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Enhancing Experiences, Elevating Profits: The Role of Customer Insights
This is the second of a three-part series of articles written by BrainTrust member Lisa Taylor, Director of Retail Consulting at Thought Provoking Consulting, about topics discussed during her time at eTail Boston 2023.
All retail experiences should start with the customer. Oftentimes, however, that isn’t the case. Companies make decisions as “business decisions”: what someone “thinks” the customer wants or needs, utilizing gut instinct or a focus group of one.
The retail landscape has never been more competitive or complex, and as technology progresses, customer expectations continue to rise. The old “stack it high and let it fly” doesn’t work anymore. Retailers need to have a deep understanding of why customers shop with them, and data only provides part of the story. Having a contextual understanding of customers’ needs and turning those insights into action will drive Brand Love. Not only will customers return, but they will tell others, creating a network effect and building your business in the process.
At the eTail Boston conference, I had the opportunity to moderate a panel discussion with experts across a variety of disciplines to gain an understanding of how they use customer insights. After the conference ended, I reached out to two of my panel experts to get more insight into the potential pitfalls of bias in research and how to directly influence product development using the voice of the customer.
Scott Fennell, Senior Manager of Omnichannel Performance and Analytics at Groupe Dynamite, shared, “I believe one of the biggest issues surrounding bias in the data collection and analysis process are the questions being asked, whether on the front end when speaking to customers, or internally when expressing the need for understanding. Are you or your teams ‘leading the witness’ and trying to achieve a certain objective, or are you allowing an open exploration of any information you may have to develop a meaningful story?”
We also discussed how technology is breathing new life into the process and opening up possibilities. “Based on the ever-increasing processing and learning abilities in the tools we have access to, the scope for learning about customer interactions and behaviors, away from traditional transactional-based insights should give greater insight into a much larger cohort of potential customers who may be considering the brand when interacting across any channel.”
One way to move away from bias is to take a crowdsourced approach to product development, much like David Henry, COO and co-founder of Card Isle, has done. Card Isle has a digital-first approach to selection and design, which has transformed its ability to collect feedback from and take action on customer preferences.
When asked about this approach, David said, “We’ve built into our platform the ability to securely monitor and aggregate quantitative data about how each of our card designs is performing in the browsing, selection, and personalization stages of card selection. Each of these steps is almost entirely hidden in a traditional approach to greeting cards, and when this data is passed to our artists, they are able to use it to improve their existing designs and inform the next designs they are planning to make.”
He continued by explaining why this strategy has been so successful for Card Isle’s business model. “Focusing Card Isle’s energies on closing the feedback loop between creator and customer, instead of on being the curator or gatekeeper, gives our artists the freedom to rapidly test new content ideas and determine if they are resonating with our customer base in a matter of days instead of months.” This process of continuous feedback unlocks innovation at the speed of the customers and their ever-changing preferences, providing companies like Card Isle with the ability to react to the latest trends.
One thing the panel agreed on is taking a holistic approach by integrating data with qualitative and quantitative insights to bring forth the “why” behind the engagement and purchase motivation. Quantitative insights provide the scale of understanding, while qualitative insights provide a richness and extra layer of depth.
Regardless of the approach, the utilization of deep insights to truly understand your customer can mean the difference between success and failure — it allows you to relate to your customers and meet them where they are. Otherwise, you are merely activating on what you think they are looking for. Sometimes luck will be in your favor, but more than likely you will be out of position.
Discussion Questions
How have you utilized insights to spur innovation? What customer problems have you been able to solve that you couldn’t have seen without insights, and what opportunities do you believe you have missed due to a lack of insights?
Poll
Loading …BrainTrust
Susan O'Neal
General Manager, Promo Intel & Insights, Numerator
Kai Clarke
CEO, President- American Retail Consultants
Consumer insights are a critical piece in the puzzle that helps retailers make informed decisions. The quality of those insights is important as is understanding where they came from. Data from actual consumer behavior is extremely valuable, if interpreted properly. Data from surveys can be useful but needs to be sanity checked for bias and misleading responses as people have poor recollection and will often not reveal their true behavior (e.g., saying they shop sustainably when they actually buy fast fashion).
It’s really easy to get caught up in the tsunami of data available for retailers today to try to answer what should be a pretty simple question- who are my customers, and what keeps them shopping by brand? I think the article is spot on in that transactional-based insights are only useful within the context of a holistic view of customer behavior. That includes human movement data, market analytics, and of course, data from the CRM to understand specific preferences.
Here is a real concrete example of how important consumer insights are from my domain – promotions. Consumers are responding to inflation differently. Yes, the broad trends are trading down to value brands, and but it is actually more nuanced. Comfortably retired consumers look for “spend more to save more” deals. They are willing to increase their spending to save on a per unit basis. Meanwhile consumers who are struggling financially (and that can be from any demo/socioeconomic group) can’t afford to take expand their spend like that. They’re the ones more likely to just change where they shop to EDLP and trade down to value brands. You can’t compete effectively without understanding how all of your tactics affect consumer-level behavior and psychology.
Yes, we regularly use insights to spur “innovation” for our clients. Many of the experience solutions we have created wouldn’t have been as strong without insights. One of the most surprising insights I heard years ago and then hear again consistently is that shoppers know when a retailer cares by the kind of store experience they create by way of cleanliness, neatness, information, assortment, etc. It was the word “care” that most surprised our team and how it was used.
I think companies often have bad sets of insights from poorly designed studies OR their team is too inexperienced to interpret the insights. There are a handful of examples where we there were many gaps is the research of others that we had to just deal with without closing. Not sure what opportunities we missed.
Conversely, you can be overly reliant on insights which often happens with clients. Good and great advances can be based on directional understanding but sometimes you need a leap of faith that insights isn’t going to provide. Many trained practitioners hold the need for data too tightly due to their training, inexperience or lack the imagination to put that aside and take a risk.
I have been saying for years that syndicated data without qualitative data does not provide the whole picture for true insight generation, especially as they relate to the consumer. Adding more sets of qualitative data allows suppliers to bring those more granular insights that are of value to the retail customer to help make better decisions to meet the needs of the consumer/shopper. As a Nestle’ client said to me years ago, data gets you so far. You have to be able to take the analytical expertise that exists at headquarters or the COE and combine them with the what the national account manager or local sales/category management knows about the retail customer account and their shoppers.
With the vast amounts of data available to most companies, innovation needs to be driven by more than performance data. Some of my best experiences were working with product managers to develop new products including POS data from multiple retailers, trend information from market research companies, and direct consumer feedback of product concepts. Good analytical teams will meld qualitative, pos, and other types of consumer data together. With three or more types of data, companies can ensure that they have the information needed to confidently take action that drives innovation.
One of the best structures to test insights that I have learned is the What > So What > Now What framework. With all of the data out there, most of it is interesting but does not lead to innovative activities and the analyst really needs to do the work to ensure that there is a ‘So What’ and a ‘Now What’ to spur activity. I have seen and have been personally guilty of sharing data about consumers or geographies or product performance that do not lead to any action and that is only a nice to have – but will not positively impact the business.
Consumer insights is absolutely everything, in my opinion. You can have the most innovative product in the world, but if it doesn’t resonate with the needs and expectations of the target audience, it’s not worth rolling out.
Comprehending customers is at the core of retailing — especially coming to understand the ways in which what they see as core and rational and smart is often the opposite of what a retail culture wants to think. Yet we must start at the fundamentals: why are they in our stores, what makes that visit rewarding to them, and what brings them back? THESE are the key insights we need.
I fear, today, how obsessed we’ve become that data and technology are going to reveal this. As I’ve written many times, the narrowness of what can be round with these techniques can lead retailers to spend a great deal of money on customer insights without discovering anything which matters. My podcast co-hose Shahin Khan has observed, though, that “The ratio of relevant data to irrelevant data will asymptotically approach zero.”
In part, relying on data we find less and less which is meaningful. For this reason, retailers need to continually have wide open qualitative research in the field to continue to explore the questions I noted above.
The discussion presents some great thoughts about how to gain insight into customer thinking. It misses one key data point that most retailers need to pay more attention to: interaction between customers and employees. That is honest front-line feedback.
To begin we need to recognize that all revenues & profits come from customers, not from products & services. Quantitative data is necessary but not sufficient to fully understand consumer behavior. Here are a few quotes that reinforce the notion that direct input from real customers makes a difference.
“Ultimately, it’s not about predicting the future – it’s about following our customers and embedding the future in everything we do.” McDonald’s CMO
You have to constantly assess what your customers want and need.
I spend some time every month listening to customers calls.
I encourage my executives to do the same.” Lillian Vernon
“I would rather listen to 3 people for 3 hours than read a survey of 8,000 people.” Keniche Ohmae
“The desk is a dangerous place from which to view the world.” John LeCarre
Amen!
Direct, unfettered insights, usually from your customer direct to management, are the core to innovation and change. This goes both up and down the organization. Add to this incentives for internal feedback loops to spur innovation and create unique positioning of the company and its employees and you have the key to success for any organization that needs to adapt or perish in today’s rapidly changing environment.
Companies of all sizes understand the value of “customer insights,” and those with the means should absolutely take advantage of these data insights. Customers’ buying patterns, favorite brands, and online activity can now be tracked with the courtesy of advancements in technology. Ultimately, these datasets can be leveraged to produce offerings that resonate with the target audience’s preferences.
With all that technology has to offer these days, gathering customer insights isn’t the hardest part. The main challenge is converting this data into usable information. Even with all of the machine learning and Generative AI, retailers would require accurate data to derive results. Consequently, a dedicated team under the right leadership will be critical in determining how these insights can be used and what business strategies they may support.