WHAT IS THE HALO-EFFECT AND HOW DOES IT AFFECT YOUR BUSINESS?
Being completely engaged in your company, and of course, also being an expert on its products, it’s a good bet that you think your product is pretty darn outstanding.
The salient question we need to ask ourselves is how much of our perception is based on our personal experiences with our company’s product and our personal investments in its development? We might also ask ourselves how we truly know our product is the right fit for our clients?
There are a mess of questions like this brought on by our attachment to our products or services.
But, let us not beat around the bush. Let’s have a broad-strokes example of the Halo Effect to jog our memories:
In their recently published book, “Think like a Freak,” Steven Levitt and Stephen Dubner (the authors of “Freakonomics” and “Super Freakonomics”) discuss some of the pitfalls entrepreneurs need to avoid in their perception of their products. To illustrate their point, they cited a survey about the events of 9/11. The survey given out after the event asked, “According to news reports, groups of Arabs carried out the attacks against the USA on September 11. Do you believe this to be true?” (Matthew Gentz, 2004)
To those of us in the U.S., this statement is obviously true, but to respondents in predominately Muslim countries, the statement did not seem as valid:
Country Percent believe to be true
(Matthew Gentz, 2004)
On its surface, it seems to us that there must be some flaw in this study’s sample, but the results were valid. This survey is not brought up to begin a geo-political debate, but to demonstrate the Halo Effect.
The Halo Effect is awell-documented social-psychological phenomenon that causes people to be biased in their judgments by transferring their feelings about one attribute of something to other, unrelated, attributes (Jennifer Cardello, 2013). In this particular survey, the respondents’ feelings about their religion and culture caused a level of disbelief that someone from a similar culture and religion could have organized such a horrific event—in their mind, it just couldn't have been true.
A known problem companies have, simply put, is that insiders exhibit The Halo Effect with reference to their own products. Millions of dollars are spent every year on R&D on product development, but during this development, entire teams forget the prime directive, which is to ask the one person that matters: their customer.
Due to the Halo Effect, the time and effort that has been invested into developing the product or solution are transferred to whole into the company’s perception of how well it will meet the customers’ needs. Therefore, the company may think they have exactly what the customer needs at the exact price point that they need it at.
Unfortunately, the customer has not made that same investment. Thus, they may not agree (in part or in whole) with this group-think perception—causing a serious disconnect that leads to
Decreased customer satisfaction
Shorter contract terms
Abandonment and defection
So how do we effectively challenge the Halo Effect within our organizations?
By incorporating Win Loss Analysis into your methodologies, you can ensure that these blind spots are not clouding your connection with your customer base. With win loss analysis, you are able to gather the best data available, getting it directly from the Voice of the Customer (VOC).
Your buyers give you their feedback and let you know exactly how you match up against your competition. You will learn the specific reasons why they like your product (as well as the aspects they don’t like—and why!).
By throwing away your self-biases and engaging in an effective Win Loss Program, you will be able to gather the right data to make the product that your end customers will pay for, and not the product that the company thinks would be in the best interest of the customer.
By incorporating win loss programs into your preexisting architecture you will receive your pivotal information MUCH faster than even the startups who are vaunted for their lightning fast ability to adapt and pivot.
So sit back in your desk, and watch your game change from one of the stagnant Halo Effect to one of massive action.
Jennifer Cardello, J. N. (2013, November 9). The Halo Effect. Retrieved from Nielsen Norman Group: http://www.nngroup.com/articles/halo-effect/
Matthew Gentz, J. S. (2004). Blame for Sept 11. Attacks Unclear for Many in Islamic World. Journal of Economic Perspectives 18, no. 3.
Steven Levitt, S. D. (2014). Think like a Freak. New York: Harper Collins.