The wrong numbers – are you comparing apples with pears?

I thought I’d highlight the care you need to take when reading data. It’s easy to get it wrong.

Note: Please read this alongside my post about using information to help your business succeed


So, you’ve got the numbers and supplementary information you need at your fingertips. You’ve been reviewing this and using what you’ve gleaned to inform what you do. But things aren’t going quite as you’d hoped and expected. Something’s not right.

There can be a variety of things which could be leading you astray. Here are a few possible scenarios for you to consider which highlight how you need to approach information and data analysis to make sure it’s working for you.


The numbers might be hiding more than they are revealing:

Your top line figures might be showing that your profits are good or even up, but if you’re not looking at how those figures are made up, then you might be heading for a fall.

It could be that one area of business is dramatically increasing whilst another is in decline and needs action to address it. If it’s the more profitable area of the business that’s in decline then you need to be worried.

Understanding how different parts of your business are individually performing is essential if you are to maximise your profits and make sure you are addressing issues within the business.


They’re not the right numbers to measure what you’re trying to achieve

You’ve set some targets for your sales team to bring in new customers. They’re doing a great job and overachieving on what you’ve set. Things are looking good, but this may not actually be the case. If you’re losing existing customers because your sales people aren’t spending any time on them, then things are looking much less rosy.

Making sure that measures and targets are set which consider all the contributing elements is vital if you are to be confident of achieving what you want.


You’ve got the numbers which show you what you want to see

We’re all familiar with the phrase ‘Lies, damn lies and statistics’, but we don’t always realise how we can see what we want to in the information/numbers we collect.

When digging down into the underlying figures and information you need to be careful to ensure you are not looking to prove a point but to uncover what is happening. Approach any investigation with an open mind as to what you will find, that way you’re more likely to find out what’s really going on.


You’re comparing apples with pears

Not comparing like with like can lead you to the wrong conclusions.

Suppose one of your customers moves from one region of your business to another. If you don’t take that move into account when reviewing the figures for the different regions then you could miss the fact that the growth in business in one area is no more than simply a result of an operational change rather than something to shout about.


You’re mistaking correlation for cause

You’re looking at an increase in sales over the last couple of months and have noticed that it coincides with the arrival of a new sales team member. It’s obvious they’re doing a great job… aren’t they?

Well they might be, but you won’t know for certain unless you rule out other factors which might equally have led to the rise. Had the previous salesperson done the groundwork which has led to the increase? Has a competitor increased their prices or closed an outlet over that period? Has the weather been a factor? If you know what impacts your business then you’ll know what you need to check for, just be wary of leaping to conclusions.


Remember that nothing stands still

It’s important to remember that information is correct at the time it is collected, but is unlikely to stay the same over time.

You want to see how your competitors are performing so you get hold of the latest financial reports on your top 6 competitors. There are 2 things to bear in mind. Firstly, the information will be out of date, it reflects the position at the end of the last reported financial year. Secondly, they may not still be your top 6 competitors… there may be other companies which have grown in your market segment and are now more important for you to monitor.

Continually, or at least regularly, keeping an eye on the market and the competition as well as your own figures will help you make the right decisions for your business. Making sure that the information you use is up to date is vital.


Using Marketing Research

There’s another area which I’d like to flag up which is around using the results of any market research you do. Research results are helpful but should always be viewed with a level of healthy scepticism and an understanding of the potential for error involved.

I have posted a separate article on Market Research, but the key thing is to make sure that:

  • you use the information for the purpose intended (and that it was designed to produce answers for)
  • you were talking to the right people – and, for quantitative research, enough of them
  • you’ve asked questions in a way that doesn’t bias the results.
Finally, when looking at the results of any data analysis, it’s a good idea to listen to your gut instinct.

If it doesn’t look or ‘feel’ right, then it’s worth checking that you haven’t built any errors into your analysis. Use the check list which I’ve outlined so you can be confident that your interpretation is sound and you can use the results to help guide your decisions.


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