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

by drjim on December 9, 2009

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?

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What We’ll Be Talking About Next Time

Fire your customers! Well, not all of them of course, but at least the ones that you really don’t want to have. As product mangers we all like to brag both internally and externally about how many customers are using our products. However, the dirty little secret that we don’t share is that all customers are not created equal. In these tough economic times we should finally get around to firing the bad ones…

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{ 4 comments… read them below or add one }

Young December 14, 2009 at 4:17 am

success has its own ways, you have to find out it before you succeed.

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Chuck Flagg December 14, 2009 at 2:27 pm

This is a great post. I will probably use this and link back in a post I am working on about using a travel consultant versus an order taker.

Kudos.

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Chris Haughey July 26, 2010 at 12:01 pm

Hey Dr Jim! I’m ferreting through your posts and enjoying the perspective. I have a few opinions on the Red Box.

First, if you knew that you had to buy groceries or stop at the corner store for something and you were interested in a movie, chances are good that you would rent one from the box instead of making a second stop. Chances are good that you would settle for what was in the box so that you wouldn’t have to make a second stop! Chances are also good that you would tell the person for whom you were renting the movie that you couldn’t find what they were looking for and this was the best alternative!

Second, there is a tremendous amount of branding in an obnoxious red box. You don’t even need to know the name of the company other than movies get spit out of a big red box at the grocery. This is similar to the branding of the ThinkPad in the late 90s. As the Brand Manager, it was a dream come true. The black box with a red dot, visually, had more brand recognition than any other computer. (Unfortunately, many didn’t know it came from IBM!) However, just like a grocery, you can count on movies to be there when you want them in a place where you would prefer to rent because of convenience. In essence, they are, just like the grocery, a logistics company providing lots of things quickly and conveniently.

Third, the red box fulfills its commitment to its customer. It doesn’t make grandious claims like having the largest selection. It is also very simple to use. What they don’t tell you, however, is the penalty for being late. That $1 movie can turn into $10 rather quickly.

To your point about an exhaustive feature-set, the ThinkPad in the 90’s had more functionality than most do today…still. It had a built-in pbx that permitted me to plug my phone into it, send and receive calls, capture voice-mail directly, all while I was on-line checking my mail. I recently had a Blackberry with this functionality. It’s very cool! How would you communicate this functionality to a public that was just getting into email and who could barely use a word-processing program? Also, during the same time period, I was forced to EOL and tablet PC with more functionality than what we are seeing today because the margins fell below 25%. Sure, it was a niche player at the time, but I lobbied against the EOL knowing that we were way ahead of the curve.

Thanks again Dr Jim.

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Dr. Jim Anderson July 30, 2010 at 4:54 pm

Chris: wow — thanks for the comments! The beauty of the Red Box is that they’ve actually taken a step back — they offer their customers less! As product managers it’s easy for us to always be thinking that we need to offer more, more, more. As you said, in this case its all about convenience — they may have made it even more convenient than Netflix…

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