The power of customer insight – the good, the bad and the ugly

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The following is adapted from Getting to Aha!

Why do some businesses fail while others succeed?

You can indicate a number of things: product development, pricing, branding, customer service. But ultimately, whatever the specifics, it all comes down to one thing: knowledge, or how well you understand your customers and what they want.

Your success or failure as a brand will depend on information, so the ability to discover and leverage customer information is essential. But it’s not always easy to understand what an insight is or how you’re supposed to act on it.

One of the best ways to understand ideas is to look at examples. By analyzing the successes and failures of other businesses using information, you can better understand the power of customer insight and know what to do and what not to do. So let’s take a look at ideas in action: the good, the bad, and the ugly.

The Good: Actively Seeking and Using Insights — Starbucks

Customer insights are more powerful when two conditions are met:

  1. You actively chasing ideas. You play on offense, not on defense.
  2. You use the ideas you discover.

Starbucks is a prime example of this type of information retrieval. In 2007, Starbucks was the world’s largest specialty coffee retailer. And the company was in crisis.

Since its IPO in 1992, Starbucks had exploded, opening hundreds of new stores around the world each year. The valuation of the company had skyrocketed with its rapid expansion. But below the surface, all was not well.

Starbucks’ expansion had eroded its customer experience. In 2007, same-store sales were down for the first time in the company’s history. Instead of waiting for circumstances to deteriorate further, then-board chairman Howard Schultz was proactive.

Schultz fired Jim Donald, the company’s CEO, and returned as CEO. Schultz’s goal was to rekindle consumers’ emotional connection with the Starbucks brand. The idea behind his subsequent decisions was that Starbucks customers were looking for a special kind of experience in their stores, one that was rooted not only in coffee, but also in interactions with baristas and with each other. Schultz understood that in order to protect Starbucks’ long-term viability, every store had to deliver the experience their customers were looking for.

Schultz then took action on this idea. In a bold and costly move, Schultz closed more than 7,000 Starbucks stores for espresso training. Schultz also ordered that all stores replace any machines that blocked baristas ‘view of customers and rearrange their interiors to accommodate customers’ longer stays in stores. In addition to these store-focused innovations, Schultz highlighted the company’s biggest missions, including sponsoring a multi-day training course in New Orleans shortly after Hurricane Katrina. There, thousands of Starbucks partners took to the streets to help with cleanup efforts across town.

Schultz’s efforts paid off. In two years, Starbucks was back on track. After hitting a 52-week low of $ 14.95 in July 2008, Starbucks’ stock price exceeded $ 57.00 in May 2018. This is what can happen when you properly leverage customer information. . By understanding a deep truth about their customers, Starbucks was able to make the changes needed to improve their customer experience.

The Bad: Having Ideas… But Not Building On Them — Kodak

The “bad” thing about customer insights is when a business discovers a key insight but fails to exploit it. This is a huge mistake, which is often made because companies are too busy defending the status quo. Although they have a glimpse, instead of playing on offense, they are playing on defense.

Think of Kodak. You might be surprised to learn that the digital camera was invented in 1975 by Eastman Kodak.

That year, 24-year-old Steve Sasson introduced his new technology, the fully electronic camera that used no film, paper, or consumables, to Kodak executives. Sasson said he was certain that digital cameras could compete with 110 and 135 film cameras in the mainstream market, especially because digital technology could allow photographers to display images on their televisions. Sasson even suggested the images could one day be conveyed by telephone lines.

The executives repulsed Sasson harshly. On the one hand, they wanted to protect Kodak’s existing revenue streams. Back then, Kodak took advantage of every step of the traditional photographic process, from the click of the camera shutter, to popping a flashcube, to the local photo store or drugstore that printed images on. Kodak paper. On the other hand, Kodak executives disagreed that digital formats would significantly disrupt the market.

Ultimately, Kodak got the patent for the technology from Sasson, but they didn’t start producing their own digital cameras. The patent alone still generated billions for Kodak, but that wasn’t enough to keep the company afloat. By the time Kodak finally entered the digital camera market, it was too late. Kodak filed for bankruptcy in January 2012.

Uncovering customer information means little if you don’t actually go use them. While it can be tempting to stick with the status quo, don’t ignore your ideas. The sooner you act on them, the better.

The Ugly: Need information… but not find it out – New Coke

The only thing worse than finding out customer information and not using it is not having it at all, especially when you desperately need it. This is where things go wrong. Perhaps the most famous example is New Coke.

New Coke is perhaps the best caveat for brands skeptical about the value of insights. A staple in the beverage industry for a century, in 1985, Coca-Cola was losing market share to a variety of non-cola and diet drinks. When market research indicated that people preferred the sweeter taste of Pepsi, the Coca-Cola company decided to revamp its flagship product, proclaiming the drink the “new taste of Coca-Cola.”

In taste tests, what became known as “New Coke” beat both “Classic Coke” and Pepsi. The majority of participants said they were likely to consistently choose the newly formulated Coke over other options. But a vocal minority made it clear that they were upset by the change and felt alienated from the brand.

Coca-Cola launched the new version in April 1985, accompanying it with advertising campaigns and live events across the country. At first, the product worked well, especially in the North East. Soon, however, a backlash began to set in. Across the country, New Coke became the product people loved to hate. In July, the classic formulation was back in production.

The idea that Coca-Cola missed was that its customers would want a much loved and long-standing product taken away from them. Coke drinkers didn’t like being asked to give up something they already liked, and they really didn’t like losing a choice they had before.

If Coca-Cola Classic had remained in production, perhaps snafu could have been avoided. But Coca-Cola’s senior management had rejected the option of introducing New Coke as an option rather than a central option, arguing it would dilute the brand. They had ignored the power of habit and consumer attachment. They had ignored these factors which many testers had vigorously pointed out.

Part of what makes this example so “ugly” is that Coca-Cola was so close to discovering these ideas. They had received the feedback they needed, but ignored it and didn’t go far enough to find the information. Let this be an uplifting tale to stay curious and dig deep for important information.

Information and competitive advantage

Each brand uses consumer insights differently. But the brands that benefit the most from insights are the ones that actively pursue them. They don’t sit idly by, waiting for potentially changing (or game-ending) information to come to light. Brands that are open to discovery and challenge are placed in the best position to thrive, while those that fail to gather or use information will struggle.

The more you prioritize information, the more agile, dynamic and competitive your business will become. So strive to be more like Starbucks and less like Kodak and New Coke.

For more advice on the importance of insights, you can find Getting to Aha! on Amazon.

In 1998, Darshan Mehta pioneered online focus groups and surveys and founded iResearch, an online information platform that enables businesses to quickly, easily and inexpensively retrieve information about people. consumers and employees around the world. He draws on over twenty years of experience in marketing strategy to help business leaders understand and take advantage of changing consumer preferences. In addition to her role at iResearch, Mehta is an assistant professor at universities in Thailand, Sweden, France and the United States. Through her work, Mehta has traveled to over eighty countries and has been recognized in publications such as Forbes, Inc., Journal of Advertising Research, Quirk’s and IdeaMensch.com.








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