The Takeaway: Avoid Choice Overload
Sometimes, flexibility has downsides.
Are you offering too many membership options for your coworking space? It may surprise you, but that can actually hurt your sales.
When a customer is offered with too many choices, it actually decreases their likelihood to buy. There is a great experiment conducted in 2000 by researchers from Stanford and Columbia that tested this theory of choice overload.
The jam experiment
Researchers set up a table with gourmet jam in front of a high-end grocery store. Customers walking into the store saw one of two set-ups: the first had a limited number of 6 flavors to choose from, the second had a much more extensive 24 flavors.
The assumption of the experiment is that the more extensive selection would attract more customers, and have more sales as a result. What actually happened was quite different.
More customers bought jam when they only had 6 flavors to choose from. Even though more people stopped to sample from table with 24 options, they were far less likely to actually buy anything at all.
Having more choice resulted in lower sales, so no choice at all.
According to psychologist George Miller, the number of choices we can process is seven items, plus or minus two. Presented with any more than that, and we have to develop a strategy to process all the information and make an informed decision. Having to that can lead to us being indecisive, unhappy with the choice we make, or making no choice at all – just like in the case of the jam.
Choice overload & Coworking
To avoid choice overload from negatively impacting your coworking space, it is critical to keep what you are offering customers as simple as possible. Keep the memberships limited, clear, and easy to compare.
Coworking spaces typically offer some array of the following memberships:
- Drop-in or day pass
- Hot Desk, Flex or Part Time
- Dedicated of Full Time
- Private Office
Other variations include:
- Half-day, evening or weekend only, etc.
- Community Membership
- Day Pass Bundles or Punch Passes
- Virtual Office or Mailbox Membership
See how quickly this gets complicated?
A new space that starts out with two membership options can quickly grow to a dozen or more as members request special plans for their circumstances.
Even more options can arise when you offer multiple membership terms. Are your memberships month-to-month or do you also offer 3-month, 6-month, 12-month terms? Some spaces like to offer discounted rates for upfront payments on a multi-month plan.
All of these options are reasonable, and many coworking spaces have members that would like them. If it works for your customer base, do it. But in addition to keeping the concept of choice overload in mind, also consider the added administrative time or accounting that is required to manage more complicated payment plans. Technology can help with this a lot, but there are still going to be humans involved as well.
You also want to keep your customer in mind. If they have to track their hours or days on a punch card, that might be an added burden that diminishes their experience, even if they requested it. Don’t make your members do more work. It may be better to offer simple full day plans and make sure they are priced well so someone only working a half day still feels like they got their money’s worth.
How do you determine which memberships you should offer? Talk to your customers. Yes, they will ask for every option under the sun. You will get a phone call asking for a half day when you only offer full day passes. The goal of talking to them is not to then implement everything they ask for. Your job as the space owner is to take the input, and use it to choose as few options as possible that will serve the most customers. What people ask for is not always what they need. What people ask for isn’t always the best for your business.
The key is to not offer too much, or too little. Your members should feel like they have enough flexibility with what you are providing that their needs are being met, but not so much that they have no structure.
Great further reading about how one coworking space revamped their membership plans for simplicity: