- October 10, 2013
- Posted by: Paul Foster
- Category: Grow a Business, Innovation in business
I just read about an interesting experiment where fewer products produced more sales. It was in Dan Pink’s great book, To Sell is Human.
The experiment was done by Sheena Iyengar (Columbia University) and Mark Leppar (Stanford). They first set up a booth selling 24 different types of jam and tracked how many people stopped to consider a purchase and how many actually purchased. This would allow them to calculate the conversion ratio from opportunities to actual sales as a percentage. Three out of every hundred or 3% converted.
Then they reduced the offering to six types of jam. While the total opportunities did go down, the conversion ratio on the opportunities to sales went from 3% to 30%!
Wow! This is very interesting.
So how many different products and services does your business offer? Is it too much?
The idea of reducing the number of choices has additional benefits:
– It would simplify product knowledge training, inventory requirements and sales and marketing support materials.
Imagine a restaurant that only offered six items on the menu. Think how much easier it would be inventory, prepare and serve only six different plates?
If you are a manufacturer, surely making only 6 items would be far more efficient than making 26 different products?
It seems your customers still need choice, but too much could just be confusing enough to stall the purchase decision.
It is worthwhile exploring this possibility for your business. We would be glad to assist you if you are interested. Meanwhile, we will be reviewing our offering of products and services to practice what we preach!