27. Regression to Mean
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Regression to the mean is a very powerful idea in statistics. And in life.
It says that extremity is followed by moderation, over time regressing towards the center.
Consider a campaign that produces exceptionally high sales in one month. Without any significant changes, the idea of regression to mean indicates that sales will likely drop closer to the usual average in the following months.
This doesn’t necessarily mean the campaign failed; it just indicates some natural randomness and variability in the market. Viral ads are often followed by regression to mean, showing that the initial spike was an outlier rather than a new norm.
Regression to mean highlights the role of chance and the fact that anything extraordinary, good or bad, doesn’t persist over time.
Whether in marketing or life, things return to a more central, average state over time. Somehow, I find this idea very reassuring.
It reminds me that outliers are often anomalies and do not necessarily indicate a new trend. Thus, when making decisions, it’s wiser to look at long-term patterns rather than isolated events.
That’s it! Thank you for reading, and see you next week.