Quantitative Intuition: It’s Not Counterintuitive (Nor an Oxymoron)

Think of the best salesperson you know: if you’re fortunate, perhaps someone in your company or, less happily, in a competitor’s firm.  What are the qualities that make this person excel at the job of sales?  In a classic Harvard Business Review article “What Makes a Great Salesperson” (July-August 1964) David Mayer and Herbert Greenberg likened a star salesperson to a heat-seeking missile: “Sensing what customers are feeling, they [the sales stars] are able to change pace, double back on the track, and make whatever creative modifications might be necessary to home in on the target and close the sale.”   Whereas most of us have intuitive abilities to a greater or lesser extent, excellent salespeople lever this intuition with strong empathy skills (sensing what the customer’s needs are) and the relentless personal drive necessary to cross the finish line.  If they could, managers would bottle this elusive elixir of talents and have all their salespeople drink it, every morning of every day. Read the rest of this entry »

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Globally, $50 Trillion of Wealth Disappeared in 2008; Will the Long Tail of Consumer Choices Survive?

The global financial crisis wiped out $50 Trillion of wealth in 2008, and the global economy is likely to shrink in 2009 for the first time since World War II. The cumulative effects have left consumers without any excess household income – some losing their homes or jobs altogether – and therefore less likely to spend on frivolous products or services. As this trend continues through the predicted turnaround starting in 2010, I wonder if we’ll see an equally large contraction in the number of consumer choices that have exploded in the past 10 years?

In October 2004, Chris Anderson coined the term the “Long Tail,” referring to a new economic model where companies sell more of less. This was a direct result of the ubiquity of the Internet (along with increased processing power and cheap online data storage), where an unlimited selection exists for information, products and services 24/7/365. He argued that consumers were no longer confined to a narrow list of choices that emerge from large corporate entities in the form of “blockbuster” hits that are meant to satisfy the masses. Instead, consumers were wandering further from mainstream tastes and discovering that their preferences lie in the form of smaller niche movies, books, music, websites, services, etc. I found the theory intriguing back in 2004, but am now reconsidering it’s viability in the context of the global economic crisis: will the long tail survive?

To answer this, I can simply skim the news headlines to find companies scrambling to trim the fat off their product portfolios. No longer is cutting prices a viable strategy for dealing with declining consumer demand. Companies have turned to the ax to focus marketing dollars on their higher-margin, best-selling brands to help retain consumers, who are trading down in the recession. Auto companies have been hardest hit, where GM’s Hummer, Saturn and Saab brands will likely be lost if a buyer isn’t found. Chrysler management has already stated that the company has too many brands and too many dealers. Ford remains afloat, but for how long? Food companies from Sara Lee Food Corp. to H.J. Heinz Co. are trimming their offerings. In the airline industry, Aloha, ATA, MAXjet, Skybus, and Champion Air grounded their planes. Simply put, the long tail just got a little shorter. OK, a lot shorter. As shrinking payrolls, housing values and credit availability continue to push consumer demand down, I think it’s likely Chris Anderson will annotate the theory of the Long Tail to show its existence is more often a byproduct of exuberance in the markets rather than a permanent trend.

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