We often get questions from contractors on why they should offer four options and not three or five, or even eight.
When we look at consumer behavior and when customers are offered one option, they feel slighted as they hope to get more than one option. So, when a customer receives that one option the only way they can get another option is to go to another contractor.
It is true when a contractor offers two options the higher priced option is predominately chosen around 70% of the time. However, the customer still feels like they need more options. You can also correlate a lower closing ratio when there are two options offered.
When three options are offered it is true again that the two higher options are chosen in the lower option is definitely less than 25% of the time. When the customer sees the three options, they automatically do not choose the high-end because it has the highest price. They discount the low end because it is the lowest price and therein lies this one option that is left to be available. And what do we say above when a customer only has one option what are they left to do? Get another option from another source. The closing ratio also goes down because of this phenomenon.
When offering four options something magical happens. Yes, there will be some people that will choose the lower option. It truly is about 17% of the time and yes there are some people that will choose the high-end option which is generally about 19% of the time. The magic bullet here is the two middle options the good and the better are chosen at about 64% of the time. The closing ratio remains high. And the customer usually will ask the salesperson, “Which one would you choose?”
The reason why most contractors don’t offer multiple options is that it takes a lot of time to even put together the pricing on one option. Having a template-based proposal offering makes preparing options and offerings a small burden, or quite frankly no burden at all.
Is putting together multiple options for a customer it’s so simple then why not put together 56 or even eight options for a customer? That’s a very simple answer and we call it paralysis by analysis. At some point the customer can have too much information to be able to make an educated decision about what is the best solution for their home or office.
Don’t be that salesperson that feels like they know everything the customer needs better than the customer knows themselves. Let the customer make their own choices based on the education that you’ve provided for them. In the long run, they will feel better about their choice and have equity in their decision.