Data v.s. Storytell, Why and Why Not

Advanced Selling Podcast is a good podcast for sales professionals. Bill Caskey and Bryan Neale are very inspiring hosts who always deliver practical and executive messages. What it had been most helpful to me, was the encouragement I get from listening to their podcast: the way they talks make everything sound incredibly easy, cold calls are easy, negotiations are easy, differentiation is easy etc. 

Their talks brought me to think that maybe they are, or even it is not, I can always imagine they are. And by changing my perspective, I am able to make things look easier than I use to think and easier to get my hands on. 

Using the same way, I am able to reach out to all my ex-colleagues and re-build all my connections, that is over 200 of them in 5 countries! I am very glad I pushed myself to do that. 

Bill and Bryan are also extremely good in selling products and services that sponsor their talks. They often print beautiful stories that makes you feel it is only natural than you need their product or service. The story they tell for Stamps.com for example, gives a vivid visual on what it is like queuing at the post office, and you just can’t wait to order your stamps from Stamps.com

So it surprised me quite a bit when I heard their pitch for cyberpolicy.com: "it said that 40% of the cyberattacks are towards small and medium sized companies and 60% of them close down within 6 months. Go to cyberpolicy.com for your insurance”.

Contrary to the previous one for Stamp.com, there is no relationship in any sense between cyberattack and close down; there is, nevertheless, a relationship between small and medium sized companies and close down with main reasons such as lack of working capital, not price competitive, not innovative on market etc, cyberattack was never on the list. 

But is it just me or is it true for everyone. Is cyberattack actually one of the major reasons for SME bankruptcy, or is it at least an important reason. 

Survey by ASIC Data on 5,600 business in 2011-2012 revealed that poor strategic management as the most common cause of failure, attributed to 19% of SME failures, with another 15% of failures attributed to poor financial control.

Survey from CCH and Wolters Kluwer in 2013 on 1,000 SME found 61% of SME operators said small businesses failed because of an inability to manage costs, 50% said inexperienced management, 50% said poorly designed business models or no business plan, 49% said insufficient capital, 37% said poor or insufficient marketing, and 35% said insufficient time managing the books.

But may be the data is too old, maybe the past 3 years seen a difference?

Not exactly.

An 2016 study on major challenges facing SME in Asia countries listed accessing finance, low level of R&D, lack of IT (by which they mean digitalization) and lack of information infrastructure ( which is referring to capital market information etc),

In his book Small Business Management, Michael Ames gives the following reasons for small business failure:
  • Lack of experience
  • Insufficient capital (money)
  • Poor location
  • Poor inventory management
  • Over-investment in fixed assets
  • Poor credit arrangements
  • Personal use of business funds
  • Unexpected growth

Gustav Berle adds two more reasons in The Do It Yourself Business Book:
  • Competition
  • Low sales
 Of course, I will never be able to totally rule out the correlation, there are very likely SME that fail due to cyberattack. More of them are better off focus on solving other problems.
This brought me to think about 3 questions: 


What went wrong: the fallacy here is called illusory correlation, or more common described as ‘correlation does not imply causation’, while 2 phenomenon that have been commonly observed to happen to gather are often considered to have a relationship, for example, here the speaker is putting two phenomenon, cyberattack and bankruptcy, together with the aim to have the audience connecting the dots themselves, There is actually no evident that suggest a direct or indirect relationship. It is a commonly used trick in marketing.

While in this case, the second phenomenon is a negative event and it tried to create the effect that because the audience wants to avoid the second, they want to avoid the first. In other cases, two phenomenon may be put together with the second one being positive, encouraging audience to pursue the first one. 

‘Torches of Freedom”, the first PR campaign made by American Tobacco Company aiming to open female cigarette market, was an excellent example using a positive concept to sugarcoat a negative behavior. The campaign proclaimed that smoking was a form of liberation for women, their chance to express their new found strength and freedom.  Sales of that cigarette brand doubled in less than 6 years. 

That said, try not to extend the negative emption on cigarette on to cyberpolicy.com, the second is a reasonable product and it is developed for your benefit, it is the technique and data that was wrong. The first may cause your life.

And that brings my second question, what if the audience spot the fallacy, what impact does this bring to their attitude towards the product and what if they go beyond to discuss this with others. It is a similar question as to “if a person did something wrong, does it make this person a bad person?”. Or at least, a questionable person or a suspicious person.

Study saids it depends on if the behavior trait is perceived or not, how much the behavior trait is similar or different from topic in discussion, how serious is the incident etc. 
Say if you didn’t notice the fallacy, you will not be affected; if you notice the fallacy but you consider it to be a single incident, you will not be affected; if you spot the fallacy and you always believe any company that use marketing techniques to mislead consumers do not have good products, you will be affected; if it is about the company hiding accidents not disclosing to the public spontaneously but only after journalist report it, you may be affected. 

So to summarize, it depends. the only certainly is that it does not bring positive influence. And it is enough to make the point that marketers and product managers need to ensure their quotations and logics are sound, 

What are the major takeaways: I get two takeaways, the first is that we need to verify the message and logics that they are not against market perception; in other words, it is not too far fetched; a very far etched logic needs strong evidences and time to prove, and we don’t have netter one of of them; the second is when we don’t have good data, we can always tell a good story, a uint of one and something that is so hard to verify and so easy for audience to associate that they tend not to bother to verify. Most of us believed in fairy tale and Santa Clause, We are wired to believe in stories. 

In fact, it is all about storytelling. All decisions have an emotional component, most, if not all, the choices we make are completely at the mercy of our emotions. Tell your story in a sincere way, use what gives you the best outcome, and verify with reality. 

And we live happily ever after.

Reference:
Major Challenges Facing Small and Medium-sized Enterprises in Asia and Solutions for Mitigating Themhttps://www.adb.org/publications/major-challenges-facing-small-and-medium-sized-enterprises-asia-and-solutions

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