A great deal has been written here and elsewhere about the irrational behaviour of consumers. However, it is also important to remember that marketers and businesspeople, in general, are also consumers, or at the very least human beings and as such inclined to be irrational. Further, there is ample evidence to suggest that the best […]

A great deal has been written here and elsewhere about the irrational behaviour of consumers. However, it is also important to remember that marketers and businesspeople, in general, are also consumers, or at the very least human beings and as such inclined to be irrational. Further, there is ample evidence to suggest that the best decisions in business are made rationally, and as such that irrational behaviour by marketers is not conducive to performance maximisation. Marketers also need to learn to make decisions rationally. To make the best marketing decisions – avoid survivor bias. Many businesses calculate their ARR – annual rate of return – from customers. In one example of this practice examined by researchers, the initial calculation suggested an ARR of 112%. However, this calculation was based on the rate of return from retained users (users who were still customers at the end of the financial year). When a second…