We are taught these lessons from a young age, but we forget how to apply them into adulthood. Think of Goldilocks and the Three Bears. What porridge did they think was the best option?

When I owned restaurants, I put this into action. For a specific cut of steak, I provided three options. Small, medium and large size. Small size has a small price, signalling on budget. Large price signalled high roller. Medium price was happy in-between. Guess which option was the most popular? I knew this was going to be the case. I made the medium size of steak slightly larger than what I was able to sell in the past and made sure its profit margin was the highest of all options. The results of doing this across most of our offerings? I was able to improve our bottom line significantly and improve customer reviews while not changing our offerings. It just required repackaging them in a way where the dish I wanted to sell the most matched the way customers make decisions.

The best changes you can make in a business are often the simplest and most cost effective. To achieve you must know when and how consumers make choices. The best first step in this process is often found by asking yourself, friends and customers to walk you through how they decided on what they purchased in your business.

Hopefully this results in you offering more precise products and services in the future – and overall, less jam.