How Understanding Choice Architecture Leads to More Effective Sales
When Richard Thaler and John Balz of the University of Chicago and Cass Sunstein of Harvard Law School coined the phrase choice architecture in 2008, they clarified how decision makers make choices. More importantly, they illuminated how choice architects, such as sales people, can use choice architecture to “help nudge people to make better choices… without forcing outcomes”.
Put more simply, choice architecture in sales involves influencing decisions by shaping the way choices are presented to customers.
The Reflective System vs the Automatic System
While we’d like to think that buyers make decisions based on logic and rational thinking, the reality is that many, if not most, people buy on emotion – often unconsciously so. This same process extends to choice-making in non-sales contexts, as noted by what psychologists refer to as the Reflective System and the Automatic System.
The Reflective System is one in which decisions are made through thought, logic, and reasoning – and is a slower process. The Automatic System, in counterpoint, is a quick, instinctive process based on intuition and ingrained memory and behavior. For example, in the United States, we’ve been conditioned to think of red as Stop and green as Go through driver’s education and years of learned experience. It’s so deeply engrained in our culture that it’s become instinctive. How, then, would we react to green stop signs at an intersection? Realistically, we’d probably proceed – the color green is larger and more immediate than the lettering, and our Automatic System would override our Reflective reaction.
An example in sales of utilizing the Automatic System is found in restaurants that post the Daily Special on a menu board that customers see when they first walk in. While many will take the time to read the full menu when it’s given to them at the table, and thereby engage in a reflective process, a significant number of customers will instinctively opt for the special because it’s already in their minds. Additionally, if they ask a server to make a recommendation, the server will likely respond with the special, which is a default option.
In a study that was published in the American Journal of Public Health, researchers found that simply by rearranging the environment of a cafeteria, they were able to increase sales of healthy choices and decrease sales of unhealthy choices. We’ve seen the same thing in retail environments, of course, where items at eye-level of the intended consumer (whether adults or children) have a greater purchase rate than those placed above or below. Thus, product placement is paramount in influencing choice and driving buying behaviors.
The same is true of listing items in a situation where there’s a lot of options. If you’re an ice cream shop with only a handful of flavors, the order you list those flavors matter a lot less than if your shop offers 31 or 50 flavors – in the latter circumstance, order can very much influence purchasing decisions.
There’s even more we could discuss in terms of choice architecture (including how the complexity of a product influences choice structure and decision behavior), but that’s for another blog post. Taking note of these basic elements of choice architecture we’ve discussed here can help you think about how you arrange your own selling strategy and processes to influence customer behavior.
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