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BrainTrust Query: Facts or Gut Instincts? What Makes for Better Marketing Decision-Making?

October 14, 2011

Through a special arrangement, presented here for discussion is an excerpt of an article from the Joel Rubinson on Marketing Research blog. The piece first ran on Brands As Business Bites, Denise Lee Yohn's blog.

Two of the hats in Edward de Bono's book, Six Thinking Hats, are:

  • Information: (White) - considering purely what information is available, what are the facts?
  • Emotions (Red) - instinctive gut reaction or statements of emotional feeling

I find that organizations tend to be made up of people who are either white or red hat and they often do not work well with each other. Media researchers are often analytics-driven white hat folks while creatives and agency planners are usually red hat. Not a good dynamic.

Well, I'd like to propose a different model.

Consider that 80 percent of new products fail and 50 percent of ad campaigns never show sales lift, yet researchers test things at the 90 percent confidence level. At the same time, if you wait for hard evidence on something like leveraging advertising possibilities in smart mobility you will be last in. You need some creative leaps.

So the model I propose is that we think in terms of belief repositories that are fueled by hard evidence but that these beliefs can lead marketing teams to make investments where no experiment or marketing mix model has yet been run.

Here's an example of how this works. Many believe that Facebook is a place where a marketer can build engagement for their brand because, what can be more enduring than getting someone to friend your brand on Facebook? BFF, right? Well actually, I have gotten some "ahas" by showing marketers that digital engagement marketing is really about getting people to spend time with your brand and then showing that this does NOT occur in Facebook. For brands I looked at, mostly, less that one percent of fans revisit the brand page in a given month, meaning that mostly, brand friending gives the marketer a broadcast channel for updates. On the other hand, people spend lots of time when they visit your website (usually in the three to 10-minute range per visit). A case I looked at is Starbucks. From the data I've seen, Starbucks has more than 10 times the fans on Facebook as it has visitors to its website, yet those website visits generate 10 times the number of minutes that people spend with the brand. A new belief about building brand engagement is born in this way, rooted in evidence.

Marketing decision making is about taking actions whose consequences live in the unknowable future. The belief repository system calls for hard evidence (e.g. study the data on time with brand) that changes the beliefs (e.g. owned media is where I build customer engagement) and then you make marketing decisions from there.

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Discussion Questions:

Discussion Questions: Are most marketing decisions too fact-driven or instinct driven? How do you blend the benefits of each and be timely?

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Instant Poll:

Do you believe that marketing decisions are too fact-driven or instinct-driven?

Comments:

In my early days at Quaker, we were encouraged to develop a "theory" of our brand -- why does it work, why doesn't it work, and so forth. The theory was based on research we had done and provided a platform for future research. The theory would be constantly modified as new research came in.

Marketers either operated within that theory or had to have a darned good reason to go outside it (which would usually generate research before a final decision to do so was made). This worked well for Quaker in '70s and '80s. It blended knowledge and intuition nicely (and Joel was a part of the thinking in those days, as I recall).

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

Marketing has a tendency to be reactionary instead of proactive. Facebook is the hottest thing now so producers and retailers scramble to build fan pages not knowing that visits may not be as frequent as they like. Now, that's not to say the brand doesn't have a line of communication with the Facebook user. You can still send messages to people who 'like' you. But in terms of building brand awareness and engaging the customer, there are better ways.

Obviously a healthy mix of facts and instinct would be preferable in any marketing initiative. I honestly believe that any marketing campaign must be organic and flexible. The best way to approach it is to know your customer and speak their language. If your customer is a die-hard Facebook user, then you have your answer. If your customer likes to read the weekly circulars on their porch, that's another answer all together.

Doron Levy, President, TheMortgageMachine.ca

Am I the only one who finds this question ironic? For years we have been working to find the right merchandising balance between gut feel and science, and only now have we started finding it.

Now as marketing emerges into the mainstream of retail are we really going to have the same debate all over again? Have we moved from the world of merchant princes to marketing princes? Yikes.

There's no substitute for talent. And, there's no substitute for science underpinning other decision processes (how many to make/buy, when the product is reaching end of life, what's the best price, etc, etc).

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Paula Rosenblum, Managing Partner, RSR Research

Marketing is mostly a science and a process rather than an intuition, however, all good scientists have some great intuition.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

Ahhhh. if only decision-making were only as simple as red and white. The most successful marketers are those who take in all of the information they can, weigh that information against their previous experiences and make an informed decision. Those decisions are usually based on a combination of things including data and gut feelings. Highly experienced marketers develop innate feelings about what works and what doesn't and they relay on those feelings to help guide their decisions.

George Whalin, President & CEO, Retail Management Consultants

I find that indeed both groups exist in retailers and brands. If it's not harnessed by some kind of belief system, what happens more often than not is that White Hats kill experimentation because there isn't any "evidence" to support what should actually be considered R&D, and that Red Hats cling to corporate myths about who their customers are or what they want, even in the face of hard evidence. That's a recipe for total dysfunction. And who gets lost in the process? The customer.

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Nikki Baird, Managing Partner, RSR Research

From my frame of reference, more decisions are instinct driven. I go where my greatest comfort lies ... but frequently that is in the fact-driven world. It only when I am wrong that I see red.

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Gene Hoffman, President/CEO, Corporate Strategies International

Interesting thinking and the Facebook analysis is spot on -- Facebook's biggest value for consumers is learning about deals.

But I can't answer this survey -- the real situation is far too subtle for this. First, it depends on the organization. Many are too fact driven and many are too belief driven.

And the error I see in fact driven is primarily that they define a narrow range of "fact" to rely on -- a dashboard that's great for board meetings but which misses the more critical facts that emerge over time and which SHOULD inform their decisions.

Doug Garnett, Founder & CEO, Atomic Direct

Decisions are always based on experience, and rarely does a decision come solely from instincts OR statistics. It's almost always a mix of both.

Thus, experience is what you get when you make a mistake twice. So you learn. With giant companies, we rarely see the mistakes because they don't generate brand/market share/$$. But it happens. Working at Best Buy, I cannot tell you how much money was blown on trial and error. They made more money by accident than any other company I know.

Marketing is as much an art as it is science. Art is what you put into it, science is what you get out of it.

Paul Flanigan, General Manager, Experiate

Sorry, I think the creatives are losing the battle. HR departments are so afraid of them, they are not even found on the retail floor or in the upper levels. Analysis, facts, figures -- these are what have made every store the same -- and boring.

I heard about a marketing conference where the designers got up one by one and showed their best work for their brand, then showed a slide and said, "And this is what I have to do" which were 30% off, BOGOs and the rest.

I wrote about all four personalities just this past week and might have clues to retailers about the Expressives and Analyticals.

Retail is about emotion and the personalities that encourage it at all levels.

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Bob Phibbs, President/CEO, The Retail Doctor

Research shows that the more experience you have, the better your instinct and gut feel.

What I teach in my hiring programs is simple: if your gut feel says don't hire someone, don't hire the person. When your gut feel says to hire someone, doubt it.

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Mel Kleiman, President, Humetrics

"Cross Check, Interpret, Respond."

I know I have mentioned it before, but that is the mantra for flying an airplane solely by instruments and I have found it to be very helpful in managing business. Cross Check the instruments to make sure there are no mechanical failures, i.e. Cross Check the data or information you are being given to ensure it is consistent. Interpret what the instruments or data are telling you. Finally, you can respond to the situation in order to get the results you are seeking. The challenge, as we all know, is that in business the data is often incomplete and decisions must be made without perfect knowledge. This is where "art" comes into play.

There is room for both types of people in business. You need the data driven white hats to avoid running into the side of a mountain, but you also need the artful red hats to see it is possible to climb above the clouds. This is where the role of the manager comes into play. The manager must be able to recognize the contributions of both types and rally everyone around a decision that may not be completely supported by either perspective. The manager must be able to weigh the risk of missing data against the potential reward of innovation and make the right choices.

The challenge in all this is that most people will make a wrong decision. Perfection is elusive and an organization cannot expect it. Managers must be evaluated over a period that is long enough to reveal whether they are right more often than wrong. In today's world, where the chief challenge for many startups seems to become "how do we monetize this," it seems that the red hats are overwhelming the white hats. On the other hand, as the cost of startups and marketing efforts decline and the rewards for success (think "angry birds") increase, maybe the red hats should rule. Why not "just throw it up against the wall and see if it sticks?"

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Bill Bittner, Principal, BWH Consulting

Figuring out what to try takes inspiration driven by some data, some deep experience, and some creativity. It also requires finding a large range of ideas to go try, not just one brilliant big idea.

Figuring out whether those ideas actually work to drive real sales with real customers is pure science and at that point the unchecked intuition (bordering on presumed marketing genius) gets in the way.

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Jonathan Marek, Senior Vice President, Applied Predictive Technologies

I don't recall hearing that Steve Jobs depended on hard evidence for his product development and marketing decisions. But then again not everyone is Steve Jobs. Know thyself and deal accordingly. When you're hot you're hot. And when you're not, search for hard evidence and surround yourself with people who have accurate gut instinct.

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Joan Treistman, President, The Treistman Group LLC

In my experience, a majority of my clients rely on conventional wisdom and historical results from a time period which may no longer apply to make key decisions. It really is both, you see -- conventional wisdom (instinct-driven) or historical results that no longer apply (fact-driven, but the wrong facts).

I am not sure if we have created a false dichotomy. The best marketing decisions use the right facts as leading indicators, but do not wait for the perfect, 100% confirmed answer before moving. The right facts, when coupled with a strong instinct for what happens "on the ground", lead to steady growth and innovation.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

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