Computers and artificial intelligence have come along at an exponential rate over the past few decades, from being regarded as oversized adding machines to the point where they have played integral roles in some legitimately creative endeavours.
The arrival of big data has delivered a plethora of new data for insights into customer preference and behaviour. Online browsing activity, for instance, presents a rich tapestry of customer preferences and sentiment, and has been used almost exclusively to build behemoths such as Amazon and Google.
But while data plays a huge role in the future of the customer insights function, it won’t be at the expense of more traditional means and strategies helping brands get inside the minds of customers.
Joanne Norton has been uncovering customer insights for close to 20 years, most recently as customer insights director for the beauty company, L’Oréal, in Australia.
“Twenty years ago when I was starting out, the main two go-to tools were focus groups or questionnaires,” Norton tells CMO. “There are a lot more tools now we can deploy. And it just helps us get a much deeper understanding of consumers.”
While digital plays a big role today in delivering insights from consumers about how they are acting, how they are feeling, and how they are applying L’Oréal’s products, many of the biggest developments in insights Norton describes are much more analogue in nature.
For example, one of the most successful customer insight initiatives at L’Oréal has been its Customer Connect program, which sees everyone from the top down taking a day away from their regular roles to observe and talk to customers in their homes, shops or other locations where target audiences might be found.
“Our managing director is very passionate about us understanding our consumers,” Norton says. “So we go through all levels of our organisation, right down through to our interns. There is very much a culture within the organisation that values curiosity. What we do is instil constant questioning as to ‘why are consumers doing that?’”
Norton says this is all part of a broader philosophy that says customer insight is not just the remit of a particular person who has ‘insights’ in their job title.
“It is very much a part of our business that we believe everyone needs to be consumer-centric, and in that respect we have seen a real democratisation of insights,” Norton says. “It really is the responsibility of all to bring to the business learnings and insights that they see from the consumer, as opposed to it just being the reasonability of the market research department.”
But she cautions that insight alone is useless with the ability to take action from it.
“What we are creating is much more of a continuous feedback loop,” Norton says. “That allows us to make adjustments live, rather than have a discreet project that is either open or closed. It is about incorporating what we are seeing, what we are hearing, and how we’re interacting with the consumer, and constantly feeding that back into the business decision-making processes that we have.”
The company continues to use traditional tools such as focus groups, although Norton says even here the analysis activity has become more sophisticated.
“You would still run the group in pretty much the same fashion as you would have 20 years ago, but the level of analysis that our partners are now doing around the focus group take it much, much further,” she says. “There is a lot of work that has been in contextual experience. So not just having a product tested, but really understanding how their usage of that product fits within the consumer’s world.”
Ultimately, Norton says these sources and processes are delivering a richer and deeper understanding of consumers than ever before.
“There is a lot more information and data you need to wade through to get there though,” Norton says. “But the deeper, richer understanding is no doubt valuable. And there is no question that if we’re not doing, it our competitors are.
“Purely from a competitive advantage perspective, it is absolutely necessary for us to ensure that we are constantly evolving in the sophistication of our techniques and the types of information and the richness of information we are getting.”
Mixing old and new insights
The customer insights functions at Sydney-based grocery retailer Harris Farm Markets is also being enhanced by new sources.
“We draw customer insights from listening to our customers through all of our customer touchpoints,” says head of marketing and ecommerce, James Kerridge. “We see focus groups and surveys to be just as relevant as they were five or 10 years ago, but we now have the luxury of being able to draw insights from all of the channels at one time and drive a customer experience strategy through that qualitative and quantitative feedback.”
This includes email inquiries, live website chat sessions, phone calls, and social channels, as well as surveys that are used to gather net promoter data.
While the data sources are growing, Kerridge has wrangled that growth through the acquisition of Zendesk’s customer service software.
“Instead of having different customer touchpoints in all these different places, Zendesk simply ties them altogether and allows you to manage all that data and all those interactions in one place,” he says.
“We are definitely able to optimise our resources and maximise our return in terms of the time we spend developing initiatives that are going to improve our customer experience.”
One recent insight was that Harris Farm Markets’ customers care deeply about food wastage. That led to the development of a campaign called Imperfect Picks, through which the retailer began selling misshapen fruit and veg that didn’t meet supermarket specifications.
“Through that initiative, we were able to launch a campaign that was based around reducing food waste, helping Aussie farmers, and saving customers up to 50 per cent,” Kerridge says.
Building the right toolkit
While the options and tools – and outcomes – available for customer insights today are broader than ever, it seems not all organisations are taking advantage.
The Boston Consulting Group’s Global Centre for Customer Insight has been researching and benchmarking numerous topics relating to customer insights functions since 2009. BCG’s partner and managing director, Monica Wegner, says one question asked what an insights function might look like were it to be a source of competitive advantage, and divided the answers into four categories based on maturity and capability.
“We were very surprised to see at that time  that only 10 per cent of companies sat in the third level of ‘strategic insight partner’, or the fourth level of ‘a source of competitive advantage’,” Wegner says.
When the latest round of results was published this year, they showed significant improvement, with 20 per cent now reporting in the third and fourth categories. But this still only represents one-fifth of all organisations.
However, investment into insights functions may grow dramatically, according to the results of another BCG survey of 45 cross-sector CEOs.
“When we asked them what were the top 10 capability development areas that they see in their organisation in order to drive growth, customer insight came out as the number one,” Wegner says. “There is an imperative to do it, but our benchmarking says they are not there yet.
“The question is, what does it take to be more of a strategic insight partner or a source of competitive advantage?”
Leveraging big data
The answer can most likely be summed up in one word – data.
The arrival of big data processing capabilities has led to the emergence of consultancies with specialisation in earthing customer insights from data, and their capabilities are evolving rapidly.
The sources from which insights are being derived can also be surprising. Melbourne-based company, Immersive, has built a capability around analysing unstructured data housed in a range of formats to glean insights into customer sentiments.
According to its founder, Evan Harridge, this is particularly useful in B2B organisations, where interactions between suppliers and clients are often captured electronically in company email and document archives, as well as voice conversations when converted to text. He says these provide a true record of activity and sentiment.
“Instead of using surveys to get customer insights, you can use lots of different data sources to describe what an insight is about a customer,” Harridge says. “Geolocation data, the tone of conversation, what they are discussing - all of these different types of data sources are a much better indication of customer insights then surveys.”
The insights might uncover what customers are saying about an organisation’s service standards at different locations – especially when they are unhappy about them.
“There are lots of intercompany emails with respect to an account, which are not typically used to understand if that account is happy or unhappy,” Harridge says. “If we can process all of this text information at speed, we can also then overlay that with other data sources at speed, and suddenly there is lots of value in an interaction between a contract and what is happening in a live, close-to-the-edge interaction.”
One client to sign on with Immersive is health insurer, Bupa, which has used the technology to create a single-view-of-customer application.
“We take all of their transaction information around their optical, dental and health insurance customers to look for addressable markets,” Harridge says. “We can then use that information to recommend what next service might be interesting to them.”
Turning insights into action
The desire to turn data-driven insights into actions has also been witnessed at the analytics consultancy, Servian. Its general manager for Victoria, Vivek Pradhan, says client conversations traditionally have been around how to better understand the customer, how to segment the customer base, and how to have personalised conversations with the customer. But that is rapidly changing.
“A lot of recent interactions with marketing or chief customer officer organisations is around experience,” Pradhan says. “Data in and of itself isn’t very useful until you apply it to business outcomes. Customers are now wanting to use operational data platforms and feed it back into their back-end systems.”
This has led to insights functions taking on an operational perspective, such as using an insight to generate a ‘next-best’ action that can be fed into a CRM system.
Pradhan says Servian has clients in the banking sector in New Zealand using insights to drive real-time engagements with customers through digital channels.
“The patterns are common,” he says. “They are all about changing experience, and the experience is seen as a means to an end.”
One of the key challenges Wegner believes faces insights functions is their ability to rapidly integrate their insights back into their organisation. This might mean creating data sets that provide a point-of-view on where the net growth opportunities are.
BCG’s Wegner agrees it is critical that insights functions build a stronger capability to operationalise their insights if they are to reach the fourth state of delivering competitive advantage. This includes using data sets to provide a point-of-view on where net growth opportunities are.
“The other interesting question is about where should customer insights sit,” Wegner says. “In the majority of cases it does sit within the marketing function. But there are some organisations that are moving a strategy where it may be closer to some of the decisions the company is making about where they head next.
“But in terms of how the insight function plays out, they have to embrace this and stand up to this and take more of a point-of-view. To get that seat at the table they need to show that they can bring something new in approach that they can provide and integrate with other data sources.”