Numbers Don’t Lie, But They DO Mislead

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Being election season, ads are a constant irritant, and even the usually informative news media have become partisan.

While sitting with my laptop working, I was ignoring the TV. An intro for a politician included clips from the candidate’s speeches, and several of the statements interrupted my thoughts and caught my attention. I made a mental note that whatever the race, I was voting for the other candidate—until I heard the identity of the other candidate, the ONE person I most want to see removed from office. So, as I have done in every election, I will again vote for the lesser of evils.

But will that candidate and the party take my vote as an endorsement of the candidate’s crazy rhetoric? Will they realize that I just wanted to avoid the more horrible alternative? Will I be sorry?

That got me thinking about a business’s offerings—products and services—and the choices that consumers make each day.

As businesspeople, we focus a great deal of attention and resources on the sale. Once made, we take that sale as a vote of confidence, and often, we assume that we will maintain those customers, even projecting their sales and our market share into the future. We assume customer loyalty, and we turn our efforts to recruiting more fans to our brand.

But what if those sales were not votes of confidence?

What if the choice was the lesser of evils? Like my election vote, many consumers are faced with making choices from an array of offerings, none of which really wow them.

Example: My internet service is provided by AT&T not because I am truly loyal to AT&T, but because Time-Warner pressured them to cut their prices, and I really don’t care who provides my internet service, so why switch?

What if the customer was overwhelmed by too many choices? What if they chose us because they didn’t really know what to do and wanted to get on with their life?

Example: A much-referenced study offered people different options for jams. The more choices the participants were offered, the fewer decisions and purchases they made. The same was true for mutual funds. (See Paradox of Choice in this interesting post.)

What if the customer chose based primarily on price? Those sales are at risk of being undercut by the next low-price offering.

Example: I had a Sprint cell plan (and remained loyal and waited years for them to get the iPhone), but I switched to AT&T when their overall price for what I wanted beat Sprint’s best offering.

What if our fans are fickle? They could be wooed away by another.

Example: I was loyal to Toyota, having had good experiences with two cars, until a corporate lease brought a Jaguar within my reach financially.

Dethroning data as king?

Numbers-based insights from Big Data receive a great deal of buzz and investment of time and money. No doubt, very valuable. But there is no “why behind the buy.” All of the above scenarios would show up as the same sale with no additional information to indicate a less-than-committed customer.

Let me draw an analogy: I once had an ad that tested ineffective in ad testing. From the numbers, it was pretty certain that this ad would not produce the sales we had forecast, but what do I DO about that? How do I know how to fix it? Is a fix possible (before the air date in a few weeks)? What did consumers (kids) think about the ad and the toy? Did they not understand how great it was? Or did they understand it and not like it?

In the same way, aggregated numbers show sales trends and, though they can be sliced and diced by segments, they don’t show a complete picture of an individual consumer, especially their motivations and decision-making processes.

The retail giant Tesco has been through a rough patch of poor earnings and troubled US expansion. As the best-in-class example of a retailer capitalizing on data and analytics, a number of experts are now questioning whether they relied too heavily on data. (See this HBR article.)

So, what to do?

  • Gather and analyze quantitative information enthusiastically, but complete the picture with some qualitative consumer input to get at the “why.”
  • Look beyond the data and graphs for explanations that are deeper and more personal in their insights.
  • Talk to customers—not retailers, but the end buyer and user of your product or service.
    • Why did they choose you?
    • What other options did they consider?
    • Was the experience everything they had expected and more?
    • Would they recommend you to their friends?
    • What could have been better?
  • Wow customers by continuing to innovate and serve them in new and imaginative ways. If you don’t someone else will.
  • Create a clear point of difference for your offerings. Be the obviously better choice. Me-too is not a long-term strategy.
  • Don’t compete on price. There will always be someone willing to undercut you.
  • Develop loyalty programs that thrill the customer. Many companies—according to the story above, Tesco may be an example—develop loyalty programs that serve their own corporate goals rather than customer needs and wants.
  • Focus on the actionable. Truly valuable information—quantitative or qualitative—not only looks back to recap what happened, but, in expert hands, it also points to the best path ahead.

Information is powerful, but leading implies action, and action involves the unknown and undefined. Invest in gathering data, but stay close to the customer. Someone once told me that Les Wexner said the answers to your questions are not in your computer but in your stores talking to customers. So get out there, be biased toward action, and keep the boss (your customer) happy.

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