The balance of power has shifted from companies to their customers. Your customers now have constant access to a world of information about both your company and your competitors, and they’re putting that information to use. Social media and online review sites give them a megaphone to broadcast their feelings about brands—positive and negative. Those voices have an impact.
In a study from Dimensional Research, 90 percent of people who read online reviews said that their purchasing decisions had been influenced by positive reviews, while 86 percent said they were swayed by negative reviews.
The empowered customer is more demanding and less loyal. “Brands have never been more fragile,” James Surowiecki, a business journalist for The New Yorker, wrote. “The reason is simple: consumers are supremely well informed and far more likely to investigate the real value of products than to rely on logos.” Customers no longer rely on a brand’s reputation to gauge the value of a product. According to a study from Accenture, 40 percent of retail industry leaders cite millennials’ lack of loyalty as their number one concern.
If they’re unhappy with a product or an experience, customers will tell you so, and they will expect a response. Companies that neglect to engage with angry customers risk a public relations disaster. Just ask the marketing team at Starbucks, which encountered a backlash to a U.S. campaign that encouraged baristas to have conversations about race with customers who’d rather just pay for a coffee and get on with their day. Or ask Chip Wilson, who stepped down as chairman of athletic wear retailer Lululemon after he prompted public fury by insinuating that overweight customers were to blame for a flaw in a line of yoga pants. As Mark Cuban has said, “Treat your customers like they own you. Because they do.”
In the age of the empowered customer, companies must move beyond traditional market research. Their challenge is to harness intelligence about their customers more quickly and comprehensively. By understanding the empowered customer, a company can make effective and intelligent business decisions.
What is customer intelligence—and how can it transform your brand?
Customer intelligence is about producing insight into customers that is both smart and useful. To gather customer intelligence, a company must draw on data from multiple sources and analyze it at the speed of business. This intelligence tells decision-makers not just Who, What, When and Where, but Why. It’s the knowledge of why customers behave as they do that allows companies to adapt to meet customer demands. Good customer intelligence not only informs, it guides and advises leaders as they make real-world business decisions. The result is a holistic picture of customers that’s more about people than pie charts.
Customer intelligence is also crucially about action. It means using that insight to drive better business decisions and measurable results.
The difference between data, intelligence, and insight
Data is the raw material of information about customers. It can be biographical information like age and education level, a single response to a survey question or a discrete record of a single purchase. Data is essential but on its own largely useless—it’s backward-looking and can’t predict how customers will behave. Context gives data meaning. For example, the fact that a customer bought product X twice this month is uninteresting by itself. The fact that a customer bought product X twice this month but only once last month is more interesting. The fact that a 30-year-old customer with a master’s degree bought product X once last month and twice this month is more interesting still, and so on.
Intelligence is the holistic and flexible understanding of customers that comes from gathering, contextualizing and analyzing data. Intelligence is data studied and scrutinized at the speed of business— in real time—to produce actionable insight. Customer intelligence means going a step further to place information into context, so we learn that our 30-year-old, grad-school-educated customer has recently moved and has a young family.
"Intelligence is data studied and scrutinized at the speed of business— in real time—to produce actionable insight."
Insight is the deep understanding of customers that comes from gathering, analyzing and synthesizing customer intelligence. Insight goes beyond the Who, What, When and Where to tell us Why customers behave as they do, guiding better business decisions and delivering results. Arriving at insight means learning that our well-educated customer with a young family is shopping with us because Product X is diapers and the young family includes a baby. We learn that the family is also sometimes buying a competitor’s diapers because they’re a little cheaper and the family is on a tight budget after a move into a new house. Perhaps we decide to build loyalty between this customer and our brand by offering coupons for our diapers to lower their cost and help the family through a financially difficult time.
The era of customer empowerment demands new tools to learn what customers want. In order to compete today, companies must look beyond data, using customer intelligence to arrive at actionable business insight. To succeed, companies must understand the different sources of customer intelligence and take advantage of tools that will help them get closer to their customers.