Monday, September 17, 2012

Finesse Precision to Fit the Premise

On a tour at the big city museum, a guest points to the reconstructed skeleton of a Tyrannosaurus rex. She asks, “How old is the skeleton?”
     “Oh, roughly sixty-five million, five years, six months,” answers the guide.
     “Roughly? That’s a pretty precise “roughly.” How can you come up with such an exact figure?
     “When I trained to be a guide here, they told me those bones are sixty-five million years old. That was roughly five and a half years ago.”
     I think most retailers would agree the guide was guilty of unnecessary exactness. He forget to fit the precision to the premise, as you’d have done.
  • Is it better to say “73% of our 70 products meet all applicable standards” or “51 of our 70 products meet all applicable standards”? A classic finding in consumer research is that percentages are easier than raw frequencies to understand and remember. Therefore, if ease of comprehension is important, present the percentage format. Then, unless close precision is required to earn shopper credibility, ease the cognitive load by rounding off. “About 60%....” is easier for the prospect to work with in their head than “Between 58% and 59%.” 
  • A rating scale ranging from 1 to 100 risks conveying a misleading precision. Is there really that much difference between a rating of 35 and 38? A one-star to five-star rating system is usually more accurate and meaningful for the shopper. 
  • Researchers at University of Southern California and University of Virginia defined “goal specificity” as how precise a consumer’s savings goal is. “I want to save $3,000 this year” has high goal specificity because it’s so precise. “Over the next few years, I want to save as much as possible” has low goal specificity. The researchers found that when a savings goal is long-term, the financial advisor should encourage more precision. 
  • Dropping prices dramatically can attract new customers. But it also has a clear potential to irritate current customers. Economists use the term “rockets and feathers” to describe how prices on many item rise quickly, but drop slowly. Consumer behavior research at Northwestern University and Massachusetts Institute of Technology finds that lowering prices gently and with precision is a good way to ensure customers who visit your store often will continue to trust your pricing. The economists can still credibly use the word “feathers”, since one meaning of “feather” is to hit softly and precisely. 
Click below for more: 
Choose Between Percentages & Frequencies 
Inform Consumers, But Don’t Intrude 
Enrich Clients’ Savings Deposits 
Feather Pricing Changes with Precision

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