The Rise and Fall of Nate Silver: A Lesson in Risk Communication

thinkstockphotos-543817436Political prognosticator and analytics guru Nate Silver rose to national fame by correctly predicting elections. But in 2016, Silver joined almost every other analyst by projecting a victory for Hillary Clinton over Donald Trump. Was Silver’s good luck over?

Cognitive Bias and the “Failure” of Data

Actually, Silver’s estimate for the 2016 election was closer to correct than almost anyone else’s. He saw Clinton as a heavy favorite, but still gave Donald Trump a roughly one-in-three shot of winning. But the world didn’t remember that part of the projection once the election results came in. They just remembered the part Silver got wrong. Nobel Prize winner Daniel Kahneman has an explanation: cognitive bias.

Kahneman studied how people make decisions and judgments, and he quickly discovered that they don’t make any sense. People like to think of themselves as logical and rational, but they mostly use logic to justify believing whatever they want to believe anyway. And one thing people absolutely love to believe is that the future is certain. Human minds loathe uncertainty. Uncertainty breeds anxiety and fear—sometimes paralyzing fear. So when given a number like “one in three” or “ninety percent,” they subconsciously convert the odds to “yes” or “no.”

This cognitive bias is often very useful. You probably never consider the statistical chance that you’ll be run over by a bus because if you did, you might never leave the house. It’s far easier, and probably mentally healthier, to treat the risk of bus accidents as a 0. But the tendency to round probabilities up or down can be disastrous in the business world.

Communicating Risk

Have you told your boss that there’s a 90% chance you’ll make the sale? If the deal didn’t go through, you were probably in a bit of hot water. Has a supplier ever told you her product’s failure rate was less than 1%? You’d probably be pretty mad if your order was a dud. The problem with both of those statements of probability is that they do a poor job of communicating risk. They invite the mind’s cognitive bias to take over and convert the estimate into a certainty. When that certainty turns out not to be so certain, it feels like a broken promise.

That’s why the world decided Nate Silver was wrong. They had rounded up the probability of a Clinton victory to a guarantee. When Trump won, it felt like Silver had broken his word. His failure wasn’t in the data—it was in the way he communicated the risk.

The lesson here is that quoting numbers won’t save you.

Don’t just toss out percentages—put them in context. Visualizations are one useful technique. If a product will fail one time in a hundred, a graphic with 99 white shapes and one black shape gets the message across far more effectively than the numbers. Analogies are also effective. A 90% probability? That’s about the same as the chance that an NFL kicker will make a 32-yard field goal. Anchoring the numbers to a familiar context creates a lasting impression. It forces the mind to acknowledge uncertainty.

In business and life, people care about honesty. But if your goal is to be trustworthy, it’s not enough to state the facts. You have to make those facts sink into others’ minds. When it comes to probabilities and risks, that task is taller than it looks.

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Business Lessons From the Wizard of Oz

The Wizard of Oz is an exciting tale that has delighted people for several generations. When young Dorothy is magically transported from her home to the magical land of Oz, she and her companions must outsmart witches and other dangers in an effort to find the famed Wizard of Oz, who they believe can help her find her way home and grant her companions gifts of their own. Upon finally finding the wizard, however, they learn that he is not some great and powerful wizard after all. Instead, he’s just an ordinary man behind a curtain, projecting his voice and image to appear to be a magical being. Still, in the end, Dorothy does learn how to get back home.

The Wizard of Oz and Business

There are two key lessons we as business leaders can learn from the wizard. In one situation, he’s an excellent example of what we should do. In the other, he does the exact opposite of what would be appropriate in the business world.

What the wizard gets right

In Oz, the wizard regularly projects his voice and opinions for all the kingdom to see. He providers personalized information for each person who visits him.

In social media, we’re often asked to be like the man behind the curtain. We must project our voice and opinions in a variety of media, communicating a sense of authority and wisdom. With all the demands of the modern business world, it can be tempting to resort to automation. There are a number of ‘tricks and cheats’ available in the social media world. From programming social responses to buying followers to automating tweets, it’s very easy for those who desire it to completely remove themselves from the actual social media process.

If we’re to learn anything from the mysterious wizard, however, it’s important to remember to always have an actual person ‘behind the curtain.’ This will allow us to engage potential leads when they arise and avoid missing opportunities to bring in new customers, which can easily happen if all our responses happen automatically and we aren’t actually monitoring the conversation.

What the wizard gets wrong

Although it’s important to remain actually present behind all our social media campaigns, we also need to be authentic. The wizard made the devastating mistake of casting himself as something he wasn’t: a powerful wizard. When those who actually needed his help (like Dorothy and her companions) turned to him, he was virtually powerless to help. If we cast ourselves as something we’re not, nothing will destroy our reputation faster than our customers realizing it. We must always be realistic about our capabilities and strengths. Play up what you can do for customers and be confident in your abilities, but don’t ever let yourself get caught in a web of lies.

What to take away

Social marketing is an important part of branding and finding new customers. It requires authenticity. That means broadcasting a solid message based on what you can do for customers and always keeping a person involved with every stage of the campaign to communicate with customers. When you stick to these two rules, you’ll have a great chance of success.

Are you ready to get a new campaign started? Come talk to us! We’d be happy to help you get started.

Improve Your Integrated Marketing Campaign in 3 Easy Steps

Integrated marketing campaigns give companies the chance to reach their potential customers on a number of different platforms. A well-orchestrated campaign branches out across several platforms to reach the target audience wherever they might be found. Not all integrated marketing campaigns are created equally, however. Here are three steps you can take to start maximizing the benefits you receive from your integrated campaigns.

Step 1: Create a specialized landing page

Your integrated marketing campaign is aimed at bringing people from a variety of platforms and sources to your company website. Rather than just bringing them to your homepage or service page, however, create a specialized landing page that will directly speak to these visitors based on what they learned about your company through the advertisement.

A quality landing page will have certain characteristics, including clear, concise information about the value the customer is receiving and an easy-to-use form to fill out to buy or sign up for something. In return for filling out the form, the customer should receive something of equitable value. Perhaps you’re running an advertising campaign for a new cleaning product. Your landing page should extol the virtues of this cleaning product, offer customers the chance to purchase it, and perhaps include a call to action that invites people to download a free ebook about efficient spring cleaning.

Step 2: Use QR codes

QR codes can be a great way to tie a traditional campaign in with the digital world. By putting QR codes on your direct mail ads, newspaper print ads, and similar pieces, you give your customers a way to connect with your landing page (described above), without having to worry about typing in web addresses or remembering your site name. Customers can scan the QR code with their smart device and get redirected automatically to your landing page.

While QR codes are fantastic, it’s important to remember that there are some people who don’t have smart devices or aren’t in a position to scan when they see your advertisement. For these people, make sure your web address is still displayed near the code.

Step 3: Tighten the campaign focus

One of the biggest risks many marketing professionals run into is the urge to reach everyone in the community. That’s not going to be possible. For you to run a successful campaign, you need a target audience — a demographic you can pinpoint and analyze to see how you can solve a problem for them.

It’s common for businesses to get a bit carried away when it comes to integrated marketing because they think of all the different people they can reach on different platforms. But just as with any other marketing campaign, try to focus on a key demographic. Use information and research about this target to see what platforms are best to reach this type of customer, then develop the integrated campaign accordingly. Tighten the campaign to help it speak directly to a particular buyer persona.

Building an integrated marketing campaign is a helpful way to get your message in front of people throughout their day. Integrated campaigns help people develop stronger associations with your brand, remember your message, and hopefully convert more readily. If you’re looking to improve your integrated campaign, consider these three factors and see what you can use to take your campaign to the next level.

Keeping in Touch with Your Customers — Without Annoying Them

When you’re trying to build your business, it’s easy to get caught up in the thrill of the hunt — for new customers, that is. However, as studies from the Harvard Business School show, focusing attention on existing customers and increasing retention rates by just 5% will increase your profits by 25% to 95%!

Of course, savvy business owners know there’s a fine line between keeping in touch and being a bit… well… annoying, or even worse, stalky.

Put yourself in your customers’ shoes: How many e-mails do you want to receive every day? How many phone calls do you want to take? Sure, persistence is important in cultivating your customer base, but overdoing it can prove counterproductive by annoying the very customers you’re trying to reach. Here’s how to find the right balance.

Make it Personal

Who doesn’t like to receive a personalized card or handwritten note in the mail? There’s a world of difference between sending out an impersonal flyer or form letter and a customized note printed on attractive cardstock. Which would you be more likely to open and read?

Send personalized updates on the “regular” occasions — clients’ birthdays, anniversaries, major holidays, and the like — but also consider spicing it up a bit by sending a note or card when they don’t expect it. After all, most businesses send appreciation cards and letters during the winter holidays, so that’s just par for the course. Stand out by also picking a random date to surprise them.

Loyalty Programs

And speaking of dates, choose a day with significance for your customer — like their birthday or the anniversary of their first major purchase from your business — and use that occasion to automatically enroll them in a loyalty program. All you have to do is send an email letting them know you’ve enrolled them into your “VIP” program, or whatever you choose to call it.

Why automatically? Because a key to successful loyalty programs lies in making it as effortless for your customers as possible, without requiring them to take any extra steps or actions.

Artificial Advancement

The other key to successful loyalty programs lies in creating what’s known as “artificial advancement” toward a goal or milestone. A 2006 study in the Journal of Consumer Research found that customers who received punch cards as part of a loyalty program were more likely to become repeat customers if they were given a head start toward reaching a goal. For instance, many coffee shops offer loyalty cards that give a customer a stamp for each coffee drink they buy, then reward them with a free drink once they’ve accrued 10 stamps.

Researchers found that customers were almost three times more likely to use their punch cards — and spend money at a business — if at least two stamps were already present on the card when they first received it. Apparently, customers like to feel that they’re already well on their way to receiving awards!

Make Contacts Worth Their While

Whether it’s in an e-mail, through a printed newsletter, or on a sales call, providing customers with information they can use adds value to your communications and eliminates the annoyance factor. Offering industry news, community updates, or other data that’s relevant and useful to your customers goes a long way toward transforming the way they perceive your marketing efforts. A professionally written and well-designed direct mail piece sent a few times a year that’s packed with info they can use is always welcome.

If you keep your communications relevant, concise, respectful, useful, and personalized, you’ll never have to worry about being too persistent.