A true vision of the customer mindset is essential for any company in interpreting what will be purchased and why. As businesses compete for popularity in a demanding economy, the ability to explain, predict and influence customer behaviour is crucial to creating stronger relationships and successfully developing products and campaigns.
This requires a combination of data science to understand what people are doing, alongside market research, neuroscience and behavioural economics to discover why. Joined up, this insight provides enhanced understanding, enabling businesses to make better strategic decisions.
“This approach is now becoming a top priority for clients,” says Jane Rudling, managing director at Walnut Unlimited, the human understanding agency. “For some time, companies have utilised data analytics and market research in silos, but they are now entering a new phase, desiring that their insights are blended to achieve true behavioural understanding.”
Stephen Welch, joint managing director at the specialist data science firm Realise Unlimited, adds: “Companies will often have lots of sales data that details customer behaviour. When a customer makes a purchase, in isolation it may indicate that the customer is positively engaged, but in reality, they may have had a negative experience or disliked their purchase. Without a holistic view of the complete experience and a better understanding of that customer’s motivations, a brand cannot truly predict future activity.”
The move to combine data science and market research is a substantial change in practice. Businesses have long relied on metrics such as satisfaction scores and customer segmentations which do not tell the full story of a customer’s journey. The future of insight, therefore, involves adding layers of data analytics to neuroscience and market research, so companies can operate more strategically.
Companies have utilised data analytics and market research in silos, but they are now entering a new phase, desiring that their insights are blended to achieve true behavioural understanding
But while the end-goal is highly desirable, many businesses struggle to get there because they do not have the capabilities or resources in-house or because the agencies they work with rarely offer both analytics and research capabilities.
“Companies are effectively trapped by not approaching this from both sides, instead running simple surveys or demographic profiles in isolation. When they introduce advanced analytics, and blend research, new and existing data, and behavioural economics, they can see why customers really think, feel and act the way they do,” says Dr Welch.
This was the case for one large insurance provider, which had operated on the assumption that a customer who is more likely to recommend it, based on net promoter scores, would be more likely to stay. In a recent bespoke study, we found this was not the case. Rather, overall pricing and subsequent renewal price hikes were making customers switch provider.
By merging business data and recommendation data with market research, the insurance firm discovered that recommendation was a stronger indicator of cross-sales potential: the higher the recommendation score, the more inquiries that customer had for other products and services in the first two years of tenure. These were powerful and valuable insights for the customer insight and marketing teams to generate sales opportunities, predict lifetime value, mitigate churn rate, and increase cross-selling and repeat purchase rates.
The close relationship and expertise of Realise and Walnut Unlimited, as sister agencies in the Unlimited Group, allows for this seamless blending of data and research. The combined services help businesses understand customers, enhance marketing and communications, and facilitate personalisation of products, enabling profitable change. The route to doing so is joining together the “what” and the “why” of behaviour to secure strong lifetime value.