Can Sales Reps Have Too Many Choices?
Consumer choice is the subject of many studies. Should a company extend its product line or stay focused? How does this affect physical distribution, in either ecommerce warehouses or retail stores? Retail stores are fixed with limited shelf space and almost no potential to expand. Warehouses can be expanded, but at a cost.
I think we can generalize that most companies think more is better… that it is best to extend your product line and capture a sale than let a competitor capture that sale. However, have you ever felt like there were so many choices that you decided not to buy anything?
In the 1990s and 2000s a number of research studies shed light on this dilemma. Iyengar and Lepper (2000) did ground breaking work to prove the possibility of choice overload, or so many choices that the consumer chooses not to purchase. The authors set up in-store sampling in a grocery store, and gave each person who stopped by a coupon to purchase. One version of the experiment had 30 choices of condiments. The other version had 6 choices. The number of consumers that stopped by the sampling booth and then purchased that product with a coupon that was handed out at the sampling station was measured. A higher percent of consumers passing the sampling table stopped when the variety was larger (30 versus 6). Therefore greater variety is initially more attractive (60% vs. 40% of passersby). However, a much higher percentage of consumers who stopped at the sampling table purchased when the selection was limited (30% versus 3%).
Can this study tell us about B2B, where a Sales Rep sells the product to a business customer?
In Industrial Markets the “store shelf” is the Sales Reps memory. How many items can they remember when they are meeting with a customer or prospect? By giving Sales Reps more to sell, do they sell more volume, or just more different items? And what about company profit?
It is common to see manufacturers with over 1000 different sellable items. Industrial distributors will regularly stock over 10,000 SKUs in their warehouses. So, is more better? Even if sales are higher, does this translate into profit?
The graph below is a financial representation of what happens as product lines offered by a company grow, but flatten out, while costs grow.
So before you add a new product line, SKU or service offering, ask if the company will truly benefit or if you are doing because “sales people always want more to sell.”