Understanding customer insights starts with customer feedback.
The way that companies get feedback from their customers has evolved dramatically over the last few decades. 20 or 30 years ago, companies didn’t have much data on what customers thought about them and their products. Interactions with customers were by phone calls, mail, or face-to-face conversations.
Fast forward to today, and technology has changed that. Customers are generating feedback all the time without even thinking about it. They do this with social media posts, online reviews, customer service call transcripts, live support chats, and much more. And companies have entire Voice of Customer teams that are tasked with gathering feedback from customers.
So companies now have a nearly unlimited amount of feedback at their disposal. And that feedback is your customers literally telling you how well you are meeting their needs. But that feedback doesn't have any value in its raw form. How does customer feedback turn into value for your company? That's where customer insights comes in.
What are customer insights? Why do they matter to your business? And why are a growing number of businesses building out customer insights teams and investing in customer insights tools?
Think of it this way: if customer feedback is your raw ingredients, customer insights are your prepared meal. Feedback is often messy, unstructured, and unhelpful. Insights are actionable, contextual, and useful.
Customer insights are how you incorporate customer feedback from various sources and extract valuable knowledge that can actually help your business grow.
What are customer insights?
Customer insights, also known as consumer insights, are interpretations of customer behaviors, needs, and preferences.
Companies need customer insights to understand why their customers make the decisions they do. As companies learn about their customers’ needs, wants, and desires, they can use those insights to improve their products and services.
It’s important to note that the term “Customer Insights” is often used in two ways:
- Customer insights can refer to the actual insights that are derived from customer data. For example, after analyzing customer feedback you might summarize a finding like this: “our customers gain the most value for their money out of feature X.” That’s a specific and valuable insight for your business.
- Customer insights can also refer to the function of managing customer feedback and generating insights. For example, many companies have a Voice of Customer (VoC) or Customer Insights team that is responsible for collecting, analyzing, and interpreting data to extract actionable insights.
In other words, Customer Insights (the team) is responsible for generating the actual customer insights.
If you’re like most businesses, chances are you already have access to a million different sources of information about your customers.
Just think about a few examples: product reviews, social media posts, NPS survey data, purchase history, customer support tickets… Depending on your company and industry, you may have a very long list of sources. Every place where your customers can share what they think about your product and staff or where you can observe their interactions with your product and staff are potential sources of feedback.
And each of these produces data points that contribute to customer insights.
The raw data you receive from customers—whether it’s a social media post, a support case, or a review—often isn’t super helpful on its own. Customer feedback usually needs to be transformed from random and individual pieces of information into clear, structured data. From there, you can extract meaningful insights that your business can take action on. A dedicated VoC team is usually responsible for making this process happen.
Consumer insights are so powerful because they can cover the full spectrum of factors influencing customer behavior. Some examples of consumer insights:
- How and why people are using your product or service
- The types of customers that benefit the most from your product
- The factors that lead to customer loyalty
- What different customer segments think of your overall customer experience
- Why your customers choose your product rather than a competitor one
Are customer insights the same as market research?
At this point, you might think, “That sounds like market research.”
You aren’t wrong—there is some overlap between customer insights and market research. But they aren’t synonymous terms. Market research can help you understand “what” your customers think, but customer insights gives you the all-important “why.”
Here’s why that is: Market research refers to gathering data about an entire market or industry. The methods used to accomplish this often include things like focus groups and third-party surveys. Market research is broad, but it’s not usually very deep. It can help you understand what customers are doing and thinking in the market, but it probably won’t give you deep insights into why they’re doing or thinking those things.
But don’t discount market research—it’s an important part of understanding your growth potential and competition. That’s why most (perhaps all) companies do some level of market research. Done right, it can help you understand big gaps and opportunities that you can take advantage of (in comparison to your competitors).
On the other hand, the goal of customer insights is to go deeper to find out the why. It aggregates your raw customer feedback from many different sources, synthesizes it, and aims to give you actionable insights. Once you deeply understand your customers’ why—why they buy from you, why they’re frustrated, and so on—you can better predict how they might respond to future changes, such as new features, products, services, or campaigns.
In short, market research points you in the right direction, but customer insights is what truly gives you a firm foundation for making strategic business decisions.
Why every business should care about customer insights
“If I had asked people what they wanted, they would have said faster horses."
It’s one of Henry Ford’s most quoted lines (even though he may not have actually said it).
This statement is often used as a poetic way of saying that customers don’t innovate. That’s true—your customers aren’t responsible for coming up with innovative ideas for you to evolve your product.
But there’s a danger that often gets missed when people reference this quote: It’s often used as an excuse for not listening to customer feedback. And that is missing the point. In fact, in this example, Ford’s customers did give great feedback: namely, they wanted a faster mode of transportation.
The difference between these two perspectives involves listening more deeply. It’s easy to take customers at face value, as if they mean everything literally. It takes more time and intentionality to understand why they gave you that feedback and what their actual underlying need is.
The latter option is how you get to customer insights.
Putting in the work to glean insights from what your customers are saying enables you to capitalize on at least three different opportunities.
- Keeping up with customer expectations
- Making use of available data
- Becoming an insights-driven company
Keeping up with customer expectations
Customer expectations are evolving day-by-day, largely driven by the introduction of new technologies that make it possible to provide more tailored customer experiences.
An ever-increasing number of companies are embracing tools to create immersive and personalized experiences for their customers. Consumers want hyper-personalization and transparency:
- 66% of them report that they expect companies to understand their unique needs and expectations.
- 52% expect all offers to be personalized.
- 62% of customers have stopped buying from companies whose values don’t align with theirs.
All of this paints a clear picture. Ignoring customer feedback is like burying your head in the sand. Rather than seeing new trends and leveraging them to stay ahead of the game, you’ll always be one step behind. Focusing on generating customer insights and acting on them helps you avoid this risk.
Making use of available data
Your company–like most companies—is probably sitting on a treasure trove of data.
You collect information automatically when your customers purchase a product from you or when they reach out to your support team. Many of their interactions and experiences are captured and saved in your system for practical, legal, and financial reasons—even if you didn’t actively decide to save them as a potential source of customer insights.
Figuring out how to use that data and doing the analysis work that’s required to mine valuable insights from it will take time and effort. But not using that data at all means missing out on a great opportunity. In fact, you might already be sitting on key suggestions or feedback that could transform your business, but if you’ve never bothered to look for it you’ll never benefit from it.
Becoming an insights-driven company
How many times have you read the phrase “data-driven” in a job description? Whether it’s referring to the company or potential candidates, being data-driven has been an “imperative” business goal for decades now.
It sounds like a logical goal. Who wouldn’t want to use data and analytics as the basis for every business decision? But being successful at this is easier said than done. The real value is in becoming an insights-driven business.
What’s the difference?
Being insights-driven means going beyond collecting data and trying to back up your decisions with it. An insights-driven company works to transform that collected data into meaningful and actionable wisdom, then leverages it for long-term strategic planning.
Being insights-driven means leveling up across your entire company: having a shared foundation, purposely experimenting and iterating, and pivoting quickly based on new information from customers.
The impacts and benefits of customer insights
The great thing about working with customer insights is that there’s no limit to how you can use them. If you build out an effective customer insights program, it can influence every part of your business.
Here are some of the areas in which you can leverage customer insights to drive better results:
- Targeted marketing. When you use customer insights, you can adjust your marketing strategy to individual customers. In the same way that Netflix tailors its homepage based on each customer’s preferences, you can tailor your offers to what you know your customers want and enjoy.
- Pricing strategy. If you set too low of a price, you’re undervaluing yourself. But if you set too high of a price for the market, your customers won’t purchase your products. Finding the sweet spot takes research and experimentation. Have you ever considered that maybe the right price is a different number for different customers? Good customer insights should merge the feedback your customers give with their behavior, so you can see which customers are purchasing what and why.
- Forecasting. There are many advantages to getting forecasting right. Accurate forecasting makes the difference between being fully prepared for your customers’ needs and being woefully unprepared. When you’re unprepared, you’ll accrue significant costs or you’ll be unable to meet the demand for your products. Clear customer insights can enable better forecasting and decision making, setting you up for future successes.
- Customer experience. Providing a great customer experience is the only way to build long-term loyalty. It also helps generate future growth, because satisfied customers become advocates for your brand. Customer insights enable you to keep your finger on the pulse of how your customers feel, so you can continuously improve their experience.
- Market entry strategy. Expansion into new markets is often one of the riskiest moves a business can make. Starting with market research is a great first step, but turning that research into meaningful insights brings you much closer to your prospective customers.
These are broad categories where you’ll see positive impacts from investing in customer insights, but the good news doesn’t stop there. Becoming more insights-driven also leads to tangible improvement in your bottom-line metrics:
- Predict and reduce churn. When you know the factors and customer behaviors that are likely to cause churn, you can identify which customers are at the highest risk of churning and experiment with different methods to retain them. You’ll see positive impacts across your entire customer base, too. As you make understanding customers core to your company’s identity, your customers will see the difference in a myriad of ways.
- Drive new user adoption. Following a product-led growth strategy means understanding which factors influence word-of-mouth (and why). If you can create more of the experiences that make your new users paying customers, you’ll drive new user adoption, higher conversion rates, and increased revenue.
- Maximize customer lifetime value. If you’re looking for ways to drive repeat purchases or to upsell to your existing customers, customer insights can help you figure out how. You can capitalize on every opportunity to serve your customers better, simply by having access to the right information at the right time.
Assessing your customer insights
The biggest challenge in the customer insights world is uncovering insights that matter.
Paul Laughlin coined this definition: “A customer insight is a non-obvious understanding about your customers, which if acted upon, has the potential to change their behavior for mutual benefit.”
His definition provides an interesting perspective that can help you assess whether your current approach is extracting meaningful insights. Let’s break it down:
- Stating the obvious isn’t very insightful (pun intended). By nature, uncovering meaningful insights should take some work to come up with. They’re not just lying on the surface of your customer feedback; they’re buried and need to be mined.
- Insights must be actionable. There’s no value in doing all the research and analytics if you can’t do anything with the information you have at the end.
- Insights should enable you to influence your customer’s behavior. You can change the information you display, the offers you provide, when you reach out, or a hundred other factors—but every step you consider should have the potential of changing how your customers behave.
- Insights are mutually beneficial. There’s nothing cool about tricking your customers into buying something that doesn’t work for them. To build a lasting business, you must understand how to deliver real value to your customers. When you’ve acted upon an insight, the outcome should be beneficial for both parties.
Use this framework as a measuring stick. When you think you’ve uncovered something interesting, evaluate each of your insights against these four factors and see how they match up.
How to uncover powerful customer insights
Investing in customer insights should bring a massive ROI for your business. But employing a few select strategies can boost the odds of your investments paying off. These include:
- Gathering data strategically
- Investing in a customer insights tool
- Turning your customer data into wisdom
Gather data strategically
Uncovering insights starts with collecting data, but that doesn’t mean just collecting all available data points and dumping them into a database. When you’re planning out your data collection strategy, there are two main things you want to have:
- Data points that cover the whole customer journey. You might already send out one or two surveys at different stages of the customer journey. Ideally, you should put these together and fill in the gaps to have a big-picture view of the entire customer experience. Individual, fragmented pieces of data aren’t as powerful as one coherent story.
- A broad range of sources. The best insights programs include in-house sources (e.g. NPS responses, demographic data, support tickets) and external sources (store reviews, social media comments). It’s usually easier to work with internal data because you have all the context you need, but the combination will give you a more complete picture. It's also ideal for insights programs to track and analyze both solicited feedback (when the company asks the customer for feedback, e.g. in a survey) and unsolicited feedback (where the customer shares their feelings about the company in an unsolicited way, e.g. social media, support tickets, etc). The use of unsolicited feedback will enable the insights team to uncover insights they would never find just from solicited feedback.
Invest in a customer insights platform
If VoC teams have a nemesis, it’s probably time. Manually analyzing customer feedback in tools like Excel or Google Sheets is a never-ending (and often mind-numbing) process.
A customer insights platform overcomes this challenge (and many more). A great insights platform can take a bunch of siloed data sources and integrate them for you. It can process thousands of data points in minutes, saving your team countless hours of manual work (and saving your budget tens of thousands of dollars).
Take Kapiche, for example. Kapiche makes it easy to generate meaningful customer insights at scale. Not only will it make your insights program more effective, you’ll also save a ton of time and money by implementing a platform like Kapiche.
To be fair, there are other insights tools on the market (we’re biased, but we think we’re the best of the lot). Picking a feedback analytics platform requires some serious due diligence. We recommend looking for these five requirements when considering a new customer insights tool. It should:
- Require minimal time to set up and maintain
- Eliminate human bias
- Identify key behavior drivers
- Support effective storytelling
- Centralize your data
Turn your data into wisdom
Gathering data is the first step.
Feeding that data into a tool should make it more structured, accessible, and easier to use. That’s when you have information. Give it some context and learnings, and you’ve turned that information into knowledge.
The real value comes from the last (often overlooked) step: transforming that knowledge into wisdom.
Your customer insights program should be focused on the future. Of course, collecting information and extracting lessons from the past is important. But you can’t thrive if you’re only looking in the rearview mirror all the time.
Customer insights can only transform your business if you apply the insights you’ve unearthed to the future chapters in your company’s story, usually in the form of making decisions that impact your product.
Remember, customer insights is never something you’ve “achieved.” It’s a journey. Each insight you generate is an educated assumption about the things that matter most to your customers. If you want to operate from a place of real wisdom, it means continuously feeding new data into your program and updating your understanding continually.
Putting customer insights to work
If your company has already tried to work with insights in the past and hasn’t had much success, it could be for many reasons.
Maybe the insights weren’t actionable. If you did have good insights, perhaps the information didn’t reach the right people in your organization. It could be that the data you collected was too messy to work with or wasn’t representative of what you were trying to measure.
Building a successful insights program takes time. There are six key steps to doing it right:
- Implement a data collection strategy
- Improve your customer experience using insights
- Share great insights reports
- Develop a self-service customer insights engine
- Use insights to drive revenue
- Future-proof your insights team
Implement a data collection strategy
In most companies, data collection happens in silos. One team wants to measure user adoption and asks for in-product feedback. Another team wants to survey a select group of customers to find out how they feel about different product features. Yet another team runs a campaign and sends out a survey via email after purchase. Often, all three happen simultaneously.
The result is a confusing mess.
Your customers experience survey fatigue. Each team sees its data, but can’t see how these factors might affect each other. No one has a complete picture of what your customers want.
A good data collection strategy means understanding your customer journey and the methods for collecting data at each stage, centralizing your data so it's accessible to the Insights team, and maintaining an accessible collection of the insights identified from your data.
And ideally, you should be collecting and analyzing solicited and unsolicited feedback from across the entire customer journey.
Organizations that use customer data for insights are 93% more likely to generate higher profits. It takes work to get there, but it’s clearly worth the effort!
Improve your customer experience using insights
The biggest hurdle in using customer feedback is translating that feedback into action.
There are two ways insights can help here:
- Use your insights to inform your customer experience (CX) strategy. Strategic planning often happens independently and has a fairly narrow perspective—you might focus exclusively on business goals and KPIs, for example. Those things are essential, but you can broaden that perspective just a little by including customer insights in your planning process.
- The best experiences don’t happen when you simply deliver a good customer experience. What differentiates “good” from “the best” is exceeding your customers' expectations in an effortless manner. Aligning what customers want with your CX strategy is how you get consistently excellent experiences.
Share great insights reports
Creating reports from your customer insights is pretty standard. Even if they aren’t working with customer insights directly, teams who are making changes will often ask about customer sentiment, or will want to know how customers feel about the changes. Providing a report is often the best option.
The question is: How can you make those reports powerful?
There are a few simple principles to follow:
- Focus on providing information that has a purpose and is relevant
- Create reports that speak to different audiences across your company
- Present your data as a narrative and take your audience on a journey
Focusing too much or too little on the numbers will decrease your audience’s engagement. But that’s also the case if you focus too much or too little on storytelling. Following a structure like the one above can help you establish the right balance, so that you craft reports that resonate with your organization.
Develop a self-service customer insights engine
Creating reports is vital, but if you want to run a customer insights program that continuously supports itself, developing a self-service engine can make all the difference.
What that looks like in practice is:
- Centralizing your data to improve its quality
- Adopting self-service tools that can save your in-house team time
- Measuring how effective the insights are, ideally by connecting them to business outcomes
- Democratizing customer insights by making them accessible throughout your organization
Adopting self-service solutions also opens the door to generating better customer insights. If you save time for your insights team that they would normally spend feeding data into a tool or manually tagging comments, they can instead invest that time in developing better insights and building a better engine.
Use insights to drive revenue
Driving revenue is the ultimate goal for businesses.
No one would argue against the idea that customer experience has an impact on revenue. Study after study proves that it does:
- Companies that excel at customer experience grow revenue 4-8% above their market.
- 84% of companies that improve their customer experience report an increase in revenue.
In theory, simply working with customer insights and applying them throughout your company should have a positive impact on your bottom-line metrics. But if you want to get provable ROI, actively measuring revenue and finding insights that help you push it forward will have a huge impact.
Future-proof your insights team
When you have these pieces working together, you can turn your focus to the future.
Getting started with your insights program is usually the hardest part. Once you have a program up and running, all you need to do is continuously iterate to make it better. The more of a reputation you build across your company and the more of an impact your insights have, the greater the demand for more insights will be.
Keeping up to date on trends in customer insights will help you continuously improve your customer insights team so that they’ll consistently produce great results, year after year after year.
Treat customer insights as a business need
Customer insights can be used across your entire business. They’re a powerful tool that can lead to happier customers, faster growth, and higher revenue. Finding the right ways to generate and share insights is often the biggest challenge in making customer insights integral to the way your company operates.
Kapiche’s unique approach to customer insights solves that challenge, giving you deep and contextual understanding of your customers in days or weeks and helping you find out what your customers truly care about. If you’re ready to get your customer insights program up and running, book a demo here today!