Relevance: The Remedy for the Paradox of Choice
Twenty-four years ago, psychologists Sheena Iyengar and Mark Lepper made a startling discovery in what is now known as the famous “jam experiment.” They presented 24 varieties of gourmet jam to a group of shoppers and tracked how many made a purchase. The next day, they presented only 6 varieties. The study revealed that those who saw 6 varieties were 10 times more likely to buy than those who saw 24.
It’s a phenomenon that still resonates today. For years, conventional wisdom would have us believe that more choice is the key to success and – for marketers everywhere – business, especially as technology makes more choice possible. But 24 years after the jam experiment, our increasingly commercialized world has only made the study’s counterintuitive truth even truer: Consumers are more likely to act with less options, not more.
That’s the guiding principle behind the “paradox of choice,” a term first coined by American psychologist Barry Schwartz. This concept holds that having too many options leads to distraction, decision fatigue, anxiety, and decreased satisfaction. When people feel overwhelmed, they might make choices they regret. Or worse yet, they don’t make any choices at all. Overcoming the paradox of choice is the guiding principle behind Rokt’s distinctive edge in ecommerce.
Solving the paradox is also why some of today’s biggest brands operate the way they do. When you go to Wendy’s, for instance, you get bundles instead of individual items. Baconater combo, Double Stack combo, Dave’s Triple combo: pick one and you’re done. When you’re not piecing together your meal, Wendy’s banks more rapidly – to the tune of $2.8 billion in 2023. Similarly, when you go to Costco, you’ll see only two options for peanut butter: Kirkland Signature or Skippy. A streamlined buying experience helps Costo rake in $460,000 in sales per minute.
The concept of “more is less” applies to ecommerce as well. When people are bombarded with choices as they check out, they’re likely to get frustrated and abandon the cart. Or they might get distracted and forget that they were supposed to buy something. Even if they make it through all that noise, they often walk away with a poor impression. No matter how you slice it, too much choice limits growth.
What consumers really want isn’t more choice; it’s more relevance. Smart businesses today know that when people receive only a few – highly relevant – offers, customer satisfaction rises.
According to the Harris Poll, 90% of consumers prioritize “relevant deals” when they shop. And when they find these tailored offers, 61% of shoppers actually “enjoy the feeling of adding a little something extra to my online shopping cart when I check out.”
Nowhere is relevance more powerful than in the Transaction Moment – that critical point when customers are already in the buying mindset and most likely to respond. When you serve relevant ads in the Transaction Moment, you’re removing the paradox of choice.
You’re delivering offers that matter at the moment that matters most. As a result, you can enjoy greater profits, more loyalty, and extended customer lifetime values – 50% of respondents, according to Harris, will shop again at a brand that makes the customer experience relevant.
Unlocking this vital part of the ecommerce journey makes the difference between the “right ad” and the “best ad.” For decades, marketers have marched to the rhythm of personalization: Serve the right ad to the right person at the right time. With relevance, marketers can go even further: Offer the best ad to the best person at the best time.
Technology plays a paramount role in ensuring relevance. At Rokt, we believe relevance lies at the intersection of first-party data and AI in the Transaction Moment. Our AI-enabled platform connects ecommerce brands and premium advertisers, uniquely linking real-time transaction data with real-time customer data. Over a scaled network that processes more than 3 billion transactions annually, Rokt presents only the most relevant offers to each customer, hyper-personalizing recommendations that reward and delight consumers rather than rile and disrupt.
We all live in a world of “24 jams.” Just because we’re bombarded doesn’t mean customers have to be. By taking a page from human psychology, you can free consumers from the paradox of choice and sweeten their customer experience.
To learn more about how Rokt can help you maximize relevance, read our blog on unlocking the Transaction Moment.