What every business owner should know about the paradox of choice

November 26, 2013

Offering your prospects options can help you win business—but only if you know the right way to do it. A great example of the difference between the wrong way and the right way to offer choice comes from a graphic designer friend of mine named Bridget.

Bridget, who was new to freelancing, got introduced to the owner of a small health supplements company who wanted help with the launch of a new product. Eager to win the business, Bridget proposed a number of ways she could help—from consulting on the overall marketing strategy to just creating the packaging, with a few mix-and-match options in between. In all, she ended up sending him a proposal that included seven different options.

The prospect initially loved what he saw and thanked Bridget for the quick turnaround—even saying he appreciated all the options. He promised to get back to her in a week.

No call back

After not hearing from him, Bridget followed up. Her prospect told her he still hadn’t made a choice, adding he needed more time to decide which way he was going to go.

Bridget, who worried he might go with one of the other vendors competing for the business, called me looking for advice.

A famous experiment

After she filled me in on her story, I guessed that her prospect’s delay was due to something psychologists call the Paradox of Choice. The paradox was named after a famous experiment done in supermarkets in the late nineties by Sheena Iyengar, a professor at Columbia Business School. The experiments involved, of all things, jam.

In some cases shoppers were presented with 24 varieties of jam to choose from, but only six varieties in others. They overwhelmingly stopped to check out the 24-jam display—meaning they were definitely interested in the variety. But, when it came to actually making a buying decision, ten times more shoppers purchased from the reduced, six-jam selection.

Too much of a good thing

It turns out that customers like the idea of choice, but as options multiply most find actual decision-making more difficult. More choice means more work. It means more time invested, more effort and often more stress. The jam experiment shows that the effort involved in making the right choice often outweighs the benefit of having more freedom in the first place.

In my experience, if you’re a service provider, offering three options is usually ideal. That gives the prospect enough flexibility, without overwhelming or even paralyzing them.

After Bridget and I talked, she called up her prospect and reviewed with him the three best options she had proposed. After running through the benefits of each, her prospect finally chose one of her options.

The Final Word

It’s tempting to offer prospects options for all the various ways we can help them. But covering off all the bases usually means you don’t even get in the game. The best approach is to recommend three solutions because the prospect is more likely to choose one of three options, rather than one of six or more.

More great ideas to grow your business

Discover how to use the science behind making connections with clients to grow your business.

Find out why offering choice is one of the keys to earning more for your services in Breaking the Time Barrier: How to Unlock Your True Earning Potentialthe ebook that was downloaded over 100,000 times this past summer.

about the author

FreshBooks is the #1 accounting software in the cloud designed to make billing painless for small businesses and their teams. Today, over 10 million small businesses use FreshBooks to effortlessly send professional looking invoices, organize expenses and track their billable time.