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Reduce choice to increase sales

West-elm-chapel-St-productonline-300x200It’s counter-intuitive, but a reduction in choice, options and range can often lead to increased sales and customer satisfaction. Who would have guessed?

Simplified, narrower product ranges are contributing to accelerated customer and corporate purchase decisions, improved productivity, velocity and volume, and interestingly, fewer instances of buyer’s remorse.

Marks & Spencer in Britain has taken the plunge, and has been rewarded with enhanced performance outcomes. They simply followed the lead of several national coffee lounge networks that introduced a singular, standardised ‘medium’ sized cup of coffee, regardless of whether a customer was chasing a latte, cappuccino, macchiato, or something else. And some fast food outlets are following suit with a single size burger.

Consumer responses have been overwhelmingly positive – queues at the ordering counters have shortened and the speed of service improved. There has been some resistance though. Custom has been lost to those who preferred smaller or larger options.

However, that leakage in sales was not because of the reduction in the number of choices. It was a disagreement with the single choice imposed by management. There is little evidence of long-term brand damage or negative sentiment about quality or value

Simplifying the buying process has long been valued by customers as it fulfils the demand for convenience.

Moreover, the policy can be an effective means in the market positioning of brands, companies, products, services or applications. Importantly, it can be, and has proven to be, an effective manner to differentiate from competitors and substitutes.

Single-brand new motor vehicle dealerships consistently attain and maintain higher key performance measures than multi-brand outlets. That is important in an industry where much of the ‘shopping’ is done online, and the average time spent on the forecourt of a new vehicle dealership by intending purchasers is as little as 46 minutes. One outlet visitation is now the industry norm.

Simplifying the buying process is often rewarded with typically higher conversion rates, and volumes. Narrowing the range of available throat lozenges from an average nine to just three at the pay consoles of service stations did not discerningly affect sales. Moreover, the sales from the resultant available space with alternative products were attractively high.

Hardware, electrical appliance and toy retailer references to having and promoting, the biggest range is seldom attractive to an individual, whose needs will usually be fulfilled by one product, service or application – the right, specific product, which they have visited the store to purchase.

Choice is, and should be, a measured and subjective assessment based on research, intelligence, judgement and experience.

Astute business owners and managers are taking the risk of narrowing stock ranges, brands and sizes. They are tolerating some leakage of revenue, but welcoming the increase in profits, customer satisfaction, productivity, velocity and volume.

The measurement of stock turns is an established monitor of business efficiency. Sadly, too many people in commerce are unaware of the principle, and therefore do not monitor and quantify sales and profits performance.

Narrowing and simplifying choice, appropriately applied, can reduce inventory, shrinkage, insurance premiums, logistics costs and capital-servicing expenses. All-round, it is an attractive proposition.

Fear of the possibility of losses in marginal and incremental sales to isolated and tertiary customer groups can and does induce inertia. Decisions have consequences – good and bad, upside and downside. Those seeking to service and satisfy heighten their chances of failure. The alternative is to identify, isolate, analyse and relate to choice customers and choice clients. Most have narrow and specific preferences. 

Barry Urquhart runs Marketing Focus and is a business strategist, consumer behaviour analyst and keynote speaker. He can be contacted at Urquhart@marketingfocus.net.au or on 0419 835 555. 

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