Paying big bucks for anecdotal evidence – a costly trap

Here is an experiment that has some telling implications. Ask 100 people who are looking at cars on your lot and in your showroom over the next few days where they are. Don’t ask people in service as they are more likely to be paying attention to where they are because they have already committed to a transaction. You have to politely ask them to not look around before they answer (no peeking). If you are a Ford dealership, chances are that 95 to 99 of the people will say they are in a Ford dealership. How many of them will know the ‘name’ of the Ford dealership? 90? 80? or maybe even less like 50 or 40?

Why would you run this experiment? A couple of reasons; the obvious one is that people on the lot looking at cars to possibly buy are not as aware of your ‘brand name’ as you are. Does this mean that if more of the people knew the ‘name’ of the dealership, you would sell more cars? Doubtful at best. Yet, there are companies out there that charge a fortune to interview people on your lot to determine ‘where’ they heard about your dealership. This is called ‘anecdotal evidence’.

People don’t pay attention to the same details you think are important – they have their own individual set of priorities that make anecdotal evidence a poor guide to fashioning your business decisions. Take the dealership that hired one of these customer interviewing services to determine from which advertising medium the most customers heard or saw their dealership mentioned (with the obvious intention of guiding you to use that medium more). In this case, Radio was the overwhelming winner – yet the dealership didn’t have any radio ads running and hadn’t for over a year!

You see, people will cite the medium where the most dealerships ads are heard or seen in that particular market. The customers are constantly hearing radio ads for car dealerships in this market and, as a result, they will cite radio as the place where they heard about this dealership – even though this dealership doesn’t advertise on radio.

Remember, even when they are standing on your lot, many don’t even know the ‘name’ of the dealership (other than it is a Ford or Toyota dealership). I don’t think you need to hire a company for 20K, 30K or more to tell you which medium is most used in your market. You can figure that one out for yourself.

If you want to question customers and get information that may actually have some use, question them after a transaction (when they are paying attention).

Here are two good questions: What features of the car they selected helped them make their decision? And, what did they like or dislike about their experience buying from you?

You’ll still get a wide range of answers, but at least this particular anecdotal evidence is derived from people who are paying attention – they just bought a car from you! (and even at this point, not 100% of the people will be able to tell you the name of your dealership)
You want to measure results? Keep track of your market share each month and look at it over extended periods to determine what worked and what didn’t. You’ll still have to do some guessing, but at least you are working from ‘results’ information rather than anecdotal evidence.

For a direct marketing strategy that has SUSTAINABILITY and grows both INFLUENCE and MARKET SHARE, please click here for a sustainability study from the ARM system.

Posted on September 3, 2015 in ARM, Market Share Growth, Perspective

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