A Road Map to Customer Insights

In the crossroads of marketing research and customer research, a field of customer insights is flourishing. Instead of talking merely about research findings and conclusions, practitioners (managers and professionals) are developing and discussing customer insights. The term ‘insight’ does sound deeper and more clever, with potentially more ingenuine and farther-reaching meanings and implications. Especially when engaged in consumer marketing (B2C), the insights are developed from research on different aspects of consumer behaviour; findings, lessons, and ideas for action are translated into insights. Practically, insights may arise from research in traditional methodologies as well as advanced analyses of Big Data sources, biometric and neuroscientific methods.

Insights are beneficial insofar as they are engrained in a customer-driven strategic approach to marketing and management of relationships with customers. The customer insights can inform and guide programmes and activities directed at customers, but there has to be a pre-devised and well-thought plan for the research or analyses that will produce helpful and valuable insights (in other words, there may be little value in ‘insights’ when managers do not know what they need and want to learn). Academics also study and relate to customer insights, particularly in research centres and executive programmes that are devoted to producing knowledge with business applications (including in collaboration with large and multinational companies), and consulting to business firms.

The road map to customer insights recommended here is being proposed by Michel Tuan Pham, a Professor of Business at Columbia Business School, specialising in areas of marketing, consumer decision making, cognition and emotion. Pham is also a Research Director at the Center on Global Brand Leadership in the business school. He presented his framework of ‘Five Steps to Customer Insight‘ recently in a video interview (18 August 2021, on YouTube: Columbia Business School). This ‘road map’ demonstrates a strategic approach to gaining crucial knowledge about customers; it entails a managerial decision schema in a lucid and well-ordered manner. Furthermore, it links areas of information with the research or analytic methodologies that can produce the required information on customers, and from which insights may be drawn.

Pham proposes five sets of questions that managers need to answer for building-up their customer insights, or greater understanding of their customers. Those sets constitute the five steps managers have to go through in order to develop an informed, coherent and complete plan for managing valuable relationships with their customers. For each question-set, he briefly explains some methods that may be used to obtain relevant answers. Hereby we will only highlight interesting aspects regarding each step:

1. The initial step deals with the crucial question: Who is the customer? A few roles are distinguished: buyer/payer, user, and influencers in-between such as other family members. The methodological domain assigned to answer this question is Decision-Making Unit Analysis.
2. The second step enquires: What are the customers’ needs? There could be expressed needs, latent-genuine needs, but also fictitious needs; managers should sort out between these types of needs, and also identify their gaps from addressed needs — this is the Need Landscape. (Pham gives an example of a fictitious need in B2C: consumers may tell a company that they would like a silent vacuum cleaner, yet they won’t like it actually because if it is too quite they cannot be sure the machine is doing the job of cleaning properly — a similar argument has been made in the case of silent digital cameras.) The relevant methodological domain is Customer Need Analysis.
3. The leading question in the third step is: How customers evaluate the options being considered? This step concerns a key stage in a consumer decision process. Pham discusses three types of models: economic value added to the customer (objective, monetary); multi-attribute (subjective, compositional); and conjoint analysis (decomposition of overall [product/service] value). Application of these models belongs in the domain of Customer Value Analysis.
4. The fourth step broadens the view about the decision process (beyond evaluation): What are the different stages? Who are the main players? How customers narrow down their set of options? Importantly, managers should not neglect stages earlier to the construction of a consideration set. The decision process is influenced on one flank by long term memory, and by environmental stimuli on another flank. It is notable, though not inconceivable, that Pham assigns greater weight to evaluation by dedicating a separate step to this decision stage, and even positions it before investigating the decision process in whole. The methodological domain engaged for this step is Buying Process Analysis.
5. The fifth step is focused on customer experience (CX), a topic of prominence in recent years: What are all the facets of customers’ experience? Pham also draws attention to enquiring what value is created or destroyed. He discusses different elements of a wheel of CX, including the customer decision journey + later stages of fulfillment, service & support, etc. These elements or stages in CX may have impact on brand perceptions to consider. The methodological domain applicable in this regard is Customer Experience Analysis.

Consumers naturally make decisions for other purposes than buying products or services on any given occasion, particularly if they enter into a relationship with a company over time (e.g., mobile and Internet communication contracts). There could be decisions on how to use a product, participating in activities and events organised by the company, how to act in requests for customer support, and more. In that sense, a focus on Buying Process Analysis may narrow too much the scope of decision processes engaged by consumers. On the one hand, the focus may be justified since buying a product or service is still at the core of any relations with a company, and experiences surround the products or services bought / hired and used by customers. On the other hand, any other decisions beyond buying may be incorporated in the different facets of customers’ experiences (i.e., the CX wheel).

The first two sets of questions, relating to the steps of decision-making unit analysis and needs analysis, must be answered first; the order of the latter three steps, with answers to their related questions, may be swapped (e.g., Steps 3 & 4). Pham does not suggest, however, if there is place for going back-and-forth to update answers of previously addressed steps (e.g., Step 2 on needs).

As a practical approach to employing his framework model or ‘road map’, Pham advises to let each member of a management team answer separately (in isolation) the five sets of questions, then let team members meet together, hear and compare their answers to see how well they are in alignment, so as to be able to proceed forward.

The framework for developing and managing by customer insight proposed by Pham is clear and logical to follow as a road map for managers. Most of its components are concepts and models familiar from past research and theoretical publications in the domains referred to through the five steps. The advantage in adopting and following this road map is in the organisation of the framework of managerial research-driven decision process in sensible five steps: its structure, encompassing content of relevant concepts, and especially in the meaningful and useful context they are brought together.