Can Psychology Save Starbucks?

A great customer experience means making it easy for people to make decisions.

Starbucks is in trouble.

Despite strong mobile sales, their overall revenue is down and their business is softening in China (a major growth market for the brand).

But most of all, their customers are frustrated.

Long wait times and complex menus are driving people into the arms of other premium coffee retailers like Blank Street Coffee. 

For example, the Starbucks menu has ballooned to over 87,000 possible drink combinations.

And psychology tells us this is a disaster for decision-making.

When faced with too many choices, our brains get overwhelmed.

Psychologists call this Choice Overload (or Overchoice).

And while the ability to personalize drinks has long attracted customers to the brand, there has to be a trade-off between customization and overwhelming options. 

I saw Choice Overload working against one of my clients last year. 

She runs a small design agency but after 8 successful years was starting to see her conversion rates fall. 

"My leads keep ghosting me and I don’t know why. I’ve never had this problem before." she told me.

My client didn’t have a problem with lead flow, but her leads would meet with her and suddenly say things like, "I need to think about it" or "I'll get back to you."

Then they’d disappear.

And while there might be market and industry pressures, once I took a look at her offers I knew what was going on. 

“When did you introduce all these options?” I asked.

She was offering 15+ types of projects, 6 types of payment plans, 3 options for project lengths, and infinite start dates.

My client hadn’t really done it on purpose, but being in business for as long as she had…

Meant her offerings had organically ballooned over time (a lot like the Starbucks menu).

One lead would ask for a different payment option and another would ask if my client did a certain type of project, and it all got added to the pile of options.

Like a lot entrepreneurs, she had a false assumption that “more choice = more sales” so she happily added more and more options for potential clients. 

She also had a mental block around getting rid of anything because she was afraid reducing options meant losing business - a very common, and understandable, thinking trap that many entrepreneurs fall into.

But with her client roster shrinking, she was willing to try a simplification exercise with me. So we:

• Simplified her pricing options and used pricing psychology to make the decisions easier for clients

• Combined select products into one core, front-facing offer and moved the rest “backstage”

• Started offering start dates that fit her schedule and work load, not as options but as requirements for signing clients

Along with these changes, she needed to make a psychological shift.

We worked together to get her from thinking of herself as serving her business like a glorified employee, to using her business as a tool that serves her.

Within a few months, she saw her close rate climb by 50%. 

And she nearly 2x’d her inbound leads, too.

(A nice benefit that meant she could raise her prices and be choosier with her clients.)

Because the easier it is to choose, the easier it is to buy.

Starbucks understands this principle.

That's why their new CEO Brian Nichol is reducing their menu size by 30%.

So customers can make faster decisions (and wait times can go down).

Because sometimes the best way to sell more is to offer less.

Until next time,
Jen

PS. Tomorrow I’m sharing an invite to a 90-minute Skill Session that will help you unlock the psychology of a high-converting landing page.

You’ll get an easy-to-follow template, specific analysis from multiple industries, and a clear understanding of what psychological levers to pull to drive your conversion rate up.

So you can drive more sales, get more buyers, and get more newsletter subs without spending more time or money on marketing.

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