There is a truism in gambling that you don’t need an indicator that’s right all the time to help you predict winners. You do just as well betting using an indicator that is wrong all the time as long as you remember to bet the opposite of what the indicator predicts will happen. Consistency and accuracy are what you’re after, and something that is wrong all the time is very accurate, albeit in the wrong direction.
I thought of that when I read about a study to be published in the Journal of Marketing Research. It dubs certain consumers “harbingers of failure,” because they are people whose tastes lead them to buy new products that are doomed to failure on a very regular basis. In other words, if one of these folks buys your new to the market product, kiss it goodbye:
A study of retail purchases from about 130,000 consumers at a national convenience store chain found that 13 percent of them had purchasing habits that predicted failure of a new product, defined as surviving less than three years. Specifically, half or more of the products they bought flopped.
So, customers who bought Diet Crystal Pepsi are more likely to have bought Frito Lay Lemonade. Both failed. Further, not only is their early adoption of a new product a strong signal that the product will fail, but “the more they buy, the less likely the product will succeed,” the researchers wrote.
That’s from the Chicago Tribune report on the study. So what does this have to do with your business? We often get way too focused on what’s a straight line; the indicators that confirm a positive relationship between what we’re doing or marketing and a growth in revenues. What this study points out is that we need, instead, to focus on ANY indicator that has a demonstrable correlation to our success or failure no matter what form it takes. Finding 15,000 consumers who always seem to purchase products that fail is fantastic. While it puts you in the unenviable position of rooting for certain people NOT to buy your new product, it also allows you to take action. In this case, the recommended course is to ask people not only whether they would buy the new product but what other products they buy — to judge whether they have mainstream tastes.
And that should help you make more winning bets!