Customer insight: a luxury or a key competitive advantage?

Evolution of customer insight
Remember the days when data experts were seen as the dull, nerdy end of marcomms? Not that long ago really. Whisper it, but now data is sexy. Data rocks. Data empowers marketers. And data, used properly, delivers fascinating insights and ignites the most emotionally compelling creativity.

And that’s why customer insight is now a field of expertise that data marketing professionals can take to the boardroom of their organisation. Yet, despite this, there is a dearth of real life examples of businesses embracing customer insight as their key competitive advantage. Tesco has almost become the exception that proves the rule rather than a shining model of what can be achieved.

Why? Maybe it’s because, in order to embrace customer insight – or a culture of customer centricity – organisations have to challenge the way they structure their business; the ultimate point of customer responsibility within an organisation, the behaviours and skill sets of their customer insight teams and the inherent trade off between a product and customer focus.

Defining customer centricity
And maybe it’s because the term customer centricity itself paints a distorted vision of abandoning everything traditionally linked with product marketing and replacing it with a strategy designed to knee jerk to the latest consumer trend. In reality, of course, customer centricity’s real practical meaning is to balance the requirements of the business with that of the consumer; to resist the urge to continue to implement a product strategy in lieu of any real customer understanding.

A lack of customer understanding where it is needed most, in the boardroom where the real decisions are made, is usually a symptom of an organisational structure that does not reflect the importance of the customer. An antidote to this problem has started to emerge in some companies in the form of the CCO – the chief customer officer.

The CCO itself is a direct product of the convergence of sales, marketing and customer service. Well guess what? That’s exactly the data we have in our databases. (You did remember to build that single customer view, right?) Customer insights, in the hands of a CCO, have a deserved place in the boardroom, speaking the language of the CEO and CFO, dealing with business critical decisions from pricing to supply chain. Customer insights, in the hands of your marketing service provider, are lucky to be taken seriously outside the sphere of marketing communications strategy, a far cry from the business strategy that is often aspired to.

So, how do you drive consistently high quality customer insights through all levels of a business? The process has to begin with getting the right structure in place to support the right talent.

Evolving skill sets
The role of the customer insight specialist is changing rapidly. A decade ago the focus was on computational efficiency and technical excellence. The focus was on recruiting bright computer programmers with experience of querying large CRM solutions, or years of SAS experience. We’ve since realised that these days, accurate, high speed data crunching tasks can largely be carried out by the technology itself. The role of customer insight specialist is evolving from computational to interpretative and observational.

Automate to liberate
This change is indicative of a broader trend in marketing communications. Marketing is becoming more complicated. More unique treatments, across multiple touch points over sequential waves of activity. Yet this is often delivered with the same headcount of FTEs (full time employees). Human capital is often the scarcest resource in any marketing department. Therefore it is vital to harness advances in technology to systemise repetitive tasks and free up resource to focus on more qualitative initiatives.

So, given that you have a well functioning single customer view and have automated anything that can be automated, what do you do with all that spare resource? Well firstly you need to ensure that the resource available, comfortable in computational tasks, has the breadth to adopt a wider perspective on customer insight. At RAPP we have solved this by subscribing to the notion of t-shaped people – employees with deep skills in one particular field of expertise with the ability to embrace a broader field of knowledge.

The driving force of insight
This wider perspective is crucial because customer insight is not the exclusive domain of database marketing. As the cliché goes, database analysis is like driving by looking through the rear view mirror – sooner or later you are going end up in a ditch. Databases are great at determining ‘who’ and ‘what’, what they don’t tell you is ‘why’ and ‘what if’. Combining database analysis with both primary and secondary research helps to build a 360 degree view of the customer.

Outside of Nintendo the success of the Wii took many industry observers by surprise, selling over 10m units in 2008 (compared to 4.7m Xbox 360, source: NPD). Whilst any form of database analysis could replay that figure and provide a profile of who is buying it and what they attach to the purchase, you need research and a subtlety of observational skills to understand this success as a wider trend of gaming moving from the bedroom to the living room and the widening of the audience beyond 15-34 year old males. The point is that somewhere in the organisation these clues have to be brought together in one place where a skilled customer insight specialist can make sense of not only what just happened but the implications for the future.

In a relatively short period of time the role of the customer insight department has changed from being to answer any question you wish to know of the customer base to knowing which questions you should be asking in the first place. The implications of such a change are fundamental. At a basic level insight is a production department responding to the requirements of the business. A highly functioning insight department applies its insight assets to proactively identify opportunities to the business.

Dealing with abundance
It is also true that in this ever more complicated world we have more potential sources of insight than ever before. The digital world provides instantaneous feedback in massive volume. Without the proper technology in place to make sense of this information we cannot act upon it. If you are receiving real time data you had better be prepared to make real time decisions. The days of the monthly database update should have failed the Y2K compliance test.

In the golden age of direct mail it would take six to eight weeks to determine the success of a campaign. Today, an email campaign can be judged within minutes of deployment. Furthermore, with throttling of delivery the campaign can be changed on the fly. The results of direct mail campaigns are measured in the black and white terms of response. An email campaign breaks that response down into deliverability, open rates, individual content link click throughs and final conversion to purchase. The complexity of possible analysis is enormous.

However, the most significant shift is the availability of data outside of the database that mushroomed with the advent of social media. People do not complain to customer services anymore, they Tweet about it, they start threads on community forums which in turn draw not just a willing audience, but likeminded individuals who embellish or add their own observations.

Championing insight-driven opportunity In such a data rich, constantly evolving environment every customer insight department should be considered in constant beta, because the technology and sources of insight are themselves constantly in flux. It may be easy to say and harder to do, but if you can match the change in skill sets required with an internal champion who has the authority to represent the customer in the boardroom you really can consider yourself ahead of the game.

RAPP
Simon James, Planning Director