Agile Insights Blog

4 min read

Common Sense Isn’t Always Common Sense

Mar 31, 2016 2:29:05 PM

I was recently introduced to a marketing consultant by a mutual connection. To follow-up on his questions about Vennli, I sent him an email which included a link to a case study (you can read the case study here if you want).

Here was his response to my email:

Hi Rachel,
Thanks for the sales pitch….
That seems like common sense to me.
Sincerely yours,

I couldn’t help but feel a little defensive – both for Vennli and my client. But before I responded, I paused to think more about his reaction. It’s actually natural and something we all experience.

Good ole Wikipedia defines hindsight bias as follows:
Hindsight bias, also known as the knew-it-all-along effect or creeping determinism, is the inclination, after an event has occurred, to see the event as having been predictable, despite there having been little or no objective basis for predicting it.

This is just one of many biases we all have. We have to make decisions all day long without complete information, and we do so by connecting data and seeing patterns wherever we can. This helps us simplify our surroundings… sometimes to our detriment. When it comes to trying to predict customer behavior, specifically how customers choose between competitors, basing decisions on assumptions can be dangerous as it is rife with our personal bias.

In other words, common sense is not actually common sense.

Our co-founder and Notre Dame Professor Joe Urbany identifies four basic gaps between what executives predict and what customers actually say:

  1. Customers think about your competition differently than you do. (When Joe surveyed 421 past executive students that completed a strategy project using Vennli’s model, 28% indicated that customers brought up competitors that they had not considered.)
  2. There are factors customers think about when making choices that you don’t know about.
  3. What you think is important to customers may not be (and vice versa).
  4. What you think customers believe about what makes your brand better is often wrong.

Assuming you have all the data, or that all of the answers are “common sense�? is reckless. The faster you can correct for these gaps and properly diagnose ways to enhance customer value, the faster you can grow your business and beat your competition. You need data about the drivers of customer choice and how you compare to the competition in order to make better decisions about your product, marketing, and sales.

It’s not unusual to conduct customer or market research and then look at the results and think, “That makes sense! I totally would have guessed that!�? Hindsight bias.

In fact, it’s so common that, to address this bias, Vennli has their clients take the customer survey themselves so that we can present the “internal view�? and compare it to the customer view.

They NEVER match. Most commonly, company leaders have a more positive view of their product’s competitive advantage than customers actually perceive. They often think factors are driving customer choice that are actually of low importance to customers.

While sometimes uncomfortable to see, this visual comparison of the internal view vs. the customer view of the market is eye-opening, and it prevents the “that’s common sense - I knew that already�? phenomenon.

Bryant McGill once said, “an intelligent person is never afraid to find errors in his understanding of things.�? This can be humbling and takes bravery, but the cost of NOT checking internal assumptions with customer data can be crippling for an organization.

So, going back to the case study, our client reduced the risk in their decision-making process by testing their assumptions and bravely being open to finding things that were not “common sense.�? While the case study doesn’t share the findings in great detail, it shows the power of gaining the type of insights that allow you to focus on exactly what matters to customers.

So, here was my response to him:

Dear X,

I can understand how you might think our case study was common sense. Let me explain why. 

The purposes of a Vennli growth case is to study how customers choose between competitors. We take the factors customers consider and, using survey data, visualize which are most important to customers and how competitors compare.

As you know, there are limitless possibilities when it comes to positioning and messaging. The goal for any marketer is to figure out which messages will drive growth the fastest within specific segments of the market that are the easiest to target. Marketers have amazing technology available to them to distribute messages to customers, but the messaging input is often determined by marketers based on their assumptions about what will drive customers to choose their product.

At Vennli, we have the marketing and product leaders at organizations take the survey so that we can create an “internal�? view that we can compare to the customers’ view. This prevents the arrogant “I knew that already!�? bias that we all naturally have. At the very best, we find the internal perspective of a company is only around 60% in alignment with the external view - usually it is much less. I’m not comfortable making decisions knowing that 40% or more of what I think about my customer and competitive positioning is wrong – not many would be.

I’ll give you another example. Another client (you can read their case study here), thought their biggest competitive disadvantage was the attractiveness of their facility. Their closest competitor had recently done a renovation, and their leadership felt they were losing market share for this reason. It turns out that it was actually patient wait times driving patients to choose their competition. This lead them to pivot their strategy to improve their patient process to reduce wait times instead of investing in facility improvements… and it resulted in an unprecedented increase in patient volume in a short period of time.

In company meetings, we often hear people say, “I think….�? How many strategic decisions were made in those meetings based on what someone in the company chalked up to as common sense? Sometimes this turns out OK…. But sometimes we’re wrong and don’t know it. Either way, we’re not as effective as we could be if we had a clear understanding of what drives customer choice.

Most people believe they possess common sense, but as Voltaire once said, “common sense is not so common.�?

I’d love to continue this discussion if you’re interested.


Topics: General

Written by Vennli

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