Every day, Americans make as many as 35,000 decisions: what to eat, what to wear, where to go, what to say — the list is endless. The sheer amount of choices available to us is mind-boggling. We say we like options, but do we really mean that?
Studies indicate otherwise, and it affects how you sell cars.
Too Many Choices Delay Action
In California, researchers set up a stall in a grocery store and experimented with selling six flavors of jam on certain days and 24 flavors on others. When shoppers had more flavors to choose from, the conversion rate was 4%, as compared to 31% for fewer options.
Columbia University researchers saw similar results when they analyzed three-quarters of a million Vanguard investment clients to analyze how the number of savings plan options affected the percentage of people who chose a plan:
- Five options: 70%
- 15 options: 68%
- 35 options: 63%
What we learn from these studies is that the more choices there are, the less likely people are to make a decision. This phenomenon is called Hick’s law, which states that the more options a person has, the longer it will take them to decide which choice is best.
How does the concept of analysis paralysis play out on your dealership lot?
Browsing the Lot Delays Sales
It used to be that people would visit a dealership and browse cars on the lot to find vehicles they were interested in test driving. Today, customers do most of their research before they walk through your doors. In fact, 60% of the car-buying process happens online.
By the time you meet with a car buyer face to face, they have an idea of what kind of vehicle they’re looking to buy. If that’s the case, they don’t want to spend time browsing the lot — especially in the heat, rain or snow. Even if they did want to browse your inventory on foot, consider the effect of Hick’s law: The more choices they’re presented with as they’re walking your sea of inventory, the less likely they are to make a final decision, delaying the sales cycle.
Limiting Choices Saves Sales
If you want to increase your odds of closing sales, decrease the number of options you present to your prospects and limit opportunities for them to consider alternatives.
One way to do that is to have the vehicle they want to test drive pulled around for them when they arrive. If you have walk-ins and it’s not possible to retrieve their desired vehicle before they arrive, make sure you can quickly find the keys and get to the vehicle on the lot.
Storing keys in an electronic system allows you to quickly retrieve keys. If they’re not in the system, you can see who checked out the key and where they were taking the vehicle (test drive, service, etc.). If you have multiple lots, organizing keys by lot will help you find both the keys and the vehicle.
If prospects don’t have a specific vehicle in mind or the vehicle they’re interested in is no longer available, ask questions to help you understand their needs so you can suggest alternatives. Letting them pick from your entire inventory not only leads to analysis paralysis but also positions you as an order taker rather than a knowledgeable advisor, which doesn’t build trust and loyalty.
Your customers are already overwhelmed with choices on a daily basis. Increase the odds of your success by making their decision about which vehicle to purchase easier.