Customer Insight as a Tool for Growth

Customer insight can often be seen as a luxury particularly for small to medium size businesses.  After all, investing in the product or service is the all-important factor when you are looking at business growth.

However, ultimately any product or service is shaped around a customer need.  Get that right and customers will buy from you and keep buying from you.  Most, if not all, of the top businesses conduct customer research on a regular basis.  They want to keep their fingers on the pulse and understand if their products or services match what customers want.

Conversely in today’s world of data, it has never been easier to find out about consumer behaviour. Google Analytics offers details on the behaviour of your website visitors.  A simple web search can reveal high level data on trends in consumer behaviour such as what people value right now e.g. authenticity, human connection and how behaviours are changing e.g. preferred channels for products and services .

So does this mean you don’t need to carry out bespoke research to find out what makes your consumers tick?  Despite the maelstrom of data, we believe dedicated customer insight is more important than ever before.

Below we outline five reasons why you should commission bespoke research:

1. Customer research avoids costly mistakes

You may think you know your customers particularly if you are a small to medium sized business.  After all many smaller businesses have excellent relationships with their customers and may have served them over years.

However it is very easy to make assumptions and think you know why a particular issue is happening.  We worked recently with a company who were developing a medical app.  They were struggling with patients booking multiple follow-up appointments.  They believed the problem was that too many appointments were available.  This gave patients the green light to book what they wanted.  They put together a plan to invest in a costly restructuring of the app.

The organisation then decided to carry out some customer research to check out their hypothesis.   This was a game changer.  It emerged patients booked multiple appointments due to poor communication of test results.  The results were often delayed so they would book a back up appointment.  The research not only saved the business considerable money changing the UX (User Experience) but allowed it to address the nub of the problem and not the outcome.

It’s easy to make assumptions when working day to day in your business.  But as the above example illustrates assumptions can be costly.

2. Data only gives you part of the story

 Data or so called ‘Big data’ is very effective in identifying the who, what, when, how and where.  As discussed so much data is available and it is easy to track customer behaviour. There is one critical piece of the jigsaw missing – the why.  The ‘why’ helps you understand what makes your customers tick. In other words what are the key drivers for why they buy from you?  Analytical data won’t give you this.

If you don’t understand the ‘why’ you risk creating an ‘empathy gap’ with your customers.  That is, you miss the point when you communicate with them.  For example we worked with a company who were churning out offers and discount communication to their customer database.  This appeared to make commercial sense as the business operated in a highly competitive online marketplace.

However, talking to their customers we found that they valued this particular company because of its longevity in the market and expertise.  Price communication undermined precisely these values those customers held dear.  And more importantly it was inhibiting the growth in average basket value per customer which would in turn enhance profitability.

This example illustrates that an understanding of your customers and not just the market can be fundamental drivers of business growth.

3. Lapsed and competitor customers hold the key to futureproofing growth

It is probable that most of the data or knowledge you hold in-house is about your customers.  As a business it is unlikely you are speaking to lapsed and competitor customers unless you are carrying out bespoke research.

An understanding of lapsed customers is critical.  At one point in time they invested in your business. Hence they are easier to win over compared to those who have never bought from you.  Why have they left you?  Who have they gone to?  What would it take to get them back?  If you can solve the area of dissatisfaction, there is a chance they might return.

Competitor customers are more difficult to acquire but can create a step change in growth for any business.  Finding out why they access competitor products or services helps assess what you can do to become ‘sticky’ as an organisation and attract their new business.  The Johari Window model created by psychologists in the 20^th century identified this type of phenomenon as the ‘blind spot’ – what is known to others but not known to yourself.  Competitor customers are your blind spot – you don’t know what they know.

 

4. A DIY research approach doesn’t deliver best value

Many organisations think they can do their own customer research.  This particularly applies where there might not be the budget to keep a handle on customer sentiment.

I recall talking to a leading firm of architects based in the City of London.  I asked them how they understood what their customers thought of them.  ‘We ask them’ came the reply.  It emerged the ‘survey mechanism’ was a quick chat at the end of a business meeting.

There are many flaws here:

• Human reserve – it’s like a waiter asking you how is your meal? Ask yourself how many times have you replied ‘fine thanks’ when it wasn’t.  I know I am guilty.  In my case it’s the British reserve kicking in.  And what’s your next move if you don’t like the food? You don’t go back.
• Asking the wrong questions – It’s easy to think you are asking the right questions.  Very often people fall into the trap of thinking direct questions work.  They don’t.  You need to understand your customers from many different angles – how customers rate you for different aspects of your service, what are the values of your organisation, how do you compare to the competitive set. Very often that is achieved by asking both direct and indirect questions.  For the latter, research practitioners use a range of so called ‘projective techniques’.   These are designed to uncover deep seated emotions that otherwise may not emerge in the course of a natural conversation.
• Inconsistency – my example for the architects’ firm is ad hoc. Tacking a ‘customer satisfaction’ question onto the end of a meeting is not consistent. It is driven by the scheduling of the meeting which is likely to be linked to a live project. Consider what happens in the hiatus between projects.  How does your company fare?  It is impossible to keep track if a competitor brand suddenly steals a march on you and your customers don’t come back to you.

5. Targeted research gives a better ROI

It goes without saying that bespoke research offers the benefit of exploring the issues you need to understand.  Furthermore you can investigate questions with a targeted audience e.g. if you are developing a high end new product or service, a focus on the following would make sense:

• your top spending customers who are more likely to trade up
• your most loyal customers who can evaluate if the new product has a good fit with your brand equity
• competitor customers who also fall into the high spend bracket

Best practise when designing research is to start with identifying the business issue e.g. to address declining sales and achieve growth, launch a new product targeted at a specific audience.  Once the business objectives are defined, the research objectives naturally emerge from that.  A dedicated research company can assist in defining these research objectives if unfamiliar.

Taking the next step towards running a research project

If you are thinking about undertaking a bespoke research project the next step is to consider the role for outside support.

There are many free or inexpensive DIY tools available on the market such as Survey Monkey or Qualtrics but that puts the onus back on your organisation to ensure you are asking the right questions.

Furthermore research consultants or agencies are skilled at getting the most value out of research.  They can design a project that meets the individual needs of your organisation.  Whilst there are syndicated studies that take a one size fits all approach, most research doesn’t.  It is designed around the specific business objectives, the goals for the research and importantly sized according to budget and timing.

The independence of external consultants or agencies is an additional bonus.   Talking to an independent body is more likely to elicit a truly honest response from customers.

Finally, ask yourself if you would benefit from customer research? Here are ten questions to help you decide that:

1. How do you know what your customers think of you?
2. What don’t they like about you?
3. Why did your lapsed customers leave you?
4. Which competitor did your lapsed customers go to and why?
5. Is there anything that you could have done to stop the attrition?
6. What do competitor customers think of you?
7. Why don’t they buy from you?
8. What do the competitive set do well?
9. What could you learn from the competitive set?
10. What could you improve so that your customers spend more with you?