In business, market research or consumer insights are critical to understanding your customer, whoever that may be. Why? Because if you understand your customer, you can take control and manage the relationship and ultimately “own the customer”.
Airy fairy sales motivation talk I hear you say. Well, what car do you drive? What restaurant do you go to most of the time for lunch? What search engine did you use to find this article? Every successful business in the age of ‘big data’ wants to understand you and to make you come back again and again. Data, whether big or small, passively or actively collected allows business to not just measure things like customer sentiment, but gain a much deeper understanding of consumers. This in turn affords companies the opportunity to make informed predictions about the direction their respective market is moving in.
This dichotomy, is both a threat and an opportunity. It threatens the old way of doing things, years and years of very good quantitative research is now being pitted against things such as Facebook IQ[1]. Analysis of a huge number of data points coupled with some traditional research methods can yield insights a good old-fashioned survey simply cannot, no matter how well sampled it is. A.I. and machine learning solutions that analyse, for example, passive data collected from smartphones, are improving all the time and extracting findings without ever having to ask a single question to a consumer.
The opportunity exists in market research companies not just telling their clients what their customer thinks of them or why they buy their products, but in being able to make informed predictions about what their customers will want or need in the future. This means seeing your market research partners as more than Analysts, they are your ‘Innovate-ists’ (to coin a phrase). So many businesses that have had large customer bases and terrific brand equity have fallen by the wayside because they didn’t understand their customer or innovate to keep up with changing desires. One example is Blockbuster Video, it once employed 84,000 people in 9,000 stores and was the go-to place for TV and movie rentals. Why is nobody streaming movies or TV shows on Blockbuster.com? Because either they didn’t understand their customer or place enough emphasis on innovating for the future. Netflix founder Reed Hastings even offered Blockbuster the fledgling streaming service for $50 million in 2000 ($56 billion value in 2017) only for it to be rejected for being a “very small niche business[2]”.
Contrast this with another American stalwart of the late 1990s, Best Buy. Faced with falling sales and an online onslaught from competitors, Best Buy made a concerted effort to engage with it’s customers by focusing on online reviews and sharing feedback with vendors. This has led to a new duel strategy of aggressively matching prices instore with online competitors and an improved website. Best Buy endures where others, such as Circuit City, have collapsed because it a) got to know and understand its customers, and, b) embraced innovation, the in-store experience today far exceeds the Best Buy of yesteryear. Indeed, with Amazon now moving to ‘bricks and mortar’ stores as consumers demand more experiences and expert advice[3], Best Buy may well have demonstrated that they still own their customer for a while yet.
[1] https://en-gb.facebook.com/iq
[2] http://uk.businessinsider.com/blockbuster-ceo-passed-up-chance-to-buy-netflix-for-50-million-2015-7
[3] http://www.mintel.com/blog/technology-market-news/amazons-brick-and-mortar-debut-speaks-to-consumer-demand-for-experience
