February 8, 2010

Stop Giving Your Customers Too Many Choices — They Don’t Want Them!

Image Credit Too Many Choices Can Make Your Customers Decide Not To Buy

Too Many Choices Can Make Your Customers Decide Not To Buy

As product managers, we have somehow convinced ourselves that our customers both want and need more choices when it comes to our products. This thinking has allowed us to heap on more and more choices for our customers to make: colors, pricing plans, features, etc. However, it just may be the case that the one thing that our customers really don’t want is to have to make more decisions in order to buy our products.

Product managers at one company seem to have figured this out and they are using this knowledge to kick Netflix’s butt…

The Story Of The redbox

Once upon a time we all used to go to Blockbuster to rent our videotapes. Then DVDs came along and a little company called Netflix realized that they could send DVDs to us in the mail. Netflix’s product managers then proceeded to kick Blockbuster’s butt. Now there’s a new player on the scene: redbox.

There are more than 18,000 redbox kiosks out there right now. You’ve probably seen them because they seem to be everywhere: drugstores, grocery stores, and even in some McDonald’s restaurants. The company says that they are installing new kiosks at a rate of about one per hour.

redbox has come out of nowhere and has taken the video rental market by storm. They claim that they now own 13% of the total U.S. DVD video rental market. What did their product managers figure out that nobody else had realized?

The Secret Of redbox’s Success

If you’ve ever seen a redbox kiosk, you probably quickly realized that it has a petty poor selection of DVDs that you can rent. Each kiosk can only hold about 600 disks at a time. Each kiosk offers only 125-200 different titles — that’s a far cry from either a Blockbuster store or Netflix’s online catalog. And yet, it sure seems to be succeeding. What’s up with this?

What the redbox product managers have found is that consumers are being overwhelmed with so many choices that often we just simply choose to not buy anything at all. Limiting the number of choices that we have to make appears to be a big part of the appeal of the redbox product.

In the early days, the redbox product managers experimented with loading the kiosks up with a wide variety of different titles including classic and foreign films. What they found out from these experiments was that their customers really didn’t want more choices. What they wanted was some help and guidance on what they would enjoy watching.

Keeping It Simple

Due to where their kiosks are located, redbox doesn’t really want their customers to take too much time browsing: make a quick decision and then move on. Since redbox focuses on new titles, this helps keep things moving.

What redbox has done is to realize that new releases is what is going to draw in most of their customers. They have almost exclusively focused on these titles with their kiosks. This means is that they may be losing some customers who are looking for some of the “long tail” movies that are not so popular. So what: redbox seems to be doing quite well even without them.

What All Of This Means For You

Taking a step back and looking at what redbox has accomplished, we need to realize that there is a message here for all product managers. We like to fool ourselves into thinking that our customers will appreciate us giving them more options, but perhaps we’ve been wrong.

Life today is complicated for everyone including our customers. We like to add options to our products so that we can appeal to even more potential customers. Maybe what we should be doing instead, is simplifying how our products appear to our core base of potential customers and making it easier for them to buy our product.

This would require you to go back and look at all of the different variations of your product that you are currently offering. How many units of each variety are you actually selling? If you dropped the low performers, would you make your product more attractive to potential customers because it was less complex? This is a lesson that we all need to learn before our competition does…

Do you think that customers would buy more of your product if you offered them fewer options?