According to a new study from Harvard Business Review and FocusVision, leading global organisations see customer insight as key to business success. Other organisations, however, are missing out on the opportunity to turn widely available (big) data into insight , which in turn can be utilised across the business to make better decisions and drive growth.
The study showed that:
- 98% of participants surveyed believe that understanding their customers is crucial to creating relevant customer experiences.
- Yet, only 23% believe that their organization understands why its customers act the way they do.
There is a gap between recognising the importance of customer understanding and effectively gaining and applying insight.
Another recent study has shown that just 11% of all customer-related decisions made by Fortune 1000 marketers are made based on data.
Insights-driven businesses are growingAccording to Forrester, insights-driven businesses are growing at an average of more than 30% annually. By 2020, these businesses are predicted to take $1.8 trillion annually from their less-informed peers, according to Forrester’s revenue model.
Insight and data analytics have been a common success factor for many digital start-ups, including Etsy, founded in 2005.
Etsy set up a dedicated research department, where they blended quantitative and qualitative insight and implemented customer insights into all departments and, arguably, into its culture. Etsy has experienced 400% growth since 2012. Being insight-driven is one of the key features that sets it apart from its peers. For the first nine months of 2019, revenue is up 34%.
Tesla is another example of an insights-driven business. A former BMW customer, summed up the benefit of owning a Tesla, that is intrinsically linked to insight:
“One of the things I absolutely adore about the Model 3 is that I feel like I get a new car about every 12 weeks. I have so many features now that I didn’t have when I bought the car a year ago. Normally, at about a year, year-and-a-half of ownership I’m already scouting out the freeways for what looks good, and I find that I don’t do that with the Model 3.”
All Tesla vehicles have the ability to improve over time via “over-the-air” updates. Each car’s performance data is streamed in real-time to Tesla’s data scientists, who build models to help diagnose driving issues and provide software or firmware updates over the air. This system of insight keeps customers engaged with the car and regularly surprised by the brand via these and other fun updates which Tesla refers to as “Easter eggs”.
This switch from more traditional brands is born out in the heightened value of shares of Tesla which soared 30.7% in October this year, after it announced better-than-expected third-quarter 2019 results.
Insights have an impact on businesses
In a study by MicroStrategy, the benefits of integrating insight into day-to-day business decisions and action were seen as:
- Improved efficiency and productivity: 63%
- Faster, more effective decision making: 57%
- Better financial performance: 51%
- Competitive advantage: 48%
- Improved customer experience: 48%
- Improved customer acquisition and retention: 46%
- Identification and creation of new revenue streams: 43%
The need to connect big and small data
The FocusVision/Harvard Business Review study, mentioned at the very beginning of this piece, highlighted that in order to fully understand your customer, you need to connect both big and small data. Big data being from sources such as CRM, Point of Sales, web interactions; small data including insight is more traditionally seen as market research e.g. surveys, focus groups and online communities. Both types need to be integrated into one insight source in order to extract most insight value for the business.
Do you have a business-wide insight framework in place?
As Forrester argues, most companies have developed pockets of analytics-driven capabilities. In an insight-driven organisation, data-driven insights become embedded into day-to-day processes.
There are 6 key question areas to ask of your organisation at the outset if it wishes to become an insight-driven business, would be:
- How integrated is your insight? Big and small, all internal and external sources, does it cut across siloes?
- Is your strategy insight-driven? Does insight inform key business decisions e.g. organisation structure, proposition development, investment, innovation? Do you have a customer-centric business plan?
- Do you have insight capability within your business? Research skills, data & analytical skills and appropriate enabling tools?
- Is your Insight accessible? Do you empower people with insight or data so that they can turn data into insight? Do you have one institutional dynamic knowledge base, that enables the whole organisation access to key insight and information such as benchmarking, best practice, consumer trends, market, competitors, customer needs across the journey, etc.
- Do you practise Insight application? Does the business proactively use insight to anticipate current and future needs, do you rely on customer feedback in problem solving, problem finding, and to guide innovation or as a lens for day to day activity
- Do you readily share Insight? Does the right information get into the hands of the right people when they need it? Is it readily and automatically connected into your business operations?
Answering these simple but far-reaching questions will go some way to establishing how mature your business is in uncovering customer insights to drive business growth.
“Being insights-driven matters: it’s a competitive differentiator that will make or break your long-term success” warned Forrester back in 2017. In our work with clients, we see many organisations are beginning to realise this, but few are really set up to leverage insight as a competitive differentiator.
Could you imagine your entire organisation taking advantage of customer insights to drive large and small decisions; everywhere in the business, all the time? If you can’t, your competitors or new entrants, if they do, will be growing at your expense.