Concrete Phrases

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Take a look at this satellite photo. What do you see?

Most see a busy Walmart car park. But stock market investors see earnings.

RS Metrics sells daily satellite images of parking lots at 44 of the USA’s largest retailers. They photograph 67,000 locations every day (assuming no cloud cover).

To a layperson like me, this seems ridiculous. Surely there’s a better metric investors can use to gauge business success?

But investors place a high value on these images. They show a live, unfiltered view of buyer behaviour.

It’s concrete, no BS evidence. And using the car park imagery to direct your investments actually works.

One recent paper found that investing in companies with busy car parks (and shorting retailers with empty parking lots) delivers a 5% bump in earnings¹.

Concreteness

The car park imagery gives investors something concrete to base their decisions. Live satellite images are reliable; they’re concrete. And it’s that concreteness that makes them a good guide.

And concreteness doesn’t just impact investors; it affects buyers too.

In 2018², researchers showed 29,967 customers with credit card debt a payment deadline with a vague, non-concrete timeframe: ”within 3 days”.

Others saw a concrete deadline: “pay within 72 hours”.

Turns out, those who saw the concrete deadline (72 hours) were about 15.2% more likely to pay.

We have a bias for concreteness. And it’s a good bias. It allows investors to profit off car park images.

It’s a bias every marketer needs to learn. When attempting to persuade and influence, always use concreteness over vagueness.

Cheers,

​Phill​

P.S. I've just finished Alex Edmans' brilliant book The Madness of Markets, which is where I got the idea for this newsletter. Check out his book here.