What Makes Decisions Difficult?

This is a fundamental question because at the core of every successful business is the need for clients to make decisions to work with us and buy our product or service. That said – decisions are difficult and getting more difficult every day. The chief culprit of this in western civilization is “choice”. If we have no choice, then the decision is easy.

Here’s a generic example first and we’ll apply it to financial services a bit later on. Think about toothpaste. Its basic function is to clean teeth. Pretty boring stuff right? NOT! Through our ever increasing need for choices, toothpaste’s purpose has expanded over the years to: prevent cavities, freshen breath, whiten teeth, desensitize to heat and cold, brighten smiles and even heighten sexual prowess.

You can walk into most department stores and be faced with an entire mind-numbing isle of selection on shapes, sizes, flavors from this list: Aim, Aquafresh, Arm & Hammer, Colgate, Crest, Darlie, Doramad, Elmex, Euthymol, Gleem, Ipana, Kolynos, Lion, Mentadent, Oral-B, Pepsodent, Sensodyne, Signal, Sozodont, Stomatol, Therabreath, Tom’s of Maine, Ultra Brite, Zendium.

That’s just toothpaste. Imaging being sent to the store for toothpaste, salad dressing and cereal. Essentially, you would be faced with more than 2,000 choices. And, the choices are getting bigger every day.

The common misconception is that choices make things better, they free us up and we are more satisfied as a result. In truth, the exact opposite happens.
Here is what selection and choice does: (Start thinking of these in terms of your practice.)

1. Too many choices can create paralysis to the point of no decision being made at all. Or, more specifically, the decision to make no choice and simply put the decision off. It has been shown repeatedly that when the anxiety and risk of making the wrong decision exceeds possible benefit, then the go-forward decision is simply postponed to tomorrow, then tomorrow, then tomorrow and eventually the decision never happens.
2. When faced with a variety of choices, after a decision is made, people are more easily dissatisfied with their choice. This is because it is easy to imagine the benefits and rewards we might have achieved had we picked something else. Buyer’s remorse or regret are more prevalent when there are a multitude of choices and the most minor malfunction, or lack of performance is quickly compared to the utopia that would have been provided through a different decision.
3. Given hundreds or even thousands of choices for a product or service, our expectations increase significantly when it comes to the rewards of our decision. We believe that surely, with so many choices and options, the decision we make will meet our exact need. In reality, that is rarely the case. Our expectations increase in proportion to the number of choices we have and as a result, the product or service rarely meets our excessively high expectations.
4. We blame ourselves for bad decisions. Surely, with all the choices out there, there is a product or service that is perfect for us. As suppliers push decisions onto consumers, the consumers take ownership for “betting on the wrong horse.” As a result we are even less satisfied with our decisions and even more reluctant to make a decision the next time.
   

   So what does all mean to people in the financial services industry — an industry where clients have access to an almost infinite array of choices?

   You need to balance your client’s need to be informed and be part of the decision with their need to feel comfortable with the decision to the point of not even thinking about it again after the decision is made.

   There is really only one way to do that. With full disclosure in mind, inform them in the simplest terms possible and help them make the decision. Take ownership for the decision whenever possible and keep them informed as to the results. The more work you do in assisting the decision, the less work they will be compelled to do and the happier they will be in both the short and long term.

   Reducing choice to increase satisfaction, retention and even referrals seems counter intuitive. Speaking of choices; simplifying decisions for your clients is a choice only you can make.



Comments are closed.