Research that Produces

Customer Insights

Mohan Sawhney
Kellogg School of Management
October 22, 2003
 From market research to insight

• What exactly is an insight?

• What are some examples of insights?
• What is the process of developing insights?
• How do we transform market research from
“providing information” to “delivering insights”?
• What tools and frameworks will help us to improve
the quality of customer insights?
 Agenda

• The nature of insights

• Why traditional research rarely produces insights

• How to do research that produces insights

• Rethinking the mission of the research organization

• A process framework for evaluating research projects

 Insight – Conceptual definitions

• Grasping the inner nature of things intuitively

• Clear or deep perception of a situation

• Clear (and often sudden) understanding of a

complex situation

• A feeling of understanding
Defining a customer insight

A customer insight is a fresh and not-yet

obvious understanding of customer beliefs,
values, habits, desires, motives, emotions or
needs that can become the basis for a
competitive advantage.

– A not-yet obvious discovery

– A unique and fresh perspective
– A penetrating view of the obvious
– A competitively-advantaged idea
– Grounded in customer understanding
– Not a number, a fact, or a quote from a customer
 Seven characteristics of insights

1. Not immediately apparent

2. Can be based on one data point
3. Often come from unusual sources
4. Often discovered accidentally
5. Often rooted in observed anomalies
6. Rarely emerge from quantitative analysis
7. Need to be useful
 Examples of customer insights
• The Sony Walkman as “redefining the relationship between
personal space and private space”
• The i-Pod as “being able to take all your music with you” but yet
being “unobtrusive”
• Maison Haire studies on Instant Coffee as reflective of “lazy
mothering”
• P&G’s learning about Japanese mothers as being fastidious
about personal hygiene, spending a lot of time outside their
homes and traveling on public transportation
• Research on HDTV showing that videophiles are people with a
lot of time to watch TV and not people with a lot of money to
spend on video equipment
• Steve Jobs’ insight that people see color of their PCs as ways
to express their personalities and make a personal connection
with their PCs
• Sam Walton’s insight that suburban and semi-rural markets are
more profitable and underserved by competition
 Virgin Mobile’s Insights
About Young Adult Market

Young adults don’t

like to be marketed to

• Prepaid cellular
• “Rebel” brand image Young adults
Young adults don’t • Anonymity don’t want their
have credit cards • No contracts “father’s carrier”
• Word-of-mouth advertising
• Non-traditional outlets

Young adults buy

lots of music
 It only takes a few…
Companies built on a single insight

• Home Depot – “Target Do-it-Yourselfers”

• Federal Express – “Segment by speed”
• Dell – “Be direct”
• Starbucks – “Sell the experience”
• Southwest – “Forget hub-and-spoke”
• Enterprise – “Rent cars in the neighborhood”
• Body Shop – “Pursue environmental & social change”
• Microsoft – “Empowering people through software”
Customer insights as a subset of
business insights: The Innovation Radar
Offering
(WHAT)
Brand Platform

Networking Solution

Presence Customers
(WHERE) (WHO)

Supply Chain Customer Experience

Organization Value Capture

Process
(HOW)
 Offering
(WHAT)
Brand Platform

Networking Solution

Presence Customers
(WHERE) (WHO)

Supply Chain Customer Experience

Organization Value Capture

Process
(HOW)
 Offering
(WHAT)
Brand Platform

Networking Solution

Presence Customers
(WHERE) (WHO)

Supply Chain Customer Experience

Organization Value Capture

Process
(HOW)
 Offering
(WHAT)
Brand Platform

Networking Solution

Presence Customers
(WHERE) (WHO)

Supply Chain Customer Experience

Organization Value Capture

Process
(HOW)
 Agenda

• The nature of insights

• Why traditional research rarely produces insights

• How to do research that produces insights

• Rethinking the mission of the research organization

• A process framework for evaluating research projects

 Two ways of knowing –
Inductive versus Deductive Reasoning

• Inductive Reasoning: Using observation to

formulate an idea or theory. “Qualitative” or
“Interpretative” research draws on inductive
reasoning.

• Deductive Reasoning: Taking a known idea or

theory and applying it to a situation (often with the
intention of testing whether it is true). “Quantitative”
or “positivist” research draws on deductive
reasoning.

Traditional research tends to have a positivist bias

 Two research paradigms

• Qualitative Paradigm: Focuses on investigating

subjective data, in particular, the perceptions of the
people involved. The intention is to illuminate these
perceptions and, thus, gain greater insight and
knowledge.

• Quantitative Paradigm: Focuses on what can be

measured. It involves collecting and analyzing
objective (often numerical) data that can be
organized into statistics and interpreted.
 Contrasting the two paradigms
Qualitative Research Quantitative Research

Also Known As interpretative / responsive positivist /

hypothetico-deductive
Type of Reasoning (usually) inductive (usually) deductive

Objective Generate insights that Validate insights by

lead to hypotheses testing hypotheses
Outcomes Illuminate a situation to Accept or reject a
create deeper proposed theory, or get
understanding and specific answers to well-
insights defined questions
Methods Qualitative, eclectic Quantitative, rigorous

Approach to Validity truth seen as subjective truth seen as objective

and socially and universal
constructed
 The Pyramid of Understanding

Traditionally, marketing
researchers and research New understanding that is
agencies stop here actionable and competitively
Insights unique

Interpretation of the
Recommendations research findings.

Findings Consider carefully the

research objectives.

Information Data Analysis and

Data Reduction

Data
The Pyramid of Business Value
Of most value because offers new
Insights ways of looking at markets that
lead to competitive advantage

Recommendations Summarizes the implications

of the research for the business

Findings Selected information that is of

interest, but lacking in implications

Information Informs the business about a

market, but no indication of relative
mportance of different pieces of
information
Data
Of little value because it is
usually difficult to understand and
interpret on its own.
 It takes two to tango…

Inductive, Qualitative, Deductive, Quantitative,

Exploratory Research Confirmatory Research
that Produces Insights that Validates Insights

To blend the two paradigms into a synergistic whole, we need to

eliminate the positivist bias in research, balance the research portfolio,
and tightly link the qualitative research with the quantitative research.
 Agenda

• The nature of insights

• Why traditional research rarely produces insights

• How to do research that produces insights

• Rethinking the mission of the research organization

• A process framework for evaluating research projects

 Research as photography

• What to see
• How to frame
• What lenses to use
• How to focus
• How to develop
• How to share
• How to remember
 Seven steps to insightful research

1. Right mindset
2. Right projects
3. Right tools
4. Right customers
5. Right suppliers
6. Right metrics
7. Right dissemination
 1. The right mindset – 10 tips

1. Experience the task

2. Open your mind
3. Enter the mind
4. Peel the onion
5. Respect the choice
6. Learn to listen
7. Be there yourself
8. Observe natural behavior
9. Watch little cues
10.Keep moving on
2. The right projects –
Balancing the research project portfolio

Proactive,
Episodic

Reactive,
Routine

Validation Exploratory
Research Research
3. The right tools-
Broadening your repertoire

Ideas from Innovative Introspection,

Customers and Intuition
Partners and Brainstorming

Metaphors and Customer Patterns in

Customer
Analogies Insights Transaction Data

Observation of
Anomalies Customer Behavior
and Discrepancies in Native
Surroundings
 IDEO’s eclectic research toolkit
Draw the experience
Cultural probes
Social Network Analysis
Scenarios Five Whys
Cross-cultural observation
Affinity diagrams
Activity Analysis

Try it yourself Foreign correspondents

Flow Analysis
Bodystorming Immersion
Empathy tools
Guided Tours Fly on the wall
Extreme user interviews Word-concept association

Shadowing Error Analysis

Narration Still Photo Summary
Predict the Headlines Customer Experience
4. The right customers –
Thinking broadly about customers
Top Management

Product
Development

Su ar
bs ket
ce

id ing
an

Corporate

ia
Fin

ry
Marketing

Market
Research

Li c
Re
Hu urce

en
Product
so

Marketing
ma s

sing
n

Legal &
Corporate
Affairs

Partners
 5. The right suppliers –
From vendors to research partners

• Trusted advisor versus research vendor

• Strategic relationships with bilateral commitment
• Strategic scope
• Integrated approach versus project-to-project
• Solutions and service-minded
• Complementary skills
• Eclectic methods
• Diverse points of reference
• Engaging, inspiring recommendations
• Consistent methodology and tools across projects
 6. The right metrics –
Measuring the Value of Research
• Decision value: What decisions did the research cause to be:
– Different
– Not taken
– Improved
• Learning value: What new understanding did the research provide us
about our customers and markets that:
– We did not know before
– Customers could not have told us
– We would have guessed differently
• Business value: What implications does the research have for:
– Identifying new opportunities
– Developing new products
– Differentiating us from competitors
– Seeing the market differently
• Option value: How can the insights from this research be leveraged:
– Across business groups
– Across functional areas
– Across research projects
 7. The Right dissemination approach -
Presenting Research Findings

Worst practices Best practices

• 35 key findings from the • Key recommendations and

research
• 10 pages of methodology
• Every possible analysis
conducted
• Analyses just from that
project
• Death by PowerPoint and
bullets galore
implications for decisions
• Methodology in appendix
• Only analyses needed to
support recommendations
• Integrates insights and
analyses from prior projects
• Compelling narrative, written
as a text story
 Agenda

• The nature of insights

• Why traditional research rarely produces insights

• How to do research that produces insights

• Rethinking the mission of the research organization

• A process framework for evaluating research projects

 Market Research doesn’t deliver:
What CEOs say about Research
Not very How useful is the information ? Very
1 2 3 4 5

Finance &
Accounting

Marketing

Information
Services

Human
Resources

Market
Research

Source : McKinsey
 Criticisms of Market Research

• Don’t know our business

• Too data bound ”

• Confirm what we should already know

• Not integrative people, focus on one job at a time
•” Not good at delivering or generating insight
• Presentation valium
• Insular
• Reactive
• Order takers
• Too rigid and slow
 Some soul-searching questions

• What value does market research add to our business?

• What are the major strategic decisions taken by our
company over the past year?
• What role did market research play in these decisions?
• What would decision makers do if the research group did not
exist?
• How could market research have had more impact?
 Creating a vision statement for research

Vision Statement
An energizing picture, based on a view of the
future, of what leadership wants the function to
become.

Elements
– Fundamental goal
– View of the future
– Scope of offering
– Distinctive competencies
Vision statement for Unilever’s
Consumer and Market Insights Group

To be the fundamental resource for

business intelligence, knowledge, and tools
that are used systematically for achieving
higher levels of market performance and
stakeholder value.
McKinsey Customer Insights Vision

To be the preeminent consultants generating deep

customer and consumer insights to create
innovative marketing and business solutions for our
clients.
Eli Lilly – Customer Insights Vision

Delivering insights that drive decision

making.

– NOT Risk Avoidance

– NOT Confirmation of what we (ought to) know
 Repositioning the research function:
Some titles that firms are using

• Customer and Market Insights Group

• Consumer Insights Group
• Business Analytics and Assessments Group
• Customer Insights and Strategy Group
• Customer and Market Intelligence Group
• Customer Understanding Group
Market research at Unilever

A case study
Unilever’s Corporate Statement of
Purpose

“Our purpose at Unilever is to meet the everyday

needs of people everywhere, to anticipate the
aspirations of our consumers and to respond
creatively and competitively with branded products
and services which raise the quality of life.”

Consumer insight as an enabler of the corporate mission

 Consumer insight and Unilever growth

”Our growth depends on one thing above all

others. Consumers.”

”If we do not get better at understanding our

consumers and meeting their needs, want and
aspirations, we will not grow.
It’s as simple as that”.

Keki Dadiseth Patrick Cescau

HPC Division Director Foods Division Director
 Four roles of Unilever CMI Group

• Consumer Guru

• Consumer Voice

• Consumer Process Expert

• Guardian of Consumer Knowledge

 Transformation of Research at
Unilever: From MR Group to CMI Group

Less time managing projects, more time adding

value and mining for strategic understanding

New Competencies Needed

– Strategic Influencing
– Breakthrough Thinking
– Personal Experience
– Seizing the future
 The New Market Research Mindset

• Think BIG PICTURE

• Think CLIENT/BUSINESS

• Think INSIGHTS & SOLUTIONS

• Think LONG TERM RELATIONSHIPS

 Agenda

• The nature of insights

• Why traditional research rarely produces insights

• How to do research that produces insights

• Rethinking the mission of the research organization

• A process framework for evaluating research projects

 Seeing Research as a Learning Cycle
Eclectic tools
Diverse listening posts

Tracking Sense Interpretation skills

Evaluation Empathy
Post-mortem

Interpret
Monitor
Learn
and
Adapt Presentation skills
Relevance Dissemination
Partnership channels
Decide Communicate
 Checklist for research projects
• How does this project fit into the global business priorities of our
business?
• How does this project relate to other research projects?
• Is there something new or creative about the problem, the
methods, or the anticipated learning?
• What do we already know about the problem?
• What stakeholders will benefit from this research?
• What is the “business case” for this research?
• Are we using the right research methods for the problem?
• Should we outsource this research? How important is it for us
to be personally involved in the field work?
• How will we involve the customers of this research in the
process?
• What is our plan for disseminating the findings and insights?
• How will we capture the learning and insights so that they are
easily accessible in the future?
 Scorecard for evaluating research

• What were the key findings of the research ?

• What were the key implications of the findings?
• What new insights did the research produce?
• How were the research results disseminated?
• Who actually ended up using the research?
• What decisions did the research impact?
• What was the estimated business value of the
research?
• What did you learn from this research about doing
future research projects differently or better?
 A Macro Issue: Knowledge
Management system for research

• This is a macro question – what is the process for

disseminating, archiving, retrieving and
synthesizing cumulative learning across all
research projects done in the past?
• How will decision makers use this system? How do
we make sure this system is user-friendly and
contextually relevant?
 Bottom line
• The research team should measure itself on the business
value of the insights that it produces through research, not
on the quantity of research or the number of projects that it
conducts.
• The research portfolio needs to be balanced with an
appropriate blend of “insight generating” research and
“hypothesis validating” research.
• The research team should strive to be seen as an expert
and trusted advisor by its internal customers.
• This will require a different mindset, different methods, and
different metrics.
• The research organization needs to redefine its mission and
rethink its organization design and processes to achieve this
goal.