Executive Summary
Consumers in North America have many choices. Walmart, high-end boutiques, and all the stores in between prove that. But sometimes a large number of choices is not what consumers want or need. In recent years, especially since the Internet explosion, retailers and other providers have begun to use the word “curate” to describe the value they provide. It’s not enough to offer lots of choices anymore: Consumers expect you to do some of the hard deciding for them, to make their decisions easier. At credit unions, the product is money management, not fancy duds, but this brief examines why the planning principles are the same. Specifically, it questions the assumption that offering credit union members more choices in the form of ever more products and services is better than offering fewer, more curated choices.
What is the research about?
Recent research in consumer psychology and behavioral economics has shown that the assumption that consumers always benefit from having more options to choose from does not always hold and that in some cases consumers benefit from fewer, rather than more, options. Every day, consumers reel from information overload and decision overload, so they look for easier decisions. Larger product assortments also lead to higher expectations, which firms might not be able to fill. And the ongoing drive to build the “right” product for every taste means, paradoxically, that not every need can be filled. All of these factors make it harder to choose, and when it’s hard to choose, the easier option is to not choose at all.
Economic scarcity still holds, but cognitive scarcity does not.
What are the credit union implications?
Credit unions have made great strides toward becoming full-service financial institutions. But the urge to be all things to all people has a downside. In addition to driving up operating expenses, offering an endless array of product varieties may not be best for credit union members. Instead, consider following this behavioral science to its logical conclusion with a well-considered assortment of products. Somewhere between Walmart and Rodeo Drive, your assortment should be big enough that members have choices, and small enough that those choices do not overwhelm.