February 23, 2005

Manipulating The Numbers

Numbers are a useful tool for swaying opinions and making a point. They are supposed to represent neutral data that cannot be called into question for bias and as such serve a very important role in garnering support.

Not a week goes by in which we do not hear about the numerical result of a study or survey. Fifty-six percent of Americans think that column x is more important than column y and twenty-seven percent are ambivalent about the two and or are simply disinterested.

The problem is that very few people have the ability to really dig in and understand how the data was gathered, let alone provide a practical application for its use. To me it is a very serious issue and one that deserves further education and research.

I have a practical example to share with you about how numbers can be massaged and misleading.

In a past life I sold copiers for one of the major companies. It was a tough job for many reasons, not the least of which was that copiers were not an inexpensive piece of office equipment as well as the technological advances rendered them obsolete or out of date relatively quickly.

What this meant was that you really didn't want to purchase a copier, you wanted to lease it. The idea being that you would pay a lower monthly fee and at the end of the term you could turn it in for a credit on your next copier.

Here is a real example of how numbers were manipulated. On one of our lower end models we used to offer a 3 year (36 month lease) term that ran about $12,250.00 for the entire term. That included the copier, service and toner.

This unit went head-to-head with a unit that my biggest competitor promoted as being far less costly than our unit. For that matter they used to brag about their copier cost $300 a month and ours was $340 and change. So they would go into meetings with their prospects and draw up a little chart in which they showed the $40 a month they claimed they would save for a whopping total of $1,440 over the life of the lease.

But they had a couple of weak spots in their plan that I used to take advantage of. The first was that toner was not included as part of the lease. These copiers were being sold based upon a couple of things, one was obviously features and the other was related to the volume of copies the business anticipated they would need.

So I could use this estimated volume and reasonably predict that the business would require two toner cartridges per year. Since my competition had not built the cost of toner into the lease the business could expect to pay a total of $900 per year for toner. In other words, the business was going to be hit with an additional expense of $2,700 for the use of the copier.

Let's recap the costs for a moment:


My company:

36 month term at $340 per month

Total $12,240.00 (includes copier, service and toner)




Competitor:

36 month term at $300 per month

Total $10,800.00 (includes copier and service but no toner)

Estimated cost of toner during the lease $900 per year or $2,700

Actual cost of Copier $13,500



So in reality the copier I offered was less expensive than the competitor's model because of hidden costs. Most of the time all it took to convince the prospect not to use the other guy was to point out the real price and wait for the steam to stop blowing out of their ears.

But the real point of this example is that numbers are not always as meaningful or significant as people want them to be. It is important to take the time to understand what is being fed to you and how that data was gathered.

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