What is a Customer Insight?
Everybody talks about Customer Insights.
It doesn’t matter to which Marketing expert you ask. He/ she will talk about it.
But… What exactly is a Customer Insight?
A Customer Insight is the deep and true motivation that drives a Customer when choosing a certain product or option.
These “true motivations” are commonly misunderstood or even neglected.
You may be thinking that your customers are choosing your product because it is the best in the market while they may be choosing it for other completely different reason.
You’ll understand it better with one funny example:
Football match - Customer Insight example
Why do so many people gather to watch football on weekends? (European or American football; it doesn’t matter).
Why a 40 years old man spends 2 hours each Sunday watching a mediocre football team that practically always loses?
Think about this:
- You are a 45 years old man with 2 kids.
- On average men love football much more than women do.
- Your marriage is not the same as it was 12 years before.
- Statistically speaking, this is an average situation; check the divorce rates by country.
- You are not very happy with your Job.
- Also, quite common.
- You don’t spend as much time as you’d like with your friends.
- You are the whole day working and taking care of your kids.
- Like everyone with 2 kids should do.
Once a week, you see an “open window”, a way to “escape” your daily routine: The Football match.
- You meet your friends in your favorite Pub.
- There, you all remember the old days while drinking beer.
- Then… Once you are a bit “tipsy”, the match begins.
- The next 2 hours you scream and shout at something that “represents” all your problems: the opposing team.
Apparently, these men go to the Pub to watch the match, but in reality, they go there to have a good time and forget about their problems… at least once a week.
That is a Customer Insight.
* If you had to explain to the “aliens” what football is, you would better explain it this way.
- Otherwise, they would never understand its popularity.
This example can’t be applied to all football fans, of course.
That is why identifying Customer Insights is so difficult; because they are not homogeneous.
- What is important for you, may be not important for your neighbor or even your brother.
Then, why bother?
Why are Customer Insights important?
Basically, because if you find a “good hidden Insight”, you can offer your customers what they really want, and nobody is offering them.
A properly identified Customer Insight can be enough for starting a successful business.
Let’s see one famous example:
Starbucks - Customer Insight example
Starbucks started in 1971 and some years later became the biggest coffeehouse in the world.
How was that possible?
They were selling just coffee!
It was not an amazing new product or a high-tech Silicon Valley company.
How could they build a big successful company with such a common product, coffee?
Because they identified a “powerful” Customer Insight:
- Many people who go to Coffee shops don’t look for coffee; they really look for a “place to be”, a place to “meet”.
Think about this: there were hundreds of thousands of cafeterias all around the world before Starbucks. But how did they look like?
Ok, this is not exactly a cafeteria, but you got the idea.
- Uncomfortable chairs.
- Noisy waiters.
- Once you finish your cup of coffee someone is pushing you to leave.
- Generally, by cleaning your table and make noise around you.
- Etc, etc.
By focusing more on the “place” and “comfort”, Starbucks could offer what most of the customers were really looking for:
- A quiet place where nobody pushes you to leave.
- A place where you can spend the afternoon with your friends.
All this implied less consumption (coffees consumed per hour), but they solved it with higher-than-average prices.
* We used this same example in our “Competitive Advantages” publication.
- After this Starbucks’ discovery, being able to offer a home-like place, became a Competitive Advantage in the Cafeteria Market.
This example is very interesting since we’re talking about a very mature sector: coffee shops.
If Starbucks could do this with a coffee shop, imagine what could be done in other new sectors.
Now, the million-dollar question: how can we identify these Customer Insights?
How to Identify Customer Insights
As you may have already guessed, it is not always simple to identify a Customer Insight.
Marketing companies spend millions of dollars for doing so and they don’t always find what they were looking for.
However, if you are smart, you can find what nobody has seen before by following the next guidelines:
1. Look what your Customers do, not what they say
The best Customer Insights are hidden, even from your Customers.
It is common to want something without knowing exactly what it is.
Only by studying your Customers’ actions you can get interesting conclusions about what they really want.
You’ll understand it better with one example:
Marvel movies - Customer Insight example
We propose you one interesting game: Ask your friends which kind of movies they like.
Many people will say that they love having a glass of wine while watching the last Woody Allen film or something that sounds “intellectual”.
However, if you check Wikipedia’s Highest-grossing Films list, you won’t find any of these films:
How is possible that Marvel movies are so successful?
- They all have the same argument.
- They all have the same script (or almost).
- Some of its movies have used the same Hero with different actors and incompatible storylines.
- Spider-man, X-men, Hulk…
- Even the Soundtrack seems to be the same.
Marvel understood that most of the people go to Cinema to see some “action”, and “not think” for 2 hours.
They don’t intend to produce “Stanley Kubrick”-like movies.
They just offer the audience what they want.
That is why they repeat and repeat the same formula… and their movies still earn billions of dollars.
* One day, people will get tired of this “product” and they’ll have to modify their strategy.
- Maybe The last Avengers’ movie had the right title: Endgame.
As we often say: this example can be nuanced in many ways.
We just want you to understand the concept: Our actions reveal much more interesting things than our words.
- Sometimes, we don’t know what we want.
- And other times… we just lie to ourselves.
2. Make no assumptions
The most common mistake in Marketing is assuming your Customers will be “crazy” about your product just because you think they need it.
Your personal Bias is your worst enemy when looking for Customer Insights.
Be open to unexpected conclusions when analyzing your Market data.
Home delivery - Customer Insight example
There have been several attempts, from supermarkets, to improve their home delivery services.
Their “assumption” makes sense:
- If people can save their grocery time, they will.
- In the end, who wants to spend 1 hour in the supermarket every few days?
But why all these attempts have not been as successful as they expected? (we are generalizing, we know).
- Many grocery store Companies have a profitable and efficient home delivery service, of course, but they are always looking for new ways of reaching more clients.
Why are they always trying to improve this service, but it doesn’t seem to take off?
Because lot of people love spending some time in the local supermarket.
Going to the supermarket means:
- Checking new products.
- Spending some time “off” home.
- For example, if you have your husband (or wife) home with your 2 kids and your fathers-in-law, maybe, being at the supermarket is not a bad plan.
- If you have had a terrible day at work you maybe want to get some beers immediately.
- Doing some whim-purchases.
- Socialize (for people living alone).
- Etc, etc.
We don’t say that home-delivery services will never success.
We just say that some customers love doing their purchases personally because they like the time spent in the supermarkets.
That is a Customer Insight.
Now, you have found an interesting and unexpected Customer Insight.
What should you do?
3. Test your Conclusions
As we mentioned earlier, it is difficult to find a real, useful and deep Customer Insight.
Therefore, before you ask for a second mortgage on your parents’ house for financing your new business, you should test your conclusions.
“What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so”.
How to test a Customer Insight
1. Go, see and Touch.
- Check different businesses personally.
- Whether people there behave as you expected or not.
- Check if the average customer orders what you expected to.
- Investigate different locations.
2. Make some numbers.
- Statistics of consumption habits.
- Main products consumed.
3. Don’t look for numbers that confirm your theory.
- Try to challenge your theory, instead.
- Avoid the confirmation bias.
4. Predict results that can be confirmed later.
- Which Business (shop, supermarket, etc..) must be doing better.
- Use Income Statements to evaluate your predictions.
If you can confirm that your Customer Insight is accurate, congratulations.
Now, you have a powerful tool to succeed.
A Customer Insight is a true motivation that drives a Customer to choose a product.
- Properly identified they can be enough for starting a successful business.
For identifying them correctly, you should:
- Look what customers do rather than what they say.
- People don’t always know exactly what they want and why they want it.
- Moreover, we all tend to lie more than we admit.
- Make no assumptions.
- Assumptions can be very expensive.
- Avoid the confirmation bias.
- Try to be open to unexpected results.
- Test your Conclusions.
- Go see and touch.
- Make some numbers.
- Don’t choose the numbers that confirm your theory.
- Make some prediction for checking how accurate your conclusions are.