Filene Examines Psychology of Choice Overload Posted by AVCU on 9:30 AM

A recent publication by the Filene Research Institute examines the Psychology of Choice Overload and the implications it has on retail financial services. Credit unions need to know how to handle choice overload in their products and services according to the report's author Alexander Chernev, an associate professor in the Kellogg School of Management at Northwestern University.

"Retail is retail, whether you're selling prom dresses, chocolates, or even checking accounts," says Ben Rogers, Filene research director. "Consumers consider their available options and choose. For retail firms like credit unions, part of your responsibility is to make those choices easier."

Imagine for a moment the difference between shopping at Walmart and shopping a high-end boutique on Rodeo Drive or Fifth Avenue. The sounds are different. The employees are different. The prices are certainly different.

In fact, the retail environments couldn’t be much more different, especially in terms of product selection. Whereas an upscale boutique might sell no more than a few dozen different clothes in a narrow range of sizes, Walmart prides itself on stocking hundreds of options in a wide variety of colors and sizes. Despite the different focuses, planners construct each product set deliberately based on the needs of their anticipated customers.

"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," said Rogers. Instead, offer a well-considered assortment of products--big enough so members have choices, but small enough so the options don't overwhelm. Filene members have free access to the report while others may purchase it at Filene's website.