Customer Insights: What They Are & Why They Matter
In today’s competitive digital environment, customers increasingly expect high-quality experiences to accompany high-quality products and services. According to the latest Microsoft Global State of Customer Service survey, 55% of customers had higher expectations in 2019 than in the previous year, and that jumps to 70% for customers in the 18-34 age range.
If businesses hope to meet these expectations or even exceed them, then they need accurate insight into the demographics, behaviors, and preferences of their customers. Here’s why customer insights are so important and the tools you can use to develop them in order to stay ahead of the competition.
What is customer insight?
At its most basic level, customer insights can be understood as an informed understanding of customers that can be used to guide or respond to their behavior. Consider these criteria from the Journal of Direct, Data and Digital Marketing Practice:
- Insights need to come from multiple sources of data
- Insights need to be actionable
- When acted upon, they should be able to change customer behavior
- The change should be beneficial for both customer and business
To be effective, customer data should be collected from a variety of sources: customer service data, product and service reviews, market research (such as how weather impacts shopping and where consumers are spending their money), purchase history, public data, and customer sentiment. This data is fundamental in providing valuable insights into customers’ behaviors and preferences.
Why are customer insights important?
The collection of data helps businesses obtain a more comprehensive picture of customers and their market — what’s called a 360-degree customer view — that allows them to better understand customer behavior. From there, analysis of the data would highlight specific details about customers and certain trends or preferences that would provide a deeper understanding of how customers think. These details can help business owners answer important questions, such as:
- Why are sales down for a particular product?
- How is our brand perceived by our audience?
- How can we increase customer loyalty?
- How likely are we to succeed with a new target audience?
- What do customers think of a new or a potential new product?
- What’s driving customer satisfaction / dissatisfaction with our product or service?
- What can we do to increase conversion rates of marketing campaigns?
These insights allow companies to make more informed decisions on how to best serve their customers and win over new ones. Just as how TechTarget describes the use of customer insights as a means “to improve product development and customer support,” businesses can take this opportunity to better personalize and tailor their products and services to the needs, wants, and demands of their customers.
There’s good reason for doing so. Organizations that leverage their customer behavior to generate insights outperform their peers by 85% in sales growth, according to Microsoft. Businesses can use these insights to expand their product/service offerings, develop new marketing strategies, create detailed customer personas and customer journey maps, and enhance current offerings. It can also mean more revenue: According to Microsoft, a $1 billion company can see an average of $775 million over three years due to customer service improvements.
Benefits of harnessing customer insights
By using customer insights to inform strategic and tactical decisions, you can develop relationships with your customers, better understand the connected customer, personalize your customer interaction, and generate meaningful and quantifiable results, which can include:
- Accurately predicted and reduced churn
- Immediate detection of fraud and abuse
- Better timed offers and promotions
- Maximized customer lifetime value and loyalty
- Feedback on new product ideas, features, and services
- Unified data sets for enriched customer profiles
- Efficient focus on the customers most likely to engage
- Identifying new markets or warnings on underperforming markets
- Meeting data requirements for security, privacy, and compliance
Many industries — such as retail, financial services, manufacturing, and healthcare — now see that customer interactions and personalized engagement are essential for growth and customer retention. Below are some examples of how these industries can gain advantages with customer insights.
Customer insights – Retail
The retail industry is perhaps the industry that is most driven by customer insights. We’ve previously looked at the importance of consumer insights and how retailers and CPG companies gather data to understand the customer’s journey and build relationships; creating a deeper and more meaningful connection with the customer as a way to increase sales. That emphasis on driving a personalized customer experience is no less applicable today. Consider in the following example how a leading entertainment/hospitality company could target their most loyal (and highest spending) customers to increase their dollars spent.
Gathering and storing customer data is simple enough, but collecting relevant data within an easy-to-use mobile application would allow the company’s hosts to swiftly respond to all of the customer’s preferences. Rooms can be completely tailored before check-in, reservations for favorite restaurants can be made in advance, and preferred amenities can always be made available at a moment’s notice.
More than being able to allow a service agent to personalize an experience, such a customer insight program would greatly simplify communication and coordination between different service agents. When one host goes off-duty, the next to come on shift would be able to access the customer’s details, review the previous itineraries, and leave notices for the next service agent’s shift. This high level of continuous, seamless service is an assured means of exceeding customer expectations.
Customer insights – Manufacturing
To more successfully outperform competitors, manufacturers need to provide the right combination of customization and efficiency for their customers. Allowing customers to access a self-service portal provides two important benefits. First, providing customers the capability to design and request customizable parts would allow manufacturers to be faster and more flexible. Second, developing a secure, self-service client portal that would authorize users, collect customer data, and provide applicational insights would allow the manufacturer to better understand user needs while protecting their own IP from competitors.
Size can be a challenge when it comes to understanding the disparate needs of an international customer population. Large conglomerates spread across different industries and countries would have a greater challenge in attempting to understand all their different customer feedback. Implementing a Customer Voice system would allow for the automation of data gathering and increased analytical capability, resulting in multiple departments being able to deliver faster, more proactive feedback to customers – no matter where they’re located.
Customer insights – Financial Services
Digital development provides a great opportunity for financial services insights if financial institutions are able to leverage the right technology to take advantage of it. The adoption of a 360-degree customer vision and cloud-based analytics could provide financial agents with quicker and easier access to customer profiles for more personalized banking solutions. This would make the experience more user-friendly and more convenient for their customers, especially small businesses and the self-employed.
This level of efficient, personalized financial information benefits both businesses and their customers. Uwe Stuhldreier, an executive at Germany’s largest digital direct insurer HUK24 explains that a personalized, digital approach “enables quicker and simpler interaction and ensures each customer gets the most suitable product in line with his or her individual situation.” This more direct targeting helps to increase conversion rates and can reduce the costs of prolonged customer outreach.
Customer insights – Healthcare and Social Welfare
Customer insights have big benefits for healthcare and wellness, both for individuals and for the organizations that provide service. Hospitals that have patient data scattered across multiple IT systems — from demographic and census data, to call logs and appointments — would not only find it difficult for different teams to coordinate from the data sets, but they could also potentially be at risk of Health Insurance Portability and Accountability Act (HIPAA) violations. Implementing a scalable and flexible customer insights architecture would allow for the development of patient profiles that could be utilized by both care teams and marketing while bolstering privacy and security to stay compliant with HIPAA.
NPOs and social welfare organizations could also find an advantage in shifting towards a digital fundraising architecture. By creating more defined and dynamic data segments of donors, organizations could launch micro-campaigns that would reach out to specific donors and reflect interests that resonated with them. Fundraising would be more effective and efficient as donations could now be auto-imported into financial accounts directly. This would allow faster feedback for donors and increase engagement.
How to get started leveraging customer insights
Whether you’re servicing individual consumers or larger corporations as customers, you need to understand where your customer data is coming from and how it is collected and managed. You also need to plan how to use the data, ensure it is secure and available, and identify how different departments can interact and utilize the data. It’s a big undertaking, and not every business has the tools to start.
A 2021 survey by CMS Wire found that only 11% of organizations reported that the tools and platforms they used for managing their digital customer experience were “working well,” with 47% describing them as “satisfactory” and 42% stating their digital CX tools “need work.” With such a response, it is unsurprising that only 12% of respondents reportedly were using a customer data platform (CDP).
Customer Data Platforms are powerful tools that unify customer and operational data into a comprehensive set, allowing all relevant data to be viewable and measurable through a single dashboard. Modern CDPs also utilize AI analytics to automate the process of developing customer insights, reviewing massive data within seconds to enable real-time reports on how products and services are being used.
If your business is looking to effectively leverage customer insights through customer data, then it’s necessary to invest in a scalable CDP that can easily connect to other applications.
Microsoft Dynamics 365 Customer Insights
D365 Customer Insights collects and unifies all the transactional, observational, and behavioral data of your customers and transforms them into actionable insights. As part of the Microsoft technology stack, your team is easily able to review and act on these insights:
- Power BI visualizes and models insights into easily understood graphs and charts.
- Power Apps allows low-code development of custom apps to enable specific actions unique for your business.
- Power Automate simplifies and automates workflows and processes to increase efficiency by reducing manual requirements.
- Azure AI powers advanced data modelling, custom insights, and predictive analytics.
Plus, third-party data sources and applications can be connected to your CDP to ensure that a true 360-degree view of the customer is delivered at all times. Providing this single view of the customer is critical to providing personalized and meaningful interactions through all possible channels: face-to-face, email, online, social, and over the phone.
Interested in starting your digital transformation for greater customer insights? Contact our team today to learn more.