Are you really producing customer insight?

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All organisations want powerful customer insight, to unlock the secrets of the market, underline threats and highlight opportunities. But customer insight is not data, information or knowledge. With many organisations failing to create insight, Jennifer Kirkby examines what it is and where it can be found.

By Jennifer Kirkby, consulting editor

Customer insight managers would like a new job. Most would really like to be internal customer consultants, called in to give ‘insightful’ advice when action is being planned and respected for their knowledge. But perhaps if they actually knew how to produce insight they might find the task of selling their services a little easier.

Insight - what it is and what it isn’t

“A moment’s insight is sometimes worth life’s experience,” said American poet Oliver Wendell Holmes. And indeed, when we think of insight we think of it as rare and valuable, discerning and perceptive; a knowledge that transcends the superficial and gets to the heart of something to find its inner character and true nature - a nature hidden to the less discerning.

Insight in the world of customers can be what Merlin Stone, Alison Bond and Bryan Foss describe as “flashes of inspiration, or penetrating discoveries that can lead to specific opportunities” in their book ‘Customer Insight’. In other words, like mining for diamonds. But, more usually, it is a deep understanding of the customer in the context of the market. Insight is the ability to get into the customers head in a way that is valuable to the business. The insight that customers think blue washing powder gives a cleaner wash than white even though the chemicals are the same, is not that useful to a telecoms company, but key to a detergent manufacturer.

Insight unlocks the ‘secrets’ of the market underlining threats and pointing to opportunities, which indicates it has several other characteristics:

• It should be useful, and actionable.
  
• It needs to be ‘of its time’ and can include both hindsight (perception gained analysing the past, and foresight (perception gained from modelling the future).
  
• It is not obvious to others or easily found.

When an insight becomes common knowledge, then it loses the tag of perception. So knowing that some savers will always chase higher rates, whilst others have a propensity to loyalty if they get good service, is common knowledge in the retail savings market. But knowing that the taking out of a cash ISA is a signal for a financial planning review with cross-sales opportunities for unit trusts in certain segments is insight.

Insight is not data, it is not information (ordered data), and it is not knowledge. For example, I know some people who have financial planning reviews also have a cash ISA. In fact whilst knowledge management is often about making the tacit knowledge in people’s head’s explicit to others, the insight process is often about making explicit knowledge tacit.

Where to find insight

Geological conditions often point to where diamonds may be found, and similarly insight is more likely under certain market and organisational conditions:

• According to research by Dr Brian Smith (reported in ‘Creating Market Insight’), it is more likely in areas of the market that are more complex and/or more turbulent. So the current market for mobile communications may throw up more opportunities for actionable insight than the current market for confectionary. Although in the latter case, turbulence in political and social trends is creating more insight opportunities.
  
• A combination of different types of information, e.g. customer behaviour data, social trends, attitudinal market research, feedback and econometric models.
  
• Cultures (organisational or functional) where thinking is valued and different thinking styles, e.g. lateral, emotional, problem solving, encouraged and combined.
  
  "Thinking is the means of production. You can no longer have the situation where one person thinks and the rest follow orders."
  
  
• Learning organisations, where the insight behind the current strategy is recorded and understood, and there is an organised process of scanning information, turning it into relevant knowledge and challenging what is known in order to distil insight.

Job description is more important than title

It is because many so called ‘customer insight’ departments are unable to generate the right insight conditions that they fail in their quest to become internal customer consultants. They just aren’t really producing insight – only data, information and knowledge. Those econometric models need to link with market trend data and customer attitudinal research to predict future scenarios. That churn data would produce far more insight if linked with customer complaints, competitor information, and customer motivation research.

Of course, one of the key issues is that organisationally few companies have anyone with an overview of all the relevant data, its volatility, and the means of bringing it together in the right thinking environments. This should be the job of the customer insight manager, but all too frequently this is just a renamed role for the market research buyer, customer database manager or even customer care manager - and none of these have the big picture view or the facilitative remit that they need.

An insight process to consider

So how might real, valuable, hard to acquire, actionable insight be produced? Here is a simplified process to start the thinking:

• Define the business challenges that the insight needs to address, and eliminate noise. What are the key issues in your market to which no one has the ‘right answer’ - be it company specific (e.g. attracting customers of a certain type) or market specific (e.g. understanding the business case for social marketing in your industry). Start with major issues and break them down into smaller ones. If you don’t know what a diamond is, then how will you know when you’ve found a pink one?
  “Decide what customer insight you need to have, then try and gain it and use it.”
  
  Professor Merlin Stone

• Audit and plan out the areas where you need data and information to research the issues. Usually they fall into three groups:
  • PESTE trends (political, economic, social, technical, environmental).
    
  • Market data on consumers, customer, competitors, suppliers, channels.
    
  • Internal performance data.
  
  This data and information will come from a variety of internal and external sources (e.g. databases, market research, econometric models, customer feedback, industry experts, media, and business partners). Some will look forward and some back. Some will be strategic in nature (e.g. market segmentation research), others operational (e.g. customer complaints). A real barrier to insight is the disparate way information is collected and never audited let alone joined up.

• To link data, cluster relevant sources around the issues. A simple way of doing this is in an actual mind map. So, say an issue is ‘how do we combat new entrants in the motor insurance market’, the data to scan for this issue might include:
  • Competitor analysis.
    
  • Customer feedback at renewal time.
    
  • Evaluation of success of customer welcome programme (or onboarding).
    
  • Market research on brand image and market positioning.
    
  • Broker research and analysis.
    
  • PESTE information that has thrown up strong relevant opportunities and threats in an analysis.
    
  • Econometric modelling on customer risk.
    
  • Propensity models on customer preferences.

• Someone then needs to have ownership of that issue, and be continuously scanning the relevant information for insight. This could be a business relationship manager in a customer insight team who interfaces between P&L’s and the analysts. Or it could be the role of a ‘marketing manager’ who has the time to liaise with relevant internal information providers and think – as opposed to the one just looking to be given the ‘honey pot’.

• In my experience, this ‘issue ownership’ role has to be done on a continuous basis – that is where the deep understanding comes from. But, for expediency some organisations advocate ‘immersion’ workshops for ‘flashes of insight’. These bring together people with different but relevant knowledge to create new potential insights by:
  • ‘Clustering’ their knowledge.
    
  • Asking the five whys about accepted knowledge.
    
  • Sifting for potential actionable insight.
    
  • Crafting ‘the story’ or ‘the model’ for the new insight.
    
  • Testing this out with research, expert opinion and observation.
  
  Included in this should be the different producers of the relevant information. A combination of both methods to arrive at insight is usually good practice.

• The issue owner needs to build a ‘model’ of current accepted knowledge and insight for why things are currently done as they are, e.g. we have a welcome programme because we know that it reduces early cancellations and increases cross-sales. This is the platform for organisational learning that will help hone the issues and assess new potential insight.

• Ideally ‘accepted’ knowledge should be made explicit in a knowledge management system, under asset management in MRM systems, or even in old fashioned ‘brand books’. If tied into the customer strategy from targeting to retention, it will also highlight missing knowledge and potential for insight.

• It is against this explicit knowledge that new insight can be explored and measured for potential.

• Information can be qualitative (exploratory) or quantitative (measured). Too many companies think that only the measured is valuable, when it is often the qualitative that can indicate the presence of insight. For example, that one piece of customer feedback from frontline employees that suddenly makes sense of the data segmentation model you did on product holding. This is where the commissioning of new market research can be far ‘smarter’ and cost-effective than general piecemeal studies; where insight is lost because they don’t tie up with any other data held.

Bottom line

A report on insight should end with a flash that is actionable, so I’ll leave you with Brian Smith’s model on where insight can be found. He recommends that you grade areas of marketing strategy into their degree of complexity and market turbulence. Then he says you plot these in a four box diagram of high and low on both factors.

• Low turbulence, low complexity - are ‘calm’ areas where there is the least potential for insight.
  
• High complexity, low turbulence – he calls ‘fluky’ (a nautical term) are unpredictable areas that need through investigation of potential insight.
  
• Low complexity, high turbulence – are ‘gusty’, catch the wind of insight to gain quick advantage.
  
• High complexity, high turbulence – areas of storm where the most insight can be found for new business models as well as propositions.

That’s left me, at least, with a new piece of insight to test out!!

Further reading