Correlation != Causation

I caught a snippet of an interesting article this morning, where it appears an industry expert was commenting on a recent report that shops could raise the average spend of customers by approximately £10 (or 39% if I remember the figure correctly) by improving their customer service. Without knowing the exact details of the report (which seems to have been from SMG, a “customer insight agency”), it seemed to me that there was a fair chance that this was a classic case of someone confusing correlation and causation. The fact it was being reported by a reputable news agency (the BBC) without any real insight or comment only made it worse.

What does the statement “correlation is not equal to causation” mean? To put it quite simply it means that just because two facts occur together, it does not mean they are directly linked, or more importantly, that one causes the other. To consider the example above, the first question that needs to be asked is, do people spend more in shops with good customer service, or do shops that sell more expensive goods (and therefore have a higher average spend) offer better service on average? In this case, it is certainly possible, if not probable, that more expensive shops can afford to invest in better customer service.

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