When we think about scaling a business, we typically think more, bigger, better. But is expanding always the right decision?
Believe it or not, that answer is no. Sometimes decreasing the number of products or services in your offering can be the best strategic decision to help you grow as a business.
Less Is More
At first it can be hard to swallow the notion that fewer options are better, especially in certain industries where choice is considered a necessity.
Take grocery stores, for example. You’d think that when it comes to grocery shopping, more options would without a doubt be more preferable to customers. But in many cases the opposite has proven to be true.
Ever been to an Aldi grocery store? Built on minimalism, the typical Aldi location stocks just 1,350 products—a mere five percent of what a typical big-box grocery chain carries. Despite its limited product offering, though, the retailer was recently named the best grocery store in America. How?
Fewer products mean a leaner operation. Aldi can beat its competitor’s prices because its overhead is lower and change can happen faster. Not to mention that a lower number of products means marketing is simpler and less square footage is needed for each store. It’s a win for both the customer and the company.
A widely cited study supports the ‘less is more’ theory by describing the concept of choice paralysis.
Researchers set up a sampling station outside a busy grocery store where shoppers could taste-test different flavors of jam. In two different testing sessions, researched offered either 6 or 24 flavors of jam to choose from.
Customers given more jams to choose from would surely be more likely to find one they liked and buy it, right? Well, not so fast. You can probably see where this is going.
When 24 different jams were offered, more people tried samples, but a mere 3% of them actually purchased something. The results were staggeringly different when only 6 jams were offered, with 30% of the people making a purchase. That’s ten times more sales simply by offering fewer choices. Pretty crazy results!
The researchers surmised that contrary to popular belief, too many options are actually a bad thing and can cause customers to become overwhelmed.
Finally, more choices increase the buyer’s perceived risk.
As researchers explain, when a customer is confronted with an overwhelming number of options, they experience something described as ‘high cognitive load.’ In layman’s terms, it’s the feeling of, wow, there are a lot of choices here. I should probably do more research to make sure I pick the best one.
Since there are so many options to choose from, customers infer, there are many more opportunities to make the wrong decision, which can hinder their follow-through with making a purchase.
We’ve talked about the benefit of fewer products from the customer’s perspective, but what about for your business?
When you offer fewer products, a few interesting things happen.
- A Narrowed Focus
Fewer products mean a more defined niche. As the old saying goes, the riches are in the niches.
When you niche down, you’re able to speak to a more targeted audience. A more targeted message is always more successful than a broad one because it speaks directly to the customer’s needs.
- A Sharper Vision
A strong, cohesive brand vision is a critical element for business success, yet when you sell a few dozen or a few hundred different things, it’s easy to lose sight of the broader vision of how they all fit together.
Cutting your product or service offering allows you to get laser focused on the meat of who you are and what you do as a company, which will lead to better and clearer strategy decisions.
- More Sales
Finally, the thing we’re all looking for: increased revenue.
Numerous case studies show that when it comes to ecommerce, fewer calls-to-action on the page = more conversions. In real-world terms, think of your products as the calls to action. The fewer there are to think about, the more focus can be placed on hitting the checkout button.
Offering fewer products isn’t for everyone; if your business is growing just fine with a wide array of options, great! But if you’re finding difficulty zeroing in on your target audience or scaling your growth, consider the possibility that less might be more.
Do you offer few or many product options? Leave us a comment and tell us why it works for your business.
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