The data paradox

If you are an analyst, economist, engineer or just a logical person who likes things that neatly add up, you probably think you make rational decisions while seeking rational outcomes.

You are the type of person who likes spreadsheets that present precise, numerical data. These exact measurements inform your marketing plan so you can target your audience and build your content based on specific criteria.

You assume you make decisions rationally, and carry that assumption into your product development and marketing strategy. Your targeting heuristic is based on a persona that has a complete grasp of all the available information and will make a decision based on maximum utility.

But you’re wrong. Marketing data’s paradox is that it does not add up — at least not always.

Emotion detector

In the past 30 years, a great deal has been learned about the neurochemistry of the brain and how we actually make decisions.

This rational analysis shows that decision-making takes place in the part of the brain responsible for emotions. When we decide to act, we don’t think so much as we feel.

This means that in many ways, most of our decision-making is subconscious. It’s filled with quirks that — analytically speaking — don’t make much sense. Our thinking is glitch-ridden, based on superstition, habit and experience.

Most decisions we make don’t even feel like decisions. We’re influenced by immediate needs and a strong urge to identify with social groups.

This means that in marketing, you don’t get to target a static, logical persona that makes well-informed decisions.  You can’t assume people will decide based on a logical view of what best solves their problem.

Screwy decisions

Instead of logical, utility-based decisions, our thinking is influenced by cognitive bias. This explains why placebos work or why people jump on the “bandwagon.”  Here is an overview of these cognitive biases:

Image source Business Insider.

For a predictive, logical model, these biases seem to screw up our thinking. If you want your marketing strategy to make logical sense, this thinking will frustrate you.

You look at your product and see its admirable utility — it makes total sense to buy it. But that doesn’t mean people will.

Marketing quirks

I shopped at Kohl’s for shirts the other day. I got a $60 shirt on sale for $30. What a deal.

Or was it? Was that shirt ever worth $60, or did that price get anchored in my mind, and when I saw the sale price I figured it was a great deal?

My friend brought over a bottle of wine for dinner. He said it was rare and expensive. Wow, it sure was tasty.

Or was it? Did it really taste that different than the $10 bottles I usually buy? In fact, was it a bit worse?

Maybe it was the placebo effect. It doesn’t matter. I enjoyed it nonetheless.

My brother wants to buy a motorcycle. He can’t wait. But his wife thinks it’s too dangerous. She asked him to look up the stats about motorcycle accidents online.

He started to…but didn’t. Some things you just don’t want to know.

He said he thoroughly enjoyed his first ride last weekend.

My wife and I stood on the street deciding between two restaurants. One was full and had a crowd in the waiting area. The other was only full of empty tables.

I suggested we go to the empty one — we wouldn’t have to wait. She disagreed.

This one must be really good — everybody’s in there. The other one is dead. Must not be too great. 

We waited for 40 minutes. The meal was okay.

Data reactions

There is an important takeaway here.

For the logical, ROI-focused business owner, data analytics and spreadsheets are still important. They’re vital to marketing success.

But there is a heuristic you must adopt. Data can tell you the results of what you’ve done, but it can’t tell you what to do.

In the broadest terms of marketing a new product, it boils down to this: you won’t really know if people will buy something until they actually buy it.

The actual purchase decision — the moment when a person gives you their credit card number — is driven by emotion. It’s a mistake (pro-innovation bias, blind-spot bias, overconfidence) to think others will be swayed by your logical argument.

As you start out, you must do so with imperfect information. You rely to a large degree on instinct and hunches. There is no formula that can predict how a new product will do before it’s put on the market.

Use data to understand how people respond to what you’re doing. Make informed changes that suggest you’re getting closer to making an emotional connection with your messaging. When you see improvements, make a complete analysis of what triggered the change.

You decided to take the leap into entrepreneurship. Was that decision based on logic? Was it even rational at all?

Probably not as much as you think. Beware of the availability heuristic.

On paper, everything looks good, but don’t overestimate those numbers and spreadsheets. That data only counts after you’ve sweated out months of marketing trying to understand what gets people to buy things when they don’t even understand it themselves.

This doesn’t mean that you shouldn’t monitor your performance or learn from the data. It just means that you need to look at more than just the obvious numbers. You need to under the why behind the numbers.

Originally published on 7/19/17