Perception vs. Reality….which matters most?

The answer: it depends. Here’s why.

Reality: the state of things as they actually exist, rather than as they appear or may be thought to be.

Perception: What is perceived is the result of past experience, and interpretation of sensory information.

Most of us accept our most closely held beliefs, our thoughts about things, as reality, at least in our personal lives. When it comes to how we run and market our business, we often forget that others don’t have as much insight into the specifics of our business as we do. We understand the reality of what it takes to make the product, keep the place running, and generate a profit. As customers, we don’t really care—we just know how the product worked, how long it lasted, what kind of service we received and how much we think we paid. Or maybe as a customer, we just know what our friend told us about her experience.

An interesting true story: A company who sold their goods through specialty stores had lower prices on average than a company selling similar products in grocery and drug stores. Without direct price comparison, customers assumed they paid less in the grocery and drug stores. What does a company do? Communicate the reality or deal with the perception?

Or what about this statement, made by a client, “If our customers only knew why we charged that fee, they would probably be more willing to pay it.” Would you? Most times customers know what they expect or think is fair and aren’t too worried if you are making a profit. As a business leader, do you communicate the “real cost” or learn to deal with the perception?

So back to the question; in business decisions, it seems rather simple; if you lead a business you must know the “reality of the perception”. In other words, perception IS the reality. If you are to be successful, you must meet or, as many claim, exceed expectations. Expectations aren’t based on the reality of doing business but on the market perceptions. If customers think they are getting a value (whether they are or not), they are happy. The company that sells product in a specialty store setting must address the reality of the consumer price expectation, not the reality. As for fees, do you really care why airlines charge for bags, or just that you have to pay for them and you didn’t before? Would we embrace the fees, if they explained the economics of it to us? I doubt it.

Perception is based on experience and expectation, not fact. Many of us either don’t know the facts or don’t remember them accurately.

  • Why did we think the earth was flat for so long? We assumed it was fact.
  • Why do we elect politicians for their charm as opposed to their solutions? Do we really have the time or even access to complete information with media bias and sound bites the norm?
  • Why do we believe that chemotherapy is the only viable treatment for cancer? It is the standard of care that the pharmaceutical companies, which sponsors most of the medical community economy, want us to know.
  • Why do we have bigots and racists that think ill of a group, instead of assessing individuals? It is the belief system they have adopted or inherited.

If we make these important decisions based on perception, certainly we will continue to have people use perception to make purchasing decisions.

Don’t get me wrong, belief systems are important. But in business, it is advisable for every business leader to understand their own reality, which means understanding the market perception! Seek to understand, even if you don’t like the answers.

In fact, asking the right questions, trying to understand the perceptions and the facts have led to some of the world’s greatest inventions. Edison is known for saying “I have not failed. I’ve just found 10, 000 ways that won’t work.” He worked on a number of perceptions he had about how to create electricity before he found the reality of what worked!

Our challenge may come from the dilemma of having to search for the answer instead of going with our knowledge. As Henry Ford said, “thinking is hard, which is why more people don’t do it.” But, being open minded, learning from others, understanding perceptions, and not accepting status quo, leads to greatness. It is what makes us, our business and our communities better.

“On some positions, cowardice asks the question, is it expedient? And then expedience comes along and asks the question—is it politic? Vanity asks the question—is it popular? Conscience asks the question—is it right? There comes a time when one must take the position that is neither safe not politic nor popular, but he must do it because his consciousness tells him it is right.” — Martin Luther King

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