June 23, 2015

Three steps for retailers to reduce the burden of choice for their customers

Hani Movahed

Head of CEM Advisory, Tieto

For years, research has shown how confused and frustrated we become when faced with too much choices. So, why aren't retailers working to simplify the shopping process?

Back in the mid-1990s, Procter & Gamble embarked upon a massive push to reduce the number of different items it was selling. In hair care alone, it almost halved the product lines of brands like Head & Shoulders. And yet, to the surprise of some suspicious execs, sales per item in that market segment more than doubled.

One of the reasons Procter & Gamble's strategy paid off was that it recognised how shoppers react to a surplus of options: they feel confused and frustrated rather than liberated, and spend less as a result. This phenomenon would later be explored in Barry Schwartz's 2004 book, The Paradox of Choice, which gave us the maxim: "The fact that some choice is good doesn't mean that more choice is better."

Fast forward a decade, and the retail industry has still yet to act on Schwartz's insights. We continue to see more and more options added to stores all the time, and the process of choosing grows more and more complicated - we research on our smartphones, read peer reviews, start conversations in social channels and so on.

There's a huge opportunity for retailers today to simplify this process, and it isn't necessarily a question of cutting inventory and risking lost sales. Instead, by bringing the right data and technology into the store, they can empower shoppers and salespeople to filter out redundant options based on their individual wants and needs.

Step one: Exposing social media conversations in store

Some retailers will claim it's the role of their salespeople to guide customers towards the right products. Today, though, the consumer's key locus of trust isn't the person wearing the logo - it's the wider network of peers and influencers they're connected to on social media.

The first step, then, is for retailers to expose these conversations in store - to show customers how their peers review certain items and what the trendsetters of the day are talking about. Not only will shoppers feel better-informed of the general consensus on a product, but they'll start to trust that the retailer is transparent and well-intentioned, too.

Step two: Sharing customer purchasing behaviour

Next, retailers should supplement this social media chatter with more structured, internal data on the specific experiences of their customers. What are their stated needs when they enter the store? Which items are they most likely to buy? And how do they feel about the purchase afterwards?

Today's consumers are typically willing to share their experiences with a product, whether positive or negative. By listening to what these individuals have to say, retailers can capture and share this insight with customers who want to recreate their peers' positive experiences.

Step three: Guiding the customer in the right direction

Finally, retailers should proactively guide individuals towards the right products. Using the insight described above, they can automatically filter out options that are redundant and transport the shopper to the point at which their power of choice becomes meaningful.

Let's say you go to buy a phone and your main requirement is to be able to type quickly. Rather than present you with their entire inventories or the subjective opinions of their sales staff, retailers should be able to show you the phones that are most commonly purchased by others with the same needs. Of those, they should be able to show you the ones that attract the highest review scores and fewest complaints in social channels. And then they can hand you two or three models to try out for yourself.

The average consumer simply can't compare 100-plus products in their head while browsing in store. Grocery shopping is a good example - with as few as five or six options in front of you, it can become difficult to recall nutritional information from one to the next. However, if retailers can generate a shortlist based on your predicted wants and needs, the process becomes much simpler.

Thanks to assisted sales technology such as in-store tablets and touchscreens, each of these steps is in reach of retailers today. In the long run, they may even be able to stock less and ship less, cutting costs and becoming more environmentally friendly. As long as they reduce the burden of choice that leads to frustrated consumers leaving stores empty-handed, they'll still be able to sell more - and to a more loyal customer base.

You can read more about Tieto Customer Experience Management here.

Read our study about digital CEM in the Nordics

Read how decision makers in Finland, Sweden and Norway see CEM, now and in the coming years. A Tieto commissioned study with 320 c-level respondents in retail and financial services.

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