Book Reports, Seminars, Presentations

Is it possible to increase sales and profit by reducing the number of products/services offered?

Recently I was asked by my wife to buy some tea. Not being a tea drinker I was unaware of what I was about to face when I got to the tea aisle in the supermarket – there were so many choices of types and brands of tea (and that is ignoring the iced tea) that I simply did not know which one to choose. I don’t know about you, but facing that much choice was daunting.

If it wasn’t for the mobile phone I would have walked away and not bought anything, and instead returned home to ask my wife which tea she wanted to buy it later.

As a consumer, too much choice can lead me to (as well as any potential customers) 1, delay choosing (maybe indefinitely); 2, make a worse choice; or 3, choose things that make me less satisfied.

This means that as a business owner, you have to be careful about adding on new services or products for your customers because too much choice can translate into less sales and/or profit.

A good example of increasing profit by reducing the number of choices is when Steve Jobs returned to Apple for the second time, he returned to a business that had 350 product lines and was bleeding hundreds of millions a year. Steve Jobs slashed the product lines down to 10, narrowed the company's focus and presided over a new marketing push to set the Mac apart from Windows - all of which led Apple to briefly surpass Exon Mobil as the most valuable company in America by mid/late 2011!

So is there a way to manage the number of choices you give your customers to help ensure you do not hurt your sales or profit?

Of course there is! Recently we saw a video on TED talks, presented by Sheena Iyengar, that addresses that very issue. In that video she offered the following four strategies to make choices easier for your customers:

1. Reduce the number of choices your customers have to make and get rid of all non-essential and unnecessary options which should lead to lower costs and increased sales.

2. Make it vivid so your customers can understand the differences and the consequences of each choice.

3. Create categories to help reduce the number of choices your customers have to face.

4. Prepare your customers for more choice by starting easier and offering them products or services with a low number of choices, and move into products of services that have a higher number of choices.

By managing the way in which you offer and present choices to your customers, you can maximise your customers purchasing experience and with that your own profit.

Brydon Davidson
January 2012

Acknowledgements: Sheena Iyengar: How to make choosing easier, TED talks, January 2012