You must have seen YouTube recommending videos that match your interests. How does it happen? Well, it uses data such as engagement, view history, and watch time to gain valuable insights. It brings us to the topic of utmost importance to brands, i.e., consumer insights. In this article, we will walk you through the core concepts of consumer insights.
Consumer Insights Definition
With the advancement of technology and the advent of digital devices, consumers have choices at the tip of their fingers. From buying online to watching their favorite movies on digital platforms, they are surrounded by choices. To bring convenience to consumers' daily lives, brands use data to gain consumer insights and provide tailored offerings to them.
Consumer insight is the interpretation of data to understand the needs of consumers and provide improved and tailored solutions to them.
For brands, it is essential to understand how their target audience thinks and makes a product/service choice. With the help of consumer insights, marketers are more equipped to know the pulse of consumers. They can improve the product and provide better customer service to the consumers. It will eventually help the brands to improve the overall consumer experience.
Microsoft believes that “a moderate increase in customer experience generates an average revenue increase of $775 million over three years for a company with $1 billion in annual revenues”. 1
Importance of Consumer Insights
Consumer insights are important for brands as they help them to provide more suited solutions to the consumers and outperform their competition. It will eventually lead to more sales and an increase in market share. Brands can also use consumer insights to expand their product categories and break into new markets. It is the need of the hour too, because of intense competition in the market.
Consumer insights and big data
It is no secret that the explosion of information technologies has enabled companies to generate data easily. However, the problem comes with having too much data to use. Companies have access to many platforms to generate data, but the data alone can not be useful. It needs to be converted into meaningful information. This is where the concept of big data comes into the picture.
Big data is complex data generated through information technologies that need to be processed to analyze consumption patterns.
In the age of information overload, it is a tough ask for companies to extract meaningful information from huge sets of data. Big data offers big opportunities as well as challenges to companies. When the data is managed and used effectively, it could provide meaningful consumer insights. Companies need to design an effective information management system, and equally important to have expert data analysts at their disposal to gain valuable consumer insights.
Techniques to Gain Consumer Insights
Companies need to gain valuable consumer insights to develop or improve their products/services. There are many techniques through which companies can extract consumer insights. Some are based on statistical models and some are on user-responsive surveys. Here we discuss the most common techniques.
Questionnaires – Companies provide users with questionnaires to answer specific questions. Companies usually ask questions such as what motivates consumers to buy their brands, whether are they satisfied with the product/service, and what areas could be improved. These questionnaires help companies to improve the product/service and make their operations more efficient.
Third-party data – This means using third-party data to gain consumer insights. Companies that do not have access to data themselves use the data generated by other companies. However, it is important to get third-party data from the same industry. Companies also use this type of data because they do not have the resources to get it themselves.
Behavioral data – This data shows how consumers behave during the purchase of a certain product/service. Companies could access this data with the help of some software or through a firm that specializes in generating and managing behavioral data.
Real-time user testing – This technique is used to get consumer responses in real time. Companies use A/B tests to identify consumer responses to the processes and features of an offering. These user responses help companies to identify what works and what does not for the consumer base.
Customer sentiment survey – This kind of survey is used to determine the overall feeling of consumers. However, they provide fewer concrete responses than questionnaires. Star ratings and NPS are used in customer sentiment surveys. For instance, a user uses an app, and at the end, the app shows a message – rate your experience.
Predictive models – Artificial intelligence and machine learning has equipped companies to employ predictive models to gain consumer insights. They can manage large sets of data and extract valuable insights with greater accuracy.
Types of Consumer Insights
Overall, there are five main types of consumer insights:
Socio-Demographics – Companies get this type of consumer insight through interaction with the consumers. Brands get to know information such as the gender, age, income, marital status, and working status of consumers. It could be used to segment the audience accurately and provide more customized solutions to them.
Sales trends – Sales-related data helps companies to examine sales trends. It identifies whether the product/service is achieving the results in terms of sales. Companies can make financial projections based on such consumer insights.
Customer feedback – One of the most common types of consumer insight is customer feedback. These insights help businesses to either improve or sustain their position in the market. It tells companies if their consumer base is satisfied or dissatisfied with their offerings.
Buying motivations – The motivations behind buying specific brands could give valuable consumer insights to the companies. It helps companies identify the drivers for consumers to purchase certain brands. The motivations could be a specific feature, quality, or a brand’s problem-solving approach.
Brand perception – This type of consumer insight tells companies how consumers think about their brands. If consumers have positive perceptions about a brand, they are likely to continue using that brand. Therefore, companies could improve their product/services by using these insights.
Consumer Insight Examples
The world’s top brands, such as Apple, Nike, and Netflix, use different techniques to gain consumer insights. They use these insights to improve their product/service and the customer experience. Here are a couple of examples of top brands using consumer insights to their advantage.
Nike
Nike gains consumer insights through consumers’ interaction with the online and offline touchpoints. Through these consumer insights, Nike found that majority of its customers are not athletes but people who aspire to be them. Therefore, it launched a campaign called “Find your greatness” to inspire these aspiring athletes. This campaign turned out to be a success for the brand.
Fig. 1 - Nike uses consumers interaction to gain consumer insights
Starbucks
Another great example comes from the renowned coffee chain - Starbucks. Starbucks examines cultural trends, monitors social media activities, and gathers customer feedback to gain consumer insights. It also uses its platform to research its consumer base. Starbucks also asks its consumers to openly suggest new ideas to improve the product or the service.
Fig. 2 - Customer feedback, A way for Starbucks to gain consumer insights
Consumer Insights - Key takeaways
- To bring convenience to the daily lives of consumers, brands use data to gain consumer insights and to provide tailored offerings to them.
- With the help of consumer insights, marketers are more equipped to know the pulse of consumers.
- Consumer insights are important for brands as they help them to provide more suited solutions to the consumers and outperform their competition.
- Companies need to design an effective information management system, and equally important to have expert data analysts at their disposal to gain valuable consumer insights.
References
- Microsoft: https://about.ads.microsoft.com/en-us/blog/post/january-2020/delivering-on-the-customer-experience-imperative
- Figure 1: https://pixabay.com/photos/canon-nike-photographer-photography-1839201/
- Figure 2: https://pixabay.com/photos/glass-coffee-starbucks-coffee-shop-1058878/
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