Winning in consumer choice.

The race for consumer choice might not be what you think

In common with probably most parents, I have often cringed when I’ve heard myself beginning a sentence with the words: “I remember when…” Usually to underscore how lucky my children don’t realise they are. On one such occasion, I regaled my reluctant audience with a legend about once having had only three television channels and recalling how excited we were when a fourth was introduced.

“Was that iPlayer?” Asked the youngest. I stared back blankly. “You had Sky and Netflix and Prime, and then you got iPlayer?” Defeated, I aborted the story and reminded him he had homework to do. “Simpler times, eh dad?” Smiled the eldest as he shuffled off. And he was right. They were. We could read the entire week’s TV listings in half an hour. These days it would take a week to read a list of everything I could watch in the next half hour. Which is why none of us does any more.

Most of us watch what’s suggested: by media, by friends, and increasingly, by Amazon recommends (other streaming services are available). Because, when it comes to what to watch on a wet weekday evening, we are, according to psychologists, overloaded with choice. This is an important phenomenon for businesses of all shapes and sizes to understand.

A true story to illustrate: one sunny Saturday morning in 1999, two American psychologists opened a pop-up in a large grocery store in Menlo Park, California, offering free tastings across a range of 24 flavours of jam. The following Saturday they ran the same pop-up, but this time with just six flavours.

Three percent of tasters in the first week went on to buy a jar. In the second week, thirty percent went on to buy. It’s worth ruminating on that statistic for a second. The purchase rate increased by a factor of ten when the number of options was reduced by three quarters. This isn’t a one-off experiment; variants of it have been repeated many times by many people, with similar results. The effect even has a name in psychology literature: choice overload. Giving people more choice reduces the likelihood they will buy. They don’t want more choice; they want better choices and fewer of them.

This is a problem that many businesses are starting to face as the digital world removes the constraints on their range and inventory, and the increasing demand for the new and bespoke drives proliferation ever onwards. The ability to curate choice to suit an individual is becoming an increasingly valuable competitive advantage. Those in field sales, particularly in solution-selling type environments, have known this intuitively for years, but the rest of us needs to quickly catch up.

For retail-style environments, the popular belief is that this need to curate choice can be met by Artificial Intelligence, by “machine learning algorithms”, and the race to get it right is being played out in real time on retail, media and social platforms around the world. But what they’re proving is that great curation is far harder than it looks.

Amazon Prime, for example, thinks I love old, black and white films and foreign language classics. And up to a point, I do. But those genres now dominate most of its recommendations, if I want to watch anything else I either have to fight the AI or, more simply, go somewhere else. Conversely, Netflix thinks I love the horror-thriller genre. I enjoyed Birdbox, so here’s a load of box-set series that are all roughly the same premise but just not as good.

The leading-edge developers are discovering that machines can quickly develop far deeper biases and prejudices than the people they’re aiming to serve. But watch this space, because once they find the right balance, they will change the game on choice, and most other consumer business will be faced with a simple choice of their own: fail or follow.