Case Studies from Amazon, Yahoo, and Ryanair Reveal How Growth Teams Should Use Data + Feedback

In 2014, Amazon attempted to break into the smartphone market with their Fire Phone. Amazon is usually known for their customer-first approach but this product was Jeff Bezos’ baby: his opinion was the only customer feedback he needed make a great phone.

The result? The Fire Phone was dead on arrival.

Consumers who were looking forward to the product realized that the features they expected to work were the most important and that the ones they were awed by were merely nice-to-haves. Extrapolating an entire market from one person’s preferences is a very risky bet to make, one that didn’t pan out for Amazon.

Amazon’s Fire Phone is a cautionary tale for those inclined to make product decisions based on a sample-size that’s too small.

Yet, numbers on a spreadsheet have their own set of unique challenges. How does this type of error effect a business which trusts their data enough to make a risky investment? Yahoo knows it well.

Marissa Mayer made a bold move with the acquisition of Tumblr in 2013 for $1.1 billion. At the time, Tumblr had 300 million active users.… but not in reality. Regardless, most people praised this move because then-CEO David Karp needed some administrative assistance and Yahoo needed the revival from a younger audience.

The bet looked amazing on paper, but you know how the rest of the story goes. It turns out that internet culture is very difficult to monetize and the compounding friction between the company cultures of Tumblr and Yahoo have resulted in an airball by investment standards. The tale may not have ended as such if Yahoo had spent more time with human beings.

Yahoo’s acquisition of Tumblr is a cautionary tale for those inclined to make product decisions based on nothing but raw data.

The lesson learned from these stories is that, more often than not, you need both types of information to make a good decision.

Data + Feedback

Any decision you make when starting a business, making optimizations, or pivoting away from your current path should be supported by a balance of both data and feedback. Each one has their own strengths and weaknesses which are mirrored in reverse by the other.

Where feedback can go wrong is that it gives no sense of scale. How do you know enough people are the same as the ones you talked to? How often do people do what they say they will do? Feedback can bias you into focusing on individual customer preferences or stories, some of which are edge cases regardless of how much empathy you have for them.

On the opposite side, data can be misleading because it lacks context of why the data shows what it does and is susceptible to being an incorrect representation of the truth as you reduce the number of data points. Since data will only show you what you look for, looking at data is often not a good place to generate ideas.

The power of both

In 1987, Irish airline Ryanair was running out of money, so they hired Michael O’Leary to figure out how to be profitable. The easy move was to bring operating costs down (they copied Southwest Airlines), but what about bringing revenue up?

By spending time with customers, Ryanair found that the ticket price of a flight was a more important factor in the experience than the perks like free WiFi or meals. Most people just want to get places for cheap. But would they pay for perks, fees, and other things that other airlines bundle by default? Yes, and Ryanair has managed to charge customers for nearly everything that is optional or time-sensitive.

If this sounds incredibly annoying, it is. In 2013, O’Leary said:

“We have been the victims … of various consumer surveys saying we are the most hated company … if you look at the growth in customers, the public doesn’t seem to be able to get enough of what we do.”

Even though customers say they hate Ryanair, it is still the most popular European airline — you can’t rely on customer feedback alone. Of course, as we saw with Yahoo, a strict adherence to the data can also lead you astray. And these days, Ryanair is starting to pay a bit more attention to customer feedback, and easing up their aggressive pricing strategies.

The best growth teams don’t become obsessed with just raw data or customer feedback, they use both.

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Geoff Daigle is on the growth team at HubSpot. You can find him on twitter at @dailydaigle