What are customer insights and why they are important?
The days when the goal of business was simply to build a better mousetrap, and wait for the world to beat a path to your door, are gone – if they ever existed at all. These days, businesses understand that you have to do a little more than just make the products you think will be successful in the market and hope for the best.
You might have built the best mousetrap in the world, but if everyone owns a cat or knows a good exterminator, you won’t sell many. Businesses now know that they need to have a fine-tuned and deep understanding of their customers’ needs, desires, attitudes and behaviours in order to ensure they are not only building the right products but also promoting and selling them in the right way, at the right price, using the right channels. In short, they need customer insights.
Whether your customers are consumers or other businesses, whether you are selling cornflakes, cars or castles, to be a success, you need insights into what makes your customers tick and how to satisfy and delight them.
What is a Customer Insight Strategy?
A customer insight strategy is simply the approach you take to ensure that you have all the customer insights you need to run your business successfully.
Usually owned by the customer insights team, the customer insights strategy will align with your wider marketing strategy, which itself should be aligned with the wider goals and strategic objectives of the entire business, in order to drive growth. It is likely that it will be reviewed annually to ensure that it is still aligned with your business goals, and rewritten as needed, as those goals and objectives evolve.
If your target customers are consumers, your insight strategy will focus on consumer research. However, there may also be a need for you to conduct some business-to-business (B2B) research in order to gain an understanding of the entire supply chain. If you sell to other companies, your insight strategy will be B2B focused - but don't rule out the need to talk to your customers' customers at some point in your insight journey.
Overall, having an insight strategy enables you to take a data-driven approach to improving your business. And better quality data makes for better insights.
Components of A customer insight strategy
So, what should a customer insight strategy include? Each one is as individual as the company or customer insight team that creates it, but they are alike in the basic components that they include. These are as follows - the five 'Ws' of customer insight strategy.
The 'WHY' of customer insight
This is the most critical component - the rationale behind your strategy. What is the business objective that you want to achieve, and how can customer insights help you to do so. As above, this will relate directly to your organisations wider goals. It may be that your organisation needs to pivot to become more consumer-focused and customer-centric. It may be that you need to drive up sales or profits, or to fine tune your pricing policy.
Whatever that goal, it will determine the type of customer insights you need and how to go about achieving your insights strategy.
The 'WHO' of customer insight
This is the next step: to be clear about exactly which customer segments you are targeting and for which elements of your portfolio. Are you focused on consumer insights or do you also have business customers to include in your insights strategy?
Within your customer base, it is likely you will have multiple different consumer segments, each with different needs and requiring not only different products and services but a different approach to how you gather their input, listen to their voices and understand how they feel.
You will also need to take a different approach to gather insights from potential customers and new customers than from existing customers.
The 'WHEN' of customer insight
You need to ensure that your insights strategy takes into account not only the timescale of your business objectives but also the type of research projects you are likely to need.
Some elements of your consumer insight requirement are likely to be fast, conducted in the short term, and require real-time analysis. For example, you may need to get fast feedback on some creative content, such as an advertisement or a product concept, to feed into an agile development process.
However, your overall goal should be to create an ongoing bank of consumer insights, data and understanding that will enable you to continually hone and deepen your relationships with your customers over the longer term.
The 'WHAT' of customer insight
How do you know what sort of data you will require and how to go about gathering it? You will need to ensure that the data you gather when executing your insight strategy is of high quality and a good fit for what you want to achieve.
The best way to have confidence in the customer insights gathered is to develop relationships with trusted suppliers and agencies who can bring their expertise in research methodologies together with your expertise in your business sector.
Conducting research can be time-consuming and complex, so it makes sense to partner with specialists who can help you to get exactly what you need. It can be risky to conduct too much DIY research without working with expert partners, as you run the risk of collecting poor-quality data which won't give you high-quality insights.
The 'WHERE' of customer insight
Where you focus the attention of your customer insight strategy may depend to a degree on the structure of your organisation.
Many companies have local marketing and insight departments in global or regional territories, rather than one centralised function run from head office. This is often a legacy situation rather than an active decision, and it can be very helpful in taking local and cultural differences into account, which is an important part of customer insight strategy.
However, it can make it difficult to standardise the approach to customer insight and to benefit from learning across the company as a whole. You may need to consider having one overarching strategy but enabling local team members to create their own more nuanced approach to gathering local customer data. You can then aggregate data that is collected locally to make sense of it on a global level.
There are also other benefits of having a hybrid global and local market approach such as getting buy-in from local teams.
How to gather high-quality customer insights
There are two main categories of customer insight data you need to consider when building your insight strategy: qualitative data and quantitative data.
- Qualitative data includes research methods such as focus groups, online communities, and customer interviews.
- Quantitative data includes methods such as online surveys, Google Analytics and social media listening.
Within each of these categories are a wide variety of research methods and tools - and it will be important to use the best tools for the particular type of insight and customer data that you need. Some of these will relate to the customer journey, and some will relate to key marketing objectives.
1. Customer journey insight objectives
You will need to apply insight at every stage that your company interacts with your customers.
This may involve mapping the customer experience from the very beginning - understanding which customer to target, through how to engage those customers, understanding how customers feel about your products and services, observing purchasing patterns, gaining insight into customer satisfaction, right through to finding out about customer loyalty once they have purchased from you.
Techniques such as creating a customer journey map and tools such as the net promoter score will be useful in meeting customer journey objectives.
2. Marketing insight objectives
Another way you can break down your insight strategy is by looking at the needs of the marketing team such as brand insight, competitor insight, sales support, communications insight, pricing research and customer experience research.
Again, each of these types of marketing need will be one of the key drivers for how you apply your insight strategy - the type of research you do, and the type of customers you target.
In other words, do you want to get feedback only from customers who use your brand? If you are conducting competitive analysis, that won't work. Do you want to assess your social media strategy? You will need to target customers who are active social media users.
Key stakeholders for a customer insight strategy
Finally, who should be involved in the customer insight strategy? It will fall to the customer insights team to execute the strategy so they should certainly be involved in helping to create it.
Primary customers for the strategy and for the survey responses will be the marketing team and the sales team, so it will help to have team members from these departments on board to help create the strategy too.
It will also be important to ensure that you have senior-level support for your strategy so that it is aligned with broader company goals, and to have the finance department involved too, so that you have sign-off for the budget you will need.
Customer insight strategies are an essential part of business planning. No matter how good you believe your products or services are, without customer insights you are unlikely to be successful - the more insights, the better quality insights and the more strategic your approach the better.
Conducting an ad-hoc customer insight survey might give you some useful data in the short term, but won't help you build up a deep and company-wide understanding of exactly who your customers are and how to serve them better.
Even if you really have built the best mousetrap ever, the world really won't beat a path to your door.
- The 'WHY' of customer insight
- The 'WHO' of customer insight
- The 'WHEN' of customer insight
- The 'WHAT' of customer insight
- The 'WHERE' of customer insight