Understanding customers through metrics is vital – but building in qualitative research enables businesses to better pre-empt customers’ ‘unspoken’ needs, and to innovate for both existing and new markets more successfully.
The need for organisations to deeply understand their customers has never been more top of mind for corporate Australia. As companies strive to become customer centric, they are increasingly using customer data and analytics analysis, and gathering customer insight ‘in the moment’ from Voice of the Customer (VOC) programs, including Net Promoter Scores as part of their ‘business as usual’ operations.
Amanda Hicks, Partner, Customer, Brand & Marketing Advisory, KPMG, says these approaches mean companies now have increasing amounts of data on their customers, of increasing complexity. For example, they know how different customer segments behave at different points on the customer service journey, or they have more predictive customer spend patterns.
“Organisations are now able to measure more accurately and immediately the impact of changes to product or service offers on customer sentiment and loyalty,” Hicks says.
However, while these metrics are vital, she says they are not always offering the deeper, more personal insight that could spark a unique innovation in products or services.
“We’re seeing that a reliance on data means there’s a risk that the company starts narrowing its focus to delivering on its core metrics, rather than delivering to the customer need. And customer needs are rapidly evolving, particularly with disruptors continuously emerging, and re-setting customer expectations.”
Therefore, to truly delight customers now, and to pre-empt what they will need next, it’s necessary to get beyond ‘understanding’ via the metrics, and to move into ‘empathy’.
Nathan Baird, Partner, Customer, Brand & Marketing Advisory, KPMG, and an expert in organisational design, innovation and customer empathy, explains that “empathy isn’t sympathy, and empathy isn't insight”.
“What it is, is the ability to deeply understand your customers, and to truly see and feel from your customers' point of view. That’s empathy at its core.
“Another way to look at it is getting beyond what they ‘say’ they feel rationally – and into the underlying emotional drivers of decisions. This is what they think and feel – the ‘why’ of decision making. This information forms a basis from which we can truly start to think about meaningful innovation,” he says.
“That could be developing new products or services, or through designing communications campaigns that really resonate. It might be innovating the way your company does things – the channels to market or the back office so that it transforms experiences.”
Hicks says this helps to delight and retain existing customers, and can help organisations to acquire new ones – as there is potential to identify unmet needs and act.
Building empathy for customers starts with the C-Suite, and a commitment to “look ahead as the priority”, Hicks says.
“This is where we’re seeing the rise of the importance of the Chief Marketing Officer or Chief Customer Officer.”
Baird explains that this is when the company must have a framework to build empathy. In short: “be them (the customers), be with them, and learn about them”.
“To ‘be them’, you need to ‘get in their shoes’, doing the things they do, listening to the podcasts they listen to, reading the blogs they read, and visiting the social media sites they visit,” he says. “Always within the context of your business – but also broader.”
He says to ‘be with them’, the key is to observe how they interact with products and services, and behave in their broader life. For example: “You want to go shopping with them if it's relevant, go home and interview them as they cook, look in their pantry, eat dinner with them and interview them afterwards about all of that.”
Learning about customers requires exploring beyond the customers themselves, including understanding the industry sector and macro and micro trends.
Hicks explains: “That is about talking to experts. If you’re in the food industry, you might talk to nutritionists about the nutritional needs of different customer segments and the broader industry trends. You might ask what the restaurant owners are seeing, or the chefs, or speak to the editor of a cuisine magazine/blog.”
The underlying thread is that multiple sources of qualitative insight are vital to supplement the existing quantitative research and metrics.
“That is often ethnographic research, with focus groups, one-on-one interviews, following bloggers and watching – it is quite time consuming. However it’s really only this way that you can see, feel, touch, and be the customer in their experiences.”
Building empathy for customers is a major competitive advantage – as it means spending less time on innovating products and services where there is no demand, Baird explains.
“It’s getting to the level of innovation that is required to stay in the game in today's world – and to potentially stay ahead of the game,” he says.
If the whole organisation is on board, Hicks says it can lead to greater morale and cohesion, due to the joint sense of purpose.
“You’re improving consumers’ lives, even if it’s just in a small way, and you’re all aligned and motivated around that,” she says.
In the age of the customer, chief executive officers need a deep understanding of customer centricity, meaning the next CEO could be the chief marketing officer. Find out more in CMOs in CEO roles – the case for a new perspective.
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