Presidential elections always bring out the big guns in terms of pundits, pollsters and politicos. As always, there are many things to be learned for business marketing from political marketing – both good and bad. Here are some take-aways on market research.
Pundits are wrong 50% of the time. Opinions matter, which is why opinion leaders and early adopters are so important in marketing plans. But the opinions that matter are those who either vote or can influence a voter. People pay attention to pundits because of their perceived ability to influence, but the truth is New York Times blogger Nate Silver has conclusively proven that pundits are wrong 50% of the time. His new book, The Signal and the Noise, finds that pundit predictions are as consistent as a coin toss. In your business, who are the real opinion leaders that can drive traffic to you? It’s more likely a PTA president than a political leader.
Pollsters also get it wrong. Pollsters are the market research arm of many campaigns, so how come with modern models and algorithms they also don’t always get it right? According to Sarah Dutton, Deputy Director of Surveys for CBS news, most polls are “snap shots in time” rather than predictions. See her explanation in this video from CBS Sunday Morning.
For businesses, the moral is to be careful of research results. If the questions aren’t right, the answers won’t give you what you need for future planning. Here’s a case in point. Years ago, when asked if they needed a fax machine, most businesses said “no.” Within 1-5 years of that survey, fax machines were critical to day-to-day business. The reason for the missed predictions was that the people asked had no experience of fax machines to know they even desired one. Today, the question is moot.
Numbers guys get trendy. Aggregators such as Nate Silver tend to get closer to the truth because they combine all the polls and crunch the numbers to figure out actual odds. There’s a reason bookies make money. They understand odds. It’s the reason aggregators also do well. They can compile the wisdom of everyone else and figure out trends and patterns. For businesses, the lesson is to differentiate between one snap shot of feedback from an emerging trend. It’s the trends that will tell you your odds of success or failure.
The Walk-away: In a place like Atlantic City that runs on odds and gambling stakes, it’s interesting to know that a semi-pro poker player and baseball statistician aficionado, Nate Silver, has a current better track record in predicting elections than pundits. It shows that numbers matter, and whether you’re counting cards, runs batted in, electoral votes, or foot traffic – you need to be working with a full deck to understand your odds for interpreting outcomes in business as well as politics and poker.