Posted in Marketing, Research

Seduced by statistics

As a manager or an owner of a business, you are likely focussed on metrics, right?

My favourite demonstration of the stupidity of statistics is to ask people to imagine standing with one foot in a bucket of boiling water and the other in a bucket of ice water.

ON AVERAGE you would be very comfortable…

People are easily seduced by numbers.

  • Do you think research works?
  • Do you think strategic planning works?
  • Do you think business plans will ensure the right outcomes?
  • Do you believe in the power of the rational mind and a diligent approach will ensure success?

Consider Marketing for a moment:

  • Nielsen reports a 95% new product failure rate.
  • The University of Michigan discovered that the average cross-industry customer satisfaction score has fallen below 75%.
  • The Marketing Science Institute determined that a 100% increase in advertising expenditures yields just a 1% increase in sales.
  • ROI measurement firm Marketing Management Analytics found that major media advertising for consumer packaged goods brands returns 54 cents on the dollar and campaigns for non-consumer packaged goods brands, 87 cents on the dollar—two losing propositions.
  • A Deutsche Bank study of packaged goods brands found that just 18% of television ad campaigns generated a positive ROI in the short-term; less than half (45%) saw any ROI payoff over the long run.
  • Copernicus (the company) observed that brand equity is in decline in 48 of 51 categories where buyers perceive the leading brands as more similar than different

This is not a new symptom.

Lord Lever said:  “I know half my advertising isn’t working, I just don’t know which half.” It was true then. It is truer now.

Does this mean we don’t do marketing any more? Of course not. It simply means that we need to keep things in perspective. Not get seduced by the apparent certainty offered by a set of numbers.

In this brave new world of business, there is no certainty. There is only effort. Not diligent planning, but diligent application.

In a world where information increases exponentially and the rate of change is mind-numbingly fast, there is no time to plan. Fail(ing) forward – a term probably coined by John Maxwell – is the new business plan.

I will say that again: Fail forward is your business plan.

 

 

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