Consumer Insights: What They Are & Why They Matter
In today’s competitive landscape, customers expect high-quality experiences to accompany high-quality products and services. Data and consumer insights are the tools needed to provide valuable information to help businesses exceed customer expectations. Learn why consumer insights are important and how they can help you stay ahead of the competition.
What Is Consumer Insight?
Consumer – or customer – insights are “the understanding and interpretation of customer data, behaviors, and feedback into conclusions that can be used to improve product development and customer support,” according to TechTarget.
These insights help businesses obtain a 360-degree customer view to better understand customer behavior when it comes to purchasing decisions. Insights also provide a deeper understanding of how customers think and can help business owners answer important questions, such as:
- Why are sales down for a particular product?
- How likely are you to succeed in a new target audience?
- How is your brand perceived by your audience?
- What do customers think of a new or a potential new product?
- How can customers purchase more expensive items, upgrades, or add-ons to an existing product?
- How can you sell an existing product or service to your customers?
- What can you do to increase conversion rates of marketing campaigns? efforts?
Customer insights can be collected from a variety of sources: customer service data, product and service reviews, market research (such as how weather impacts shopping and where consumers are spending their money), purchase history, and customer sentiment.
Why Are Consumer Insights Important?
Consumer insight can provide a business with the opportunity to better personalize and tailor products to the needs, wants, and demands of their customers. Organizations that leverage their customer behavior to generate insights outperform their peers by 85% in sales growth, according to Microsoft.
Businesses can use these insights to expand their product/service offerings, develop new marketing strategies, create detailed customer personas and customer journey maps, and enhance current offerings. It can also mean more revenue: According to Microsoft, a $1 billion company can see an average of $775 million over three years due to customer service improvements.
Customers also have higher expectations when it comes to customer service. According to a Microsoft survey, 54% of consumers had higher expectations in 2017 than in 2016, and that jumps to 66% for consumers in the 18-34 age range. Why is this important? A great customer service experience will earn loyalty and “turn customers into promoters with a lifetime value of 6 to 14 times that of detractors,” according to Bain & Company. Additionally, companies that do well with customer service grow 4-5% above their market.
Benefits of Harnessing Consumer Insights
By using consumer insights to inform strategic and tactical decisions, you can develop relationships with your customers, better understand the connected customer, and generate meaningful and quantifiable results, which include:
- Predict churn
- Maximize customer lifetime value
- Deliver personalized experiences
- Better inventory planning for smaller inventories and fewer markdowns
- More effective inventory control for promotions with better data
- Promotions targeted to customers most likely to buy
- Determine optimal product pricing
- Exploring new product ideas and features
- Expand in to new markets or leave under-performing markets
Consumer Insight Use Cases
Many industries, such as financial services and manufacturing, now see that customer interactions and personalized engagement are essential for growth and customer retention. Operational silos of customer interactions, however, must be broken down and integrated to stay competitive.
Successful retailers will provide a unified experience across all marketing and sales channels to understand the end-to-end views of the customer journey.
Wayfair, for example, introduced new features in November 2019 to their mobile app, which now includes an augmented reality (AR) tool, an interactive photo component, and the Room Planner 3D feature.
Since half of their customers place orders on mobile devices, Wayfair enhanced their app, and now customers can see how the furniture will look in their homes or offices with just a few clicks. Customers can create an interactive 3D room and see how furniture and other products look and fit in to a picture of their particular space. This helps consumers find things they like while also providing Wayfair with a better idea of each customer’s unique style.
How to Get Started Using Consumer Insights
One of the most important components of using customer insights is setting a goal. It’s also important to determine where the data is coming from, how the data is collected and managed, and whether the ability to collect high-quality data exists.
You also need to plan how to use the data, and data governance is key. It’s important for businesses to not only manage the data, but also ensure it is secure and available. Determine the area of your business that will be affected by the data collection/management process and identify how different departments can interact and utilize the data.
Microsoft Dynamics 365 for Customer Insights
Insights need to be easily accessible to your team members when they interact with the customer. Providing a single view of the customer is critical to providing personalized and meaningful interactions. A consistent high-value experience is imperative through all channels: face-to-face, email, online, social, and over the phone.
D365 for Customer Insights collects and unifies transactional, observational, and behavioral data on your customers. Contact our Hitachi retail team today to learn more.