THE IMPORTANCE OF NUMBERS

5 reasons you will read this article

5 REASONS YOU WILL READ THIS ARTICLE

ILLUSTRATIONS BY KALI CIESIMIER

Whether you realize it or not, your life has revolved around numbers since the day you were born. Back then, your mother wanted to know how many pounds you weighed. When you were 3, you couldn't wait to be 4. In school, you lived and died by the percentages you got on exams and how many Valentine's Day cards you received. And now, as an adult, you scrutinize everything from your IRA statements to how much it costs to fill up your gas tank. Even on the cover of this magazine, there are numbers to grab your attention. Why does all of this matter? If you understand how people perceive numbers, you can better relate to your customers and make better decisions in the business world. Let us count the ways:

1. The numbers 0 and 5 are highly accessible in memory.

Tim Smith, PhD and managing principal of Wiglaf Pricing-a consultancy that helps businesses determine the right price for a product or service-says this means 0 and 5 are more easily understood, remembered and compared. That can be a factor in "price sensitivity," a term for how much a customer plans to spend: If you are pricing your products at $470 instead of $471, or $500 instead of $499, you may be helping customers keep track of your prices in their heads.

If they can remember your prices better, you increase the odds of them thinking of your store while they comparison shop, which can lead to you making a sale.

2. Specific numbers feel more precise; round numbers seem flexible.

Consider this idea the next time you price a house or ask for a raise. Matt Wallaert, a social psychologist and the lead scientist at Thrive, a personal finance website that helps people follow all of their checking, savings and credit card accounts at once, points out that a house that is selling for $150,000 "feels really flexible." It's almost an invitation for a potential buyer to bargain down to $148,000, "but if the house is selling for $158,952, that feels like it's really based on something," he says.

In fact, Wallaert did a study there with a colleague to that effect: It showed that people tend to think of precise numbers as much less flexible.

3. Many people aren't good at math.

A 2003 National Adult Literacy Survey found that 22% of Americans don't even have the minimal math skills necessary to compute numbers that are embedded in printed materials. That's important to consider if you need customers to understand that you're offering them a truly great deal. You may need to educate your math-averse consumer base-those who aren't great at calculating whether they're getting a good deal for the money they're paying-so they understand what you're offering.

It's also a chance for mischief if you want to confuse your customers, the way supermarkets love to try and get you to put more in your cart than you need to: "Buy three items for $6.78!" says the sign, not explaining that you could also just buy one for $2.26.

4. Certain numbers communicate a message.

Most people know that businesses will price a product at $9.99, but they may not understand why. According to Smith, "A lot of it has to do with simply how we encode numbers. We read from left to right, and so, subconsciously, we think, 'It's $9 not $9.99.' [The latter] is, of course, basically $10."

Our minds are also programmed to appreciate pleasure over pain, says Smith, who teaches a pricing course at DePaul University in Chicago. Rationally, it may only be a penny difference, but the behavioral part of us sees that penny as a gift, even as the more scientific part of your brain is scoffing at the idea.

5. $850 isn't that much higher than $625, and odd is better than even.

A A Pablo Solomon, an internationally renowned artist based in Texas, knows something about numbers, particularly when it comes to pricing the stone sculptures he creates. "We tend to think of certain numbers when given certain options and deduction," he says. "Therefore, by using some of the known ways people view numbers, one can influence a customer's reaction to a price."

For instance, once you price something over $500, "people just do not react much differently to $750 or $825 than to $675. Once they are willing to go over the $500 mark, which is 'over one half of a thousand,' they do not balk until you get to $900, which is 'nearly a thousand.'"

He also observes that odd numbers work better when near the next jump. For example, $875 is better than $900, yet $825 will sell as well as $800. As he puts it, "Numbers are magic."

PRIME NUMBERS

FROM THE WAY WE RECITE PHONE NUMBERS TO TOP 10 LISTS, THE INFLUENCE OF NUMBERS ON EVERYDAY LIFE SURE ADDS UP.

"Numbers simplify our world," says Matt Baron, an Illinois-based public relations expert who often holds seminars for media professionals that explain how to make the seemingly incomprehensible concept of numbers more understandable to the public. "We want to believe that there's a way to be faster, better or smarter-and numbers seem to be able to help us do that."

Baron points out the popularity of things like David Letterman's top 10 lists or USA Today's front-page statistic boxes. "People are pressed for time. They're inundated with so many choices, that it's always better if you can give them something that they can digest in a bitesize way," he says.

He also notes that that's why social security numbers are always broken up so you write them down in groups, three-two-four, or telephone numbers as three-three-four numbers. These became standard because they're easier to remember than one long number. (And if someone were to recite his or her phone number to you differently, there's no doubt you would be confused.)