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Avoid Embarrassment through Truth in Advertising

Marketing researchers can learn an interesting lesson from a situation reported in a recent article in Forbes Magazine. Geico, the auto insurance giant owned by Warren Buffett�s Berkshire-Hathaway, has spent millions building its brand and promoting its �97 percent customer satisfaction� rating. But the company refused to produce data supporting its claim, nor will it disclose how it came up with this number, saying its research is �highly confidential.� Forbes analyzed Geico�s annual report and found the company in fact had a 25 percent annual churn rate, calling into serious question the validity of 97 percent satisfaction claim.

As consumers, we all have a responsibility to be skeptical about research results promoted in advertising that appear to be too good to be true. Researchers have many different ways of defining a �satisfied customer.� Furthermore, unless the margin of error is known and the exact pool of respondents made available, the results of any research can be called into question. Research results also can be skewed by leading questions or poor methodology, among other common errors.

For companies advertising claims based on research findings, the ramifications are clear. Make sure every public claim can be supported by reliable data, or risk suffering severe damage to the credibility of the brand, or worse. While misleading claims based on poor research could lead to new customers, it also could lead to embarrassment or even litigation.

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