Don't judge a book by its promising conversion rates!

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At Qubit, we are firm believers that a data-driven approach is the best way to create a great customer experience. Retailers are catching on to this, but slowly. Why go on your gut instinct if the maths tells you you’re going the wrong way? You think your intuition has a shot? Let’s put it to the test.

John is shy, meek, and likes things to be organized. Is he more likely to be a farmer or a librarian?

Some of you will have guessed librarian. In fact, most of you probably did. A stereotypical librarian would have many of these characteristics, so it is easy to assume that it is more likely that someone who has these characteristics will be a librarian. If I told you that there are many, many more farmers than librarians, would that change your answer?

This type of mistake is called the representative heuristic. We intuitively judge similarities based on similarities in perception, rather than knowledge of base rates of likelihood. No matter that I know there are 100 times more farmers than librarians. John fits the category so it makes sense he will be a librarian. This is why you can’t judge a book by its cover.

We can’t rely on our intuitions. This has permeated public consciousness, so much so that in fact, 76% think that strengthening shopper engagement is the biggest opportunity offered by big data. Using our wits to drive improvements in the experience of our customers just doesn’t cut it. Conversion optimisation is led by analytics not hunches. This has led to 69% of respondents from supermarket companies claiming that data-driven marketing to individuals as opposed to predefined segments - personalising their offering - is their biggest focus over the next two years.

They have good reason for this focus, in light of the changing habits of consumers. Sainsburys, using its data set, found that 83% of customers had changed their browsing habits in the past year.  How are you going to know if your customers’ habits are changing if you don’t collect all the data?

In short: don’t let your intuitions rule your business decisions on how to market to your customers. They know what they want, more than you ever can, so let the data talk and don’t get bogged down in representativeness.

 

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