What Is "Customer Insight" and How Do You Gain It?

The challenge with gaining customer insight is two-fold:

1. How can you know that what the customer says is true?
2. How can you know what the customer does with your product/service?

The first question can be partially resolved by using a variety of qualitative and quantitative techniques (ZMET, focus groups, perceived customer value surveys), and then seeing how the responses/results "converge". This is not a simple process, but it's critical -- especially when you're using that data to innovate, and not just to improve an existing process or product.

The second question is partially answered by transaction data, but additional work, such as ethnographic study, can be absolutely critical in finding out how your service or product is actually used. And, given that your "service" is really your entire, lust-to-dust relationship with a person, you really have to understand how you engage someone, how that engagement compares with other sources of engagement, and then onward from there (exploration, selection, use, retirement of the product/service/relationship).

Ultimately all of this data should be in service of the question: What is the larger goal of the customer? It could be to solve a problem, to get closer to an aspiration, to serve the ego. As it has been said many times, people don't buy a drill for the ability to drive a drill bit. They buy a drill to make a hole. They want a hole, not a drill.

This is in part why this quest for insight is especially tricky when you're trying to innovate. Why does a customer want a hole? To put a screw in. Why? For many customers: To hang something. So, if you want to innovate, what you really want to do is to come up with something that helps people hang something. You might be able to circumvent having to continually improve your drill.

Then again, if you come up with a "hanging solution" that is not related to your drill manufacturing business, you'll be robbing from your own sales.

Pragmatically, you can try starting with the following:

1. Do ZMET or focus groups to determine the overt benefits sought by your customers. (I want to hang something.)

2. Determine the aspects of this benefit (attributes of the offering -- including soft attributes such as brand).

3. Do a survey.

4. Using factor analysis or similar technique, determine which aspects are most important, and which are truly independent of each other.

5. Do a bigger survey, using a reduced and sufficiently independent set of value drivers. SURVEY NON-CUSTOMERS, or customers of competitors. Use factor analysis again and determine how your customers "clump" in their needs.

If you want to take it further, you can also ask respondents to score how well you, and your key competitors, provide value along these value drivers. That can give you a score relative to both the value drivers as well as to your competitors.

Deep customer insight is usually complex and requires a multi-faceted approach, integrating feedback (of various types), transactional data and a dash of intuition.

Focus groups and surveys will tell you what customers think they think. What we say and what we really believe (as evidenced by our actions) are often different. For example, most of us say we believe that action on climate change is important but few of us have have significantly changed our practices.

Transactional data tells us what customers have done in terms of buying but on its own doesn't tell us why, what they though of the experience or what other options they considered.

Process measures tell us how our organisation is working but not if they are working for customers. We might know how productive we are but not how effective.

Now of course put them all together in a comparable way and we have started to build a rich picture and can seek to understand the linkages between them. Now we can begin to see the hidden messages.

Insight comes from integrating different pieces of information. Think - would you trust an airline pilot that told you ho only ever looked at one dial?

Cheers

Dave Jackson
www.clicktools.com

Customer insight: what you want or need and how to get it is pretty straight forward.
Imagine you own a small bakery. You have repeat customers and you have the odd one-tme visitor.
Why do they come to your shop?
- do they live nearby?
- do they come by your shop on the way to work?
- do they appreciate your bread?
- is your pricing better?
- is your product superior to your competitors?
- or is there no competition?

Some of the se answers can be gained by customer focusgroups, some come from your own transactional data and some answers can only be obtained by looking at your own position in the market.

Examples of how not
1. A road side assistance company has asked their client base if they were happy and if they would recommend it to others. Each year the RSA company scored very high in customer appreciation.
Then, a competitor entered the market and took over 50% of the customers.
2. For a customer I merged research data (containing repurchse intention) and actual activity data. In the end, there was no correlation between the two. A customer who said "never again" kept on coming back and a customer who said "yes" never came back.
In the end, this data was not rich enough as it did not contain the drivers behind the customer choice. Those drivers were actually available in the end after all, but not at first glance.

Think about it: why do you buy something? Let that drive your decision on how deep your insight has to be and how or where you can get that information: from transactional data, from research or by adding competitor information.

Hi Jonathan,
I'm an HR manager in B2B ICT. Just in these days I'm involved in a project to define a list of competencies related to "Customer Insight". So your post is a timely opportunity to share opinions with others.
First step for me had been try to define: what is it "Customer Insight" ?
Second step: how to gain it.
So exactly your basic questions.
At the moment I'm interested to opinions about the possible definition:
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Thanks for any feedback
Dom