How Numbers Lead Us Astray So Easily
Frogs, fish, dogs, spiders, hyenas, chimps and others in the animal kingdom all have an innate ability for counting. But we humans are easily fooled by numbers, especially when they’re presented in context. Learning to exploit the power of context can pay off big for marketers, but at the same time, marketers need to be careful not to be fooled themselves.
Consider the example of the Economist subscription offer discussed by Dan Ariely in his book "Predictably Irrational." Ariely duplicated this subscription offer with a group of 100 MBA students:
Which would you have chosen?
Repeating the exercise without the “decoy” offer of the print only subscription yielded the following results:
Which would you have chosen this time? Clearly, context will fool us into perceiving the value of offers differently.
Fish are not so easily fooled.
“Small fish benefit from living in schools, and the more numerous the group, the statistically better a fish’s odds of escaping predation. As a result, many shoaling fish are excellent appraisers of relative head counts. Three-spined sticklebacks are … able to tell six fellow fish from seven, or 18 from 21 — a comparative power that many birds, mammals and even humans might find hard to beat.” Beastly Arithmetic, NYTimes Feb 6 2018
Psychology-based marketing expert Jeanette McMurtry says,
“When marketers discover the inconsistencies and irrationalities about how consumers make choices, they can create messaging that engages consumers’ minds, both conscious and unconscious. When that happens, there's a lot more to ‘count’ when it comes to sales, revenue, ROI and lifetime value.”
One of the reasons we’re so easily tricked by numbers is our reliance on verbal intuition. In his book, “Thinking Fast and Slow,” Daniel Kahneman provides several illustrations of how our intuition gets in the way of arithmetic when we’re presented with numerical problems in a verbal context. What is your initial response to Kahneman’s word problem?
- A ball and a bat cost $1.10
- The bat costs one dollar more than the ball.
- How much does the ball cost?
You would not be alone if your initial response was 10 cents. But you would be wrong. Because if the ball cost 10 cents and the bat costs one dollar more than the ball then the total cost would be $1.20.
Consider how you might take advantage of people’s intuitive responses when constructing offers, but don’t let your own intuition get in the way of making decisions. Sometimes marketers are fooled by test results because they look for cause and effect in results that could easily have happened randomly. If you’re testing creative variations with samples of 25,000 impressions and your usual clickthrough rates are in the range of 1 percent (which yields a results pool of about 250 clicks), you should know with that sample size and that average response rate, your results can vary by 10 percent. So, statistically there’s a 90 percent chance that you could have gotten 225 clicks or 275 clicks. Yet, if you got both those extremes in an A/B test, it would be easy to conclude that one cell beat the other by a lot.
We are similarly confused by percentages. Psychologists Rochel Gelman of Rutgers University and Jennifer Jacobs Danan of the University of California, Los Angeles, have studied how often reasonably well-educated people miscalculate percentages. We hear that the price of something rose by 50 percent and then fell by 50 percent, and we reflexively, mistakenly conclude, “Oh good, we’re back to where we started.” Beastly Arithmetic, NYTimes Feb 6 2018
Feel free to comment with your answer to this percentage problem, or with any thoughts or experiences you have on using consumers’ proclivity for intuition over rationality to better your marketing efforts.