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Thatā€™s TMI! Information overload may be overwhelming your customers

buyer tactic price development price psychology psychology of pricing Oct 08, 2024
Woman feeling overwhelmed by the different choices around her

We often assume that the more information about products and their features is available the better. We might also think that the more customizations we can make to a product, the better. However, that might not actually be the case.

We process information either fast and automatically, or slowly and deliberately. Slow and deliberate thinking, called System 2 thinking, requires conscious effort and has a limited capacity. Due to this limit on how much information we can handle, System 2 thinking can lead to information overload.

 

How much information is too much?

Understandably, research hasn’t been able to find a specific number of how much information people can handle. Miller (1956) found that people can handle about 7 (+/- 2) pieces of information. On the other hand, Jacoby (1974) stated that people can handle about 24 pieces of information, most efficiently in the format of 6 brands and 4 features each.

Typically, the amount of information that people can handle depends on several factors, like the situation, and the person’s motivation and intellect. Sometimes additional information is also helpful, as it can help organize information (Korhonen et al., 2018).

If there’s too much information, it can lead to lowering customers’ motivation. In the worst case, this can lead to the customer deciding not to make a purchase at all.

 

What can you do to avoid causing information overload?

Sellers should make purchase decisions easy. This means sometimes compromising on variety and customizability to avoid overwhelming customers. Highlighting 2-3 main benefits of a product/service for different customer segments can aid in decision-making.

Let’s look at it from the example of a clothing store selling a T-shirt. While we might think that having as wide a range of colors as possible would be beneficial, it can make the purchase decision more difficult. In the worst case, customers might end up not buying anything. To avoid this, the seller should pick the best 2-4 colors into their selection. But how can you pick the right combination of colors? That requires the seller to truly understand the needs of their customers.

Most importantly it’s good to keep in mind that the brain avoids making difficult decisions. This is evident from reluctance to register for services requiring a lot of information and the low rates of people opting in and out of services. For example, some countries have high willingness for organ donations, while other culturally similar countries have low willingness. The reason for this is the type of questions used in asking for permission. Those countries that ask people to tick a box for becoming an organ donor have low rate. And the countries that are asked to tick a box for refusal have high rates. It seems that ticking a box requires a decision, it is easier for people not to tick the box, no matter the outcome.

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