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Business Is Calling for the Customer Voice
Despite boasts that "the customer is king," a new report finds that consumer insight isn't getting a seat at the table.
Posted Feb 18, 2010
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The Boston Consulting Group (BCG) released its first Customer Insight Benchmarking report recently -- a study that surveyed more than 800 executives involved in either line management or consumer insight roles. Participants were from 40 global companies with at least $1.5 billion in sales, with many, the report notes, exceeding $10 billion. However, budgets are rarely the most pressing issue when it comes to raising the customer voice in the business conversation. In fact, BCG found that oftentimes, the companies that the best — performing companies actually spent less on market research studies per full-time employee (FTE). According to Mary Egan, partner and managing director in the firm's New York office, companies spending a lot per FTE were "swimming in data" and, therefore, more inclined to get stuck on tactical research, instead of focusing on strategic imperatives.

As a consulting firm, BCG was noticing a disconcerting trend among its clients. "We were observing a real gap between the aspirations of the leadership team — what they were saying in mission statements about being customer centric — ...and the actual ways of working in most companies," Egan says. Among the most pressing reasons for this, which became the impetus for this report The Consumer's Voice: Can Your Company Hear It?, was the fact that customer insight teams were actually feeling "sidelined," their work largely un- or undervalued.

"There were days we felt like marriage counselors," Egan recalls, referring to the qualitative interviews BCG conducted with individuals from the consumer insight side and the business executive side. Insight teams would concede that their research may have been lacking, but blamed their exclusion from important strategic meetings; on the reverse end, executives argued that if the research were better, then it'd be included in discussions. Only 35 percent of executives reported that their companies were "best in class" in consumer insight; on top of that, only 41 percent characterized consumer insight as "a source of competitive advantage."

<p>Compared to companies that typically speak in terms of financials and market share, companies that incorporate customer insight are able to directly link their financial performance to customer behavior, Egan says. "Companies that look through the customer lens will say [they're] profitable in this category because consumers perceive their product as XYZ, and therefore purchase behavior is ABC," she says.

However, customer insight faces obstacles that prevent it from reaching the senior level:

  • 59 percent strongly agree or agree that they spend the majority of their time on near-term impact; and
  • 40 percent strongly agree or agree that they focus too much time on resolving tactical questions and not enough on strategic.

BCG identified four stages of maturity as companies evolve from customer insight being a cost center to a competitive advantage:

  • traditional market research function;
  • business contribution team;
  • strategic insight organization; and
  • strategic foresight organization.

The survey identified that nearly 90 percent of the companies surveyed fell in stages one and two. To reach stage four requires:

  • a focus on consumer research by the C-suite;
  • involvement of consumer research across the business, not just marketing;
  • use of a knowledge base as a learning organization; and
  • focus on insight and foresight across data sources and studies.

"We set out to really find best practices thinking that we would find a lot of high performing companies from which other companies could learn," Egan says. "What we found was very few high performing companies, and a lot of companies with a patchiness [of success that was inconsistent]."  There wasn't single "best" organizational structure for incorporating consumer insight, but a few, in fact, that suggested there still may be "glimmers of excellence." But in terms of the normal day to day, there remains a significant big gap.

When asked how their customer insight data is integrated into their business decisions, respondents reported:

  • 63 percent say they know how consumers feel about the quality of key products compared with competitors' products;
  • 52 percent have large-scale foundational, strategic consumer segmentation that's revisited every three to five years; 
  • 50 percent have a good understanding of the key drivers of consumer satisfaction by consumer segment in each product category;
  • 47 percent have a fact-based understanding of what drives their current market share positions (i.e., who does and doesn't buy -- and why);
  • 35 percent have good time-series data on how consumer needs and behaviors and the company's position changes over time; 
  • 33 percent of the company's financial forecasts include assumptions that come from consumer insight (e.g., consumer awareness and trial repeat rates); and
  • 31 percent of the company is above average or better at having widespread institutional knowledge of our consumers (i.e., who does and doesn't buy -- and why).

What certainly almost never works is when junior researchers lack the training and development to find valuable insight, in addition to a well-defined escalation path for their role. For example, Egan has found that when researchers unveil data that contradicts senior-level hypotheses, tension arises that may discourage further contribution. "When you have researchers without [a] support system," she says, "it can be dysfunctional."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine.

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