Is That a Trout in Your Milk?

Sherlock Holmes is fond of telling his colleagues that he relies on deductive reasoning to solve his many cases. He assembles all the evidence, including patently circumstantial evidence, and then he deduces just what kind of possible story would explain all the facts. Story-telling is a uniquely human exercise, and it is a shortcut for how we human beings understand our world.

Storytelling is also a key to understanding the power of Martin Lindstrom’s book Small Data: The Tiny Clues That Uncover Huge Trends. If you haven’t yet read it, you really ought to take a look.

Lindstrom argues persuasively (and correctly) that it takes more than graphs and equations to generate true insights into consumer behavior. It’s his thesis that, in addition to the Bayesian probability calculations and complex Greek-letter equations that characterize most marketing and data analytics problems, simply using intuition and judgment to understand the story behind individual, one-at-a-time observations can often be quite revealing.

In 2004, for instance, LEGO had lost its way, with global revenues down by more than 33% in the last two years. But it turned its entire business around, Lindstrom said, by acting on the insights revealed from a visit with a single young boy at his home. This boy was an avid LEGO customer, but when asked what he was proudest of, he brought out an old pair of sneakers, announcing that they were his trophy, his “gold medal.” These sneakers were worn down in a very specific way, indicating that he was a passionate and experienced skateboarder. By simply wearing the sneakers around, in effect, he was announcing to his friends and indeed to the whole world that he was a highly proficient skateboarder.

What this visit to a young boy’s home revealed to LEGO, however, had to do with the singular importance of the social currency that children constantly strive for among their peers. So the company re-focused its efforts on its central, core product, the small LEGO bricks, introducing more detailed instructions to increase the challenge and to make assembling LEGO sets even more labor-intensive. As Lindstrom tells the story, this small insight caused the company to focus on “the summons, the provocation, the mastery, the craftsmanship and, not least, the hard-won experience—a conclusion that complex predictive analytics...had entirely missed.”

By 2010 LEGO’s revenues had nearly doubled, and by 2014 it had grown global sales to some $2 billion, overtaking Mattel and becoming the world’s largest toy maker.

As marketers, we all know the power of story-telling in our bones. You can’t really figure out how to deliver a better customer experience if you don’t get down in the weeds with your customers and understand the story behind their experience. You have to put yourself in a customer’s shoes, think the customer’s thoughts and feel the customer’s own feelings. That’s why serious efforts to improve the customer experience almost always involve some form of customer journey mapping, for instance.

And story-telling is how Sherlock Holmes solves his cases, by trying to find stories that fit the evidence. His example (with a reference to Henry David Thoreau, who first came up with it) is that you may not know for a fact that the dairy farmer has dipped his pail into a stream to water down his product, but if you find a trout in your milk, you can make a compelling circumstantial case.

Small data points require judgment, wisdom, insight, and creativity to understand, but when you do find a trout in the milk it isn’t so hard to tell a compelling story.