Are consumers suffering from analysis paralysis?
How organisations can respond to consumer indecision
Search for yoghurts on the web site of the UK’s largest retailer, Tesco, and you will be returned 762 possible choices across 38 pages. In the USA, Walmart lists 681 entries. Is it any wonder that consumers find themselves in a state of paralysing indecision?
A decade ago, American psychologist Barry Schwartz discussed how this phenomenon affected physical retail stores. Fast forward to today’s online shopping experiences and decision making is even even more complex, as customers are overloaded with information from recommendations engines, online reviews and indeed, their own search choices and social interactions. The paradox of choice has gone digital.
The consequences of this behavioural shift are profound, and not just for consumers. Retailer organisations face the challenges of working with an increasingly indecisive customer base, bombarded by information from every direction. With limited options, sellers can be left with the impression that shouting louder than the competition is the only way to get results, adding to the problem.
But is there a better way to operate? Can digital technologies be deployed to help people make better decisions, rather than restricting their ability to do so? The answer is yes, but it requires a different starting point. Consumers buy products for a certain price, they respond to place and promotion. But what digital brings is the potential for much deeper levels of engagement with customers, which is quickly becoming an expectation.
In the digital world more than ever, people buy from people and organisations that they trust. To understand what this means in practical terms, we can consider consumer buying decisions on two axes: the first being the frequency that specific transactions take place, and the second being their relative cost. So buying a house or a car happens less frequently, and a great deal more expensively, than buying a pint of milk.
It make sense that one-off, expensive transactions are more likely to benefit from a direct touch, while more frequent, less expensive decisions are more open to automation. All the same every transaction, however small, offers an opportunity to build a relationship and grow trust. Digital tools can support both deeper customer engagement and increased efficiency at the same time, meaning companies can push forward on both axes at the same time. As a result, organisations can make decision making easier for their customers, simplifying their customers’ lives and further increasing brand loyalty.
We can see how organisations are building on this: UK company Graze, for example, operates more as a subscription service than a retailer for its mail-order healthy snacks. By using digital tools, the company can maximise efficiency and therefore margins. At the same time, the organisation has worked hard to engage with its customers at a personal level. It includes nutritional data in every pack, and occasionally sends a simple ‘gift’ such as a cardboard Easter bunny. This is not a gimmick; rather, it gives the organisation a personality.
In the longer term, consumers will not give their loyalty to organisations that offer nothing in return. We may be moving into a ‘post-choice’ era but humans are not robots: they will continue to buy based not only on value, but also on their intuition, desires and emotional cues, rational and irrational. By recognising this fact, and by working towards building a personal relationship with consumers even if at a distance for lower-cost purchases, organisations can unlock decision making for their customers and grow their businesses as a result.