‘The Paradox of Choice’ and the Digital Solution

Barry Schwartz, author of ‘the paradox of choice’, claims that too much freedom of choice doesn’t necessarily lead to a better way of life. He argues that having too much freedom of choice can actually be more constrictive.

This is an interesting topic, especially when applied to the ever expanding online world, and with the New Year inevitably bringing new challenges for online retailers I thought I’d take the time to offer a solution.

‘The Paradox of Choice’

Whether we want to buy shoes, computers, perfume or groceries, we all sometimes feel ‘frustrated’ looking for the best fit from so many options. Regardless of the item’s product life cycle (whether it be a lunch box or a refrigerator) we will spend a proportionate amount of time browsing multiple websites and looking for the best quality at the very best price, depending on availability. It’s this stage of the buying process that provides exceptionally valuable customer insight, but only so long as that online behavior is tracked and analyzed.

It’s very simple; if online retailers fail to provide personalized shopping experiences by recommending products and content depending on where the consumer sits within the lifecycle, the customer will most probably stop browsing, or even worse, click away to a competitor’s website. And let’s not neglect the importance of omni-channel marketing this Christmas. It’s not just about the website, if your other channels such as email, ads, SMS and social media remain impersonalized you can say goodbye to any additional revenue.

It’s a common challenge we see time and time again, so I can sympathize with any online retailer. Digital marketing is evolving at a rapid rate, so let’s start by addressing which product and/or incentive should be recommended for each individual at any stage along the customer life cycle.

The Digital Solution

Emarsys’ customers are using a customer intelligence tool (Smart Insight) to identify the customer life cycle stage of each individual and a sophisticated algorithmic recommendation engine (Predict) to personalize content based on the implicit and explicit preferences of each customer.

Imagine you have those tools in place, you can now use the segments coming out of the customer intelligence tool (Prospect, First timer, Active, VIP, Churning) and the results generated by the predictive algorithm to contact your consumers via the website itself, marketing emails and transactional emails, SMS, display ads, direct call, direct mail etc.

If you’d like more information on how to create a customer-centric marketing strategy take a look at the blog my colleague, Daniel Hagos, wrote a couple of weeks ago. He provides a great explanation on how to create a personalized experience across the customer journey. Alternatively, my previous blog identifies the three pillars of content personalization and outlines the available solutions (well worth a read, even if I do say so myself).

Anyway, back to the paradox of choice. Boundless commercial space enables online retailers to use a variety of digital channels to reach out to their target consumers (and potentially yours). Brands that are able to differentiate themselves from others by personalizing user experience along the customer life cycle will significantly increase customer retention and have a fruitful 2015.

Let’s elaborate a bit more about Email Marketing  

How do you feel when a ‘special promotion’ email lands in your inbox with 10-20 products that have no correlation to your preferences? Personally, I would stop opening these kinds of emails and at some stage I might even complain (straight to the Junk folder).

How do you feel when an email lands in your mailbox specially tailored to what you’ve been looking at, contains 3-6 recommended products and an attractive incentive related to your life cycle stage? I’d love it. I don’t promise to buy every time I get a tailored email, but it will make me feel much more engaged with the brand and it’s definitely not ending up in the Junk mailbox. I won’t complain and chances are that sooner rather than later I will complete a purchase.

Now to look at how this happened. The evolution of Email marketing can be told in three chapters:

Spray and pray – a long, long time ago, when email marketing came in to the world, we had no limitation of sending volume, content, speed or frequency. It was simply ‘spray and pray’ and the ‘prayers’ were very much fulfilled.

Basic Segmentation – Recipients were no longer satisfied with irrelevant information landing in their mail boxes. Mailbox providers quite rightly initiated strict regulations. The sender then reacted with segmentation based on demographic information (gender, location, age, etc.) and recipient engagement (open / did not open, click categories etc.).

Customer Intelligence – Today, simple segmentation is not enough. Sending the same email to a large group of recipients leads to low customer satisfaction, and it’s a waste of your time. So this year it’s time to add an intelligence layer to your email marketing strategy, an advanced customer intelligence tool which will enable you to create segments based on lead and customer life cycle. A sophisticated algorithm, analyzing website behavior, enables us to add product affinity and predictive analytics to each and every communication.

And so to conclude, Barry Schwartz does not claim that eliminating freedom of choice will make people happier, neither has he implied that a shop with only one single product will lead to a better shopping experience. In his mind, narrowing the variety of options will reduce frustration and eventually lead to a better welfare. He never talked about email marketing or website personalization but the concepts are still applicable. At Emarsys we’ve seen time and time again that narrowing options based on user preferences and customer life cycle significantly improves the user’s experience.