Product Development Strategy: A Complete Guide to Create Better Products

Posted on Mar 15, 2023Mar 15, 2023 by Emily Louise Spencer

When creating a product, you can’t just spitball it. You need to take the time to create something that customers will actually want, and that is a better option than what they currently purchase. A product development strategy will assist you in finding your ideal product-market fit, and winning over customers from competing brands by providing a superior option.

What is a product development strategy?

You might have heard of the terms “new product development” or “new product development process” – while these are definitely important when creating a new product, they aren’t precisely what we’re talking about today.

A product development strategy is the direction that a new product release takes, from its market position to its overall demographic targeting process.

It’s a catch-all term that includes everything that takes place between having an idea for a product and actually putting it on the market.

The key takeaway here is that while new product development has to do with the actual act of creating a product, the product development strategy covers this and the steps needed to turn it into a viable, marketable product.

TCGen, which specializes in product development, has created a brilliant checklist that summarizes what a product development strategy is useful for, so take a look below.

So you might be thinking, if I’ve already implemented the new product development process, why do I need a product development strategy? After all, couldn’t I just take the end result and apply the same principles?

Well, you could. However, no business exists in a vacuum.

The fact of the matter is that some products aren’t just made for the sake of making good products that make money. They have another purpose. To gain a competitive advantage within the market, keep the company relevant, and claim a foothold that wouldn’t be available later.

It’s no coincidence that a new Xbox launches around the same time a new PlayStation does. Both companies can’t afford to concede market share to each other (Unless you’re Nintendo, and then you can do whatever you want).

Alternatively, businesses can patent & sell products simply so the competition can’t. Both Xbox and PlayStation have a long history of exclusive games, many of which were made by 3rd party companies.

The lesson here?

In the world of business, it isn’t enough to have a good product. You can still be undercut, out-advertised, and out-sold by another product if you don’t play it right.

That is to say, if you don’t have a good product development strategy.

What benefits can a product development strategy bring?

Okay, this sounds great in theory, but how do I apply it to my products? Fair question.

We touched briefly on why a product development strategy is important in the last section, but now it’s time to talk about tangible benefits.

So, what are some benefits of having a product development strategy?

Keeping an eye on the big picture from the start

When you have a product development strategy, you know exactly what it is you’re trying to achieve.

That might sound like common sense but bear with me here.

Let’s say you’re making a line of clothing, and your big-picture aim is to introduce hypo-allergenic fabrics that you can market to customers with sensitive skin.

Now, if you simply tell your design team that you want a certain set of clothing, e.g., pants, shirts, etc., from pure cotton, all they know is the letter of the instructions, not the spirit.

Nevertheless, they get on with it and have a working set of prototypes produced.

So the day comes for them to produce their designs, and lo-and-behold, they’ve used a dye that renders the line completely unusable by people with sensitive skin.

So what now? Well, they’ve got to go back to the drawing board with more precise instructions.

When you have an overarching aim, you need to keep all of your teams informed so they can create products that fit the spirit of your aims, not just the letter.

A product development strategy does exactly this, aiming to focus on the product’s placement and market position every step of the way.

Aligning cross-functional teams

When you run a business that creates products, it’s expected that you’ll have more than one team working on different steps of the process.

Those involved in product creation aren’t necessarily the ones who will be manufacturing it, and vice-versa. Thus, when creating a new product with a specific aim, you need to be keeping everyone on the same page if you want things to run smoothly.

Easier said than done.

Sometimes there are factors that one team is aware of, but the other is not, making the entire process grind to a halt when a plan is produced that simply doesn’t work under current limitations.

For simplicity’s sake, let’s take the example of the clothing manufacturer above again.

Your design team has managed to avoid the issue with dyes and has created a sensible prototype. And so, they decide to pass it on to the manufacturing team to produce.

However, you run into yet another roadblock.

You see, the supplier of the dye that you’ve selected has had some bad press, and the dye itself isn’t considered that reliable by those who find hypoallergenic clothes a necessity.

Now, anyone on the marketing team could have told you this. It’s their job to know the ins and outs of the current market, and they could have saved you from having to loop back again if only you’d communicated.

Product development strategies include communication aspects like these, using the big-picture focus to bring in new information when it’s needed.

Kellogg’s championed their traditional cereals such as Cornflakes, Froot Loops, and Frosties for decades, but with times changing and consumer preferences shifting, they’ve widened their reach by acquiring more diverse options to keep their customers happy.

Feedback & guidance loops

Both of the above are examples of a business that’s missing feedback & guidance loops.

Feedback & guidance loops are lines of communication in which advice is passed on from further down the chain back to the product design team. By keeping themselves in the loop, delays and design errors can be avoided, and the process runs more smoothly overall.

Of course, these loops aren’t limited to being relevant to the design team.

All teams involved can benefit from them to some extent, even if the most obvious examples involve product design.

The big-picture approach requires, well, keeping the big picture in mind at all times.

And if factors change in one area, it’s going to have a knock-on effect that might alter your overall approach.

Efficiency

Lastly, let’s talk about efficiency.

The ultimate goal of business is to bring in revenue & make profits.

Now, this obviously means that you need a decent amount of sales, but there’s another side to it too. Costs.

You can have the most incredible products ever created, but if the costs of design are too high, then you’ll spend years in the red before ever being profitable.

That’s not to say that you can’t plan to be in the red, but it needs to be done carefully. Plenty of businesses thought that they were in the clear, only to be blindsided by the COVID-19 crisis in 2020.

What I’m trying to say is that the future is uncertain, and you need to be able to bounce back. Sinking into the red with a lengthy, inefficient product development process is precisely the opposite of that.

See, a lot of the time, your manufacturing costs can’t really be altered without affecting the quality of your products.

Your costs of sale, packaging, delivery, advertisement, and the like are often relatively static, especially if you use a third-party platform like Amazon or Etsy to sell.

So, when those two types of cost are static, and you need to lower your numbers, what do you do?

You improve your product development strategy, improve your efficiency, and decrease the amount of time & money it takes to develop a new product.

Every factor we’ve talked about thus far has been leading up to the ultimate goal of product development strategies; to make the process smoother and less costly to go through.

The 3 types of product development strategy

Rewinding back, let’s look at what a product development strategy is again before jumping right into the types you can have.

Product development strategies are all about aiming for sales. They’re all about trying to create & develop your new products in such a way that they’ll not only be great, but marketable.

You can have the greatest volcano-proof diving suit ever made, for example, but if no one will buy it, then from a business perspective, it’s a dud.

With that in mind, the types of product development strategies you can have are largely dependent on your marketing tactics.

Let’s take a look at the three most common types.

PDS type 1: Premium

When I think of premium, my mind jumps to brands like Louis Vuitton and Porsche.

What do these brands all have in common? Well, they’re high-end brands that market their products as luxuries, as things to aim to achieve.

They’re brands that enjoy high brand equity, with their products making people go “wow.”

These brands aim to be right at the top of the market, selling small numbers of products but at high prices. That way, they make a lot of profit per unit and increase their revenue overall.

There are downsides, though.

For one, costs are higher than average. This is expected, as you use “limited-edition” or “high-quality” materials in your products to make them more desirable.

Often, these materials are entirely superfluous to the nominal function of the product, such as diamond-encrusted handbags, but you could say that their purpose is to show off.

Remember, these are luxury products. Most drivers wouldn’t need a car that goes 250 mph and wouldn’t think about it when deciding to buy one. They’d just think about what can get them from A to B.

Someone looking for a luxury car, on the other hand, probably has the time and money spare to take it to a race track or onto a highway where such speeds are allowed, thus making such a feature relevant.

Further, luxury brands are very difficult to establish.

Unless you’re entering an entirely new market where almost all products were created recently, akin to Apple when establishing themselves in the PC industry, there are probably going to be big-name brands there already that won’t like you muscling in on their territory.

Keep in mind that often these brands have a long and proud history.

Many European and Asian brands date back centuries and take their longevity as a badge of honor. It’s taken as a standard of quality that they’ve been able to operate for so long and still stay in business.

The Genda Shigyō company that provides traditional Japanese gift wrapping has been running since 771! Just imagine trying to go up against that kind of established name!

There’s also the factor of a diminished customer base. It’s a fact that most Americans can’t afford luxury goods.

Fewer potential customers mean that every sale matters. Every sale lost matters even more. It’s vital to keep your quality high and your customers satisfied if you want to keep operating with this type of strategy.

PDS type 2: Budget

Entirely on the other end of the scale, we have the budget strategies.

These types of strategies follow the idiom “quantity over quality” to the extreme. In essence, by making very small amounts of profit on each sale but making lots of sales, you increase your profits.

And a low-cost product is far more likely to be bought by those who make choices on the basis of price alone, meaning a bigger reach for it.

Budget products are often thought of as low-quality, but this isn’t always the case. In this type of product development strategy especially, you keep your profit margins low to keep prices down rather than using cheap materials.

Remember, being a budget option does not mean you are cheap. It means you’re comparatively cheap when you consider the market as a whole.

A great example of this dichotomy is the smartphone industry. The cheapest new model will still set you back at least $50-100, not exactly budget.

Of course, if you do use cheap materials, you can lower your prices further and present yourself as a truly budget option, but that’s at the extreme end of the scale. The vast majority of products are not created to be cheap alternatives since consumers expect some measure of quality.

A phone that can barely load WhatsApp would probably sell poorly, after all.

There are some cons to this strategy.

You can quickly stray from low profit to no profit if your circumstances change. The difficulty with positioning yourself in this area comes with constantly having to monitor your operating costs, as even the tiniest increase will be a blow to your profits.

There’s also the factor of coming across as too cheap.

Generally, consumers are suspicious of products that are cheaper than others, even if reviews say that quality is consistent. It’s expected that certain types of products cost certain amounts, and any strategy that prices under this can be dismissed as being tacky.

Overall, this type of product development strategy is tricky to do but can perform wonderfully.

PDS type 3: Competitive

We’ve talked about the two extreme strategy types, but those are what they say on the tin, extremes. The vast majority of product development strategies fall somewhere in between, even if they do lean one way or the other.

Right in the middle of budget & luxury goods, you have competitive goods. These are products that have moderate profit margins and aim to sell a moderate amount of units.

How do you define moderate? A moderate price is determined by the average prices of that particular market as a whole. In other words, you price your product so it might be considered by the average consumer, keeping the quality consistent with what they’d expect for that price.

Let’s look at an example to make it clearer what this means.

When you think of high-end coffee, you might think of imported Jamaica Blue Mountain. On the other hand, if you want a low-budget option, you might settle for Dunkin’ Donuts’ own brand.

In the middle of these options sits Starbucks. Not too pricey and not low-quality. A good, reliable coffee shop that serves millions daily.

Starbucks occupies the competitive slot in this case, with their coffee being of a good enough quality to be called pleasant while keeping their prices low enough that they’re not a luxury brand.

Starbucks exemplifies the reason why most products are planned out to follow this route. You have the possibility of reaching almost all consumers, whether as a cheaper alternative to their luxury goods or as an upgrade from their usual once-in-a-while.

Your pricing strategy means that you make a decent amount of profit on each sale and aren’t that vulnerable to fluctuations in material costs or consumer tastes changing.

So what’s the catch? Why would anyone choose a different strategy than this, you might be asking?

Well, that’s precisely the reason. If everyone is aiming for this place in the market, then you’re simply one of a dozen.

Think of the last time you bought lightbulbs. Did you choose a specific brand, or did you just grab the first pack you saw on the shelf with a decent enough rating? Probably the latter.

When the market is saturated, you’re going to have a hard time establishing yourself as anything more than a face in the crowd. The reasons that brands want to choose this strategy are, paradoxically, the reasons that they can’t.

Not every coffee drinker goes to Starbucks, just as not everyone buys the same brand of shower gel. People buy what they’re used to, and unless you’re entering a market with something new and exciting, you’re simply going to fade away into the background.

Internal and external product development strategies – what’s the difference?

Now that we’ve talked about the different types of product development strategies, it’s time to take a brief note of… different types of product development strategies. ????

Hold on, this isn’t just a rehash of what we just spoke about, but something different entirely.

When you’re creating a new product, there are two different ways you can go about it. First off, you can utilize resources that you already possess, or you can look for possibilities that exist outside of these.

That’s what we call an internal vs. an external product development strategy.

Internal product development strategies

Internal product development typically refers to creating new products out of existing ones. That might be a personalized variant, a new and improved version of your product, or simply taking the ideas that exist within a product and applying them in new ways.

If you’re a smaller business or a start-up, you may find it hard to employ internal product development strategies since it’s possible you’ll lack the necessary resources. Look to the next section for how you might go about strategizing.

A common way for software companies to develop using internal product development is by acquiring smaller companies that produce complementary software, then combining them into a single package. This way, they can utilize their existing resources, which is far cheaper than creating new ones, and sell again as a new product.

Internal product development has several advantages, notably that you’ll already be established and can use the marketing from previous products to your advantage.

When Apple releases a new iPhone variant, for example, it’s always with the caption “the new iPhone” or “the upgraded iPhone” to allow consumers to subconsciously associate them with the success of previous versions.

Overall internal product development strategies are cheaper, easier to implement, and run far more smoothly on average since you probably know what you’re doing in this area.

On the flip side, there’s only so much you can do with an internal strategy since you’re limited by what you already possess. If you want to really innovate, you need to create an external product development strategy.

External product development strategies

External product development strategies are about creating something new. Something that your organization has never delved into before. This can be entering a new market, expanding into another country, etc.

External product development is a double-edged sword, however.

There are great rewards to be had with creating truly new, innovative products. Technological progress comes from external development, with giants like Thomas Edison & Nikola Tesla daring to be creative and develop something new.

However, this also comes at increased costs. After all, acquiring new assets takes funds, time, and effort, none of which are free.

When you create a new product using an external strategy, you could end up revolutionizing the future of electricity by patenting multiple electronic devices like Edison.

On the other hand, you could run out of money trying to build Wardenclyffe Tower like Tesla. The tower stood as a monument to human progress. However, it came at an extreme cost that couldn’t be recouped.

After all, it’s not enough in the world of business to simply innovate, you need to do it in a way that makes money and keeps your investors happy.

4 stages to creating a product development strategy

If you’ve read this far, you probably want to know how to go about creating a product development strategy.

To create one, you just need to follow the steps below. That’s it.

Go. ????

Stage #1: Defining your vision

First, you need to define your vision. This harkens back to our earlier discussion on the types of product development strategies you can use.

There are two questions that you can ask yourself when deciding what type of strategy is best.

Do you want to be a budget option, a luxury option, or a middle-of-the-road?
Do you intend to create something entirely new or to derive from existing assets?

To answer these, you need to have an idea of what you want to develop already in mind. Without this starting point, the entire plan falls apart.

Luckily, you can start with even the most ridiculous ideas. At this point, you’re not putting any material costs into the process, just time.

If you think your idea is too ridiculous, remember that someone once put their hand up in a board meeting and suggested a movie featuring “a tornado made of water with sharks in it.”

And it got sequels too!

Once you have your idea, you can start applying the potential options to it and seeing if they work.

Sometimes, you simply won’t be able to think of a place to market an idea, and that’s okay! Just file it away and move on to the next one until you find a concept you’re certain can fit one of these options.

Stage #2: Developing a strategic plan

Once you have your concept, it’s time to lay out a plan for how to create it.

The process of product creation can be as straightforward as designing a 3D file to send to a machine or as complex as mapping out a piece of software. Either way, it’s important to plan how you’re going to create it.

The strategic plan isn’t a step-by-step for how to produce your product. That comes later. Essentially, this is the process by which you link vision and reality, taking your concept and applying the first touch of real-world principles until you have a rough guide for how to begin.

The key idea here is to touch upon the real-world factors you’d need to consider, laying them out for future reference. It’s all about large strategic steps that might seem vague but are definitely necessary.

Remember, strategic plans aren’t the final word. They’re rough guides for how you want to go about your operations, with the actual details up in the air until they’re finalized. After all, you can’t predict how supply chains might look two years from now, so why finalize it right away?

Stage #3: Building a roadmap

Remember how we mentioned the step-by-step guide? This is it.

A product roadmap takes the broad steps of the strategy and breaks them down into recognizable, realizable steps. These are often built up over time and can be highly technical.

A roadmap is essentially a guide for how you will be bringing your product concept into being. It connects budgeting, assets, decisions that you need to make, and more.

When creating a roadmap, it greatly helps to keep things modular.

You might be thinking, what? Haven’t we just been talking about how important it is to keep everything running together?

So, when I say modular planning, I mean keeping every aspect of your roadmap separate yet connected.

Essentially, for each step of the journey, you need to keep it self-contained in such a way that it doesn’t depend on the previous steps having particular outcomes.

Let’s say you want to use a plastic-type material in your product, whatever that might be. You’ll need a machine that can utilize that plastic. You’re favoring polyurethane and have a machine in mind that can use it.

So what do you put down in your roadmap? Get polyurethane. Then, get a working polyurethane machine. No, no, no, you don’t do that. ????

When placing the polyurethane machine into your roadmap, you’ve essentially condemned yourself to alter your roadmap if your plan of using polyurethane falls through.

What does this mean? Remember how I talked about efficiency and lines of communication? The team looking into obtaining machines for you isn’t necessarily going to be the same one testing the materials. If you’ve placed a polyurethane machine into your roadmap, you’re going to have them running around looking for a machine that is no longer practical for you.

That’s time, effort, and money wasted.

Long story short? Make your planning modular in the early stages, so you don’t run into these issues.

Stage #4: Parallel innovation processes

The process of utilizing a product development strategy can be a tough one. How are you supposed to tie a long-term strategy into your daily operations?

Well, there’s an answer to that, and it lies in parallel innovation processes.

The trick to doing both at once is tying them together. Sure, you can try and run your daily operations independently, but that’s just asking to be led astray.

The key lies in having two systems in place:

A system for planning and budgeting in the long-term, often yearly.
A system for the short-term to explore possibilities and select emerging concepts, often monthly.

So how do you tie them in? The outputs from your long-term process become your inputs for the short-term.

In other words, you use the data you’ve gathered from your long-term vision projections as the starting points for your short-term.

You might think to yourself, what’s the benefit of doing this? Well, short-term planning without long-term management can be misguided, and the most crucial aspect of all is the budget aspect.

Every year there might be millions of product concepts thought up. However, you can only continue onto the creation process if you have the budget and assets to do so.

You can’t have your cake and eat it too. ????

The parallel innovation process keeps you on track to create only those products you’re capable of creating. Whether it’s due to budget restraints, technological limits, or simply a lack of resources, keeping your overall goal tied to the present circumstances will ensure you stay grounded.

That’s not to say that you can’t pick up ideas later on when circumstances change. Avatar had to wait almost a decade for special effects technology to catch up to James Cameron’s vision. In the meantime, Cameron devoted his attention to other projects.

The takeaway? Stick to what you can feasibly do.

Conclusion

So there you have it! You should now have everything that you need to create a workable, useful, and reliable product development strategy.

What’s next?

Once your product is out there in people’s hands, they’re going to have things to say. It’s imperative you’ll learn how to collect this data, analyze it, and use it to create better products. Check out our customer feedback analysis article to understand what needs to be done.

Using Customer Intelligence to Understand Customers and Give Them What They Want

Posted on Feb 24, 2023Feb 24, 2023 by Emily Louise Spencer

Know thy customer, and you will be able to please thy customer. When dealing with consumers, information is often lost in the hustle & bustle of everyday dealings. Few are able to fully utilize the signals their customers give in order to reap the rewards. Customer intelligence is aimed at doing just that.

It’s all about data in this age of e-commerce.

Once you have it, you’re working with first-hand accounts of how your customers wish to be treated, what they want to obtain, and how they think these things are to come about.

But data can be tricky to utilize effectively.

First of all, you have to obtain it. And not in any fishy manners if you want to build trust with your customers.

Secondly, the information provided by customers won’t be in a set format that’s easy to collate, making it difficult and time-consuming to process.

Finally, it’s very easy for these pieces of information to slip through the cracks and get lost, never making their way to the people who would be able to use them.

So, once you have this data, how do you go about using this valuable resource? The secret lies in the art of customer intelligence.

What is customer intelligence?

Customer intelligence is a catch-all term for analyzing customer data in order to find new ways to conform your business to their wants & needs.

While this might sound simple, it’s actually difficult in practice to achieve such an analysis due to the fact that consumers have different preferences.

Think of it like making coffee just the way someone likes it.

Sure, there are common factors between all of the cups you might make – coffee, milk, sugar, etc. – but there will be subtle differences that make the difference between a good cup of coffee and a great one. ☕

Customer intelligence can factor in those needs when potential customers approach you and vice versa.

It takes into account various data points such as age, location, habits, and more so that you can work with customers on an individual level. It means using all of the different combinations of these that might crop up when dealing with customers.

It’s no exaggeration to say that this is enough data to give anyone a headache!

As a consequence, utilizing customer intelligence is always done with the help of specialized software. It’s simply too much data for a human to process by hand in any useful amount of time.

Why is customer intelligence important?

In the age of the internet, and even more so following the onset of the COVID-19 pandemic, e-commerce has become more and more personalized.

It’s no secret that customers expect a personalized experience when dealing with a repeat seller, as 59% of them admit that it has an impact on their purchase decisions.

The customer experience has become increasingly relevant over the past few decades, with consumers following their hearts instead of cold numbers.

Many will even select an objectively inferior product or service if they deem the experience they have with the seller to be more pleasant. After all, customers cite bad experiences as their number one reason for switching brands or providers.

And how do you provide good experiences? By understanding their individual desires.

What can customer intelligence do for you?

After talking about how emotions are so crucial to business, it’s time to get down to some cold hard facts (I love my coffee with a hint of irony).

As mentioned, improving the customer experience is an excellent idea that will boost your bottom line.

In the next section, we dive into the details of how customer intelligence makes it possible. While more strategies exist, the ones we’ll lay out definitely pack the biggest punch. ????

Cross-selling & up-selling

It’s often quite rare for people to go to a shop for a single item and actually walk away with only that item.

There are just so many good deals that you can see, and you just have to try them out, right?

Online, things are different.

You can’t see the entire store out of the corner of your eye like you can in a brick-and-mortar location.

In fact, you’ll often only visit those pages directly relevant to the single item you’re looking for.

So, how do you show off your wares? Cross-selling and up-selling.

They’re both methods of encouraging customers to view items other than the one they specifically came to your site for, with cross-selling being concerned with complimentary products and up-selling with upgraded ones.

Essentially, they’re a means of getting a customer to want to spend more.

These can be done through advertisement banners, recommended product sections, and by related product sections on product pages.

The catch? Items often have multiple uses and reasons behind purchases, meaning you won’t necessarily know why an individual is after a certain product.

This makes cross-selling and up-selling a bit less effective.

But with customer intelligence at your disposal, you’ll have the information you need to nudge individuals toward their next purchase.

For example, a customer may purchase a DDR2 piece of RAM, a common computer part.

They might be after it because it’s what they currently have and need a replacement, in which case advising the DDR3 as an up-sell is valid.

Or, they might be working with a legacy computer, one not compatible with DDR3, in which case it wouldn’t be.

If you know which one is the case, you know which action to take.

Below you’ll see a great example of how Amazon utilizes cross-selling.

Amazon offers both a “for you” section as well as one on trending deals. You can clearly see a theme across the top row of items, showing its effectiveness at showcasing an individual’s tastes.

This dual-focus method ensures that while general items that are enjoyed by many are not ignored when it comes to cross-selling, the individual is also acknowledged.

Customer retention

Consumers have changed the way they operate in recent years, being more willing than ever to switch brands or providers over minor disagreements or small mistakes.

One of the biggest changes we saw was the rise of e-commerce transactions, with people turning more and more to ordering products online.

This makes the e-commerce customer experience critical for driving revenue. If your layout is confusing and the infrastructure is ancient, users will quickly become frustrated. And when that happens, they will easily leave your site in favor of another.

Seems plausible, right? When emotions run high, decisions are made that otherwise might not have been.

There’s a very real possibility that customers will leave your website if they don’t get the personalized, easy-to-use experience they want. When they do, that’s another customer lost.

And perhaps worse than just another purchase lost, it may be an existing customer that’s not coming back.

Low customer retention is one of the most damning factors when it comes to e-commerce profits, simply because customers cost much more to obtain than they do to keep.

While customer intelligence won’t solve your infrastructure issues, it will help improve other aspects of the customer experience immensely. With all that information you possess, you’re able to highly personalize the experiences each individual has to a great degree. Be it specific items or even your site’s layout.

Given a choice between these two options:

A simple cookie-cutter website that’s rigid and confusing.
A personalized experience on a website that responds to the way you use it and makes itself easier to navigate.

Which would you pick?

Channel analytics

When you’re running an e-commerce business, you’re often operating across multiple channels of communication. It’s not enough to simply use one social media platform, for example, as you’ll miss out on selling to those who use others.

But what works on one platform won’t necessarily work on the others. Not just because they operate differently but due to the audience that frequents each channel.

With customer intelligence on your side, you can not only measure customer behavior on an individual level but apply these principles to the different channels of communication you work with.

After all, if you have data on the individuals, it’s not hard to lump those together for group analysis.

Then, you’re able to easily translate the customer intelligence data into a form that applies to the individual channels and analyze it accordingly.

This can give you information on:

Different customer behaviors by channel.
Effectiveness of customer service in each channel.
How specific customer service tactics work with each channel.
Your ROI for each channel.
Sales tactic effectiveness by channel.

Useful, right? You can even use the information you gain from this analysis to determine whether or not it’s worth keeping a channel of communication open.

You might be thinking, why don’t I just perform an analysis on each channel? Surely that’s just as effective?

Well, yes and no.

You see, you can always use individual data as building blocks to create channel data, but you can’t do it the other way around.

This means that if you want to see how demographics affect each channel, you’d have to factor that into your data collection methods.

While that might seem like common sense, sometimes you’ll only think of analyzing a factor after the fact, meaning you’d need to do the whole data collection part all over again.

All-in-all, customer intelligence can always build up to a bigger picture, which is one of its most useful traits.

Optimization & cost-effectiveness

This one follows on from both customer retention & channel analytics, but it’s also its own thing, so a separate title is due.

On the surface level, increased customer retention means lower costs, and channel analytics means that you can optimize your approaches to each channel.

But it goes deeper than that.

When you deal with customers on the individual level, you’ll need to provide individual experiences. Customer intelligence lets you gain the information you need to provide this in a very short time frame, meaning you don’t waste time and money on ineffective techniques.

Overall, the information that customer intelligence provides means that every aspect of your organization can be streamlined, improved, and cut back when necessary. It cuts right to the heart of what customers want, which is the essence of e-commerce.

Brand loyalty

Loyal customers are hard to come by, but they’re well worth the effort to maintain.

In addition to the retention benefits mentioned above, loyal customers will act as advocates for your brand. It’s like having your own organic advertising department, except it’s free!

So, what do brand loyalty and brand equity have to do with customer intelligence?

The thing about loyalty is that it doesn’t just come overnight. You need to perform consistently well in order to build up loyalty.

While in face-to-face transactions, you can usually tell how the customer reacts to specific methods and adjust accordingly, you have no point of reference as to how to best approach a customer online.

So, how do you choose the best approach? Well, with customer intelligence, you can make educated guesses using an individual’s data.

This approach won’t be accurate in the beginning, however as time goes on and you gather more data on an individual, you will be able to adjust your approaches more effectively.

You might be thinking that this sounds like developing a relationship with that individual, and you’d be right. It’s simply done via software, as no human could ever keep up with that many individuals at once.

More effective approaches = more customer satisfaction = more loyalty.

The types of customer intelligence data

Generally speaking, customer intelligence data falls into two types, internal and external. The latter branches out into several other sub-types, but it’s quite straightforward and well worth familiarizing yourself with them.

It’s important to note from the get-go that both internal and external types of customer intelligence mix zero, first, and third-party data.

This means we recommend using both forms to gather as much relevant data as possible, especially as zero and first-party data becomes more and more precious with privacy concerns going up in recent years.

Internal customer intelligence

Internal data is the blanket term used to cover anything generated within your organization.

You can obtain internal data from your databases, point-of-sale systems, etc. The data that you receive from this won’t necessarily be different from that obtained externally, but it can be considered more organic and representative of a person’s true feelings than the data generated by prompted methods.

This data is the data that you don’t have to go out of your way to collect. It’s data that you’ve naturally picked up over the course of an individual’s interactions with you.

External customer intelligence

External data is what you get when you specifically gather customer intelligence data.

This data can be obtained via survey, from cookies, information that a user has been prompted to give to you, etc.

This data is often the more useful of the two types as it fills in the gaps and lets you see why certain methods are preferred, certain lines of communication are more used, etc.

You can split externally-gathered customer intelligence data into three types, personal, geographic, and attitudinal.

Personal data

Personal data is all about demographics. That can mean:

Age.
Career.
Disability status.
Education level.
Gender.
Income.
Marital status.
Religion.

All of this is incredibly useful when trying to personalize the experiences you can provide, not the least to avoid making irrelevant or even downright unhelpful changes.

There are many ways in which personalization can go wrong, but the more personal information you have, the greater your chances of making it go right.

Geographic data

This covers anything to do with location. It lets you know roughly where a person is when they buy from you.

Why is this important information? Surely when working online it’s all the same, right?

Well, no.

Certain tactics and strategies might work well in an urban environment but not in a rural one. Why? Because the people who live in these different places think in different ways.

Different environments create different experiences, which in turn means different habits are developed. While not exactly the same, there will be rough similarities in how people who live in the same city might behave online.

Similarly, there are probably differences between cities, states, and countries that need to be accounted for when drawing up plans.

Different geographies can also mean different delivery times, languages, tones, and more.

Attitudinal data

Attitudinal data is a little trickier to quantify, as it can change over time.

Effectively, it consists of any information on how an individual perceives your brand and the general emotions they feel towards it.

A useful tactic to gather such data is by going through review data.

This gives you a direct line to the voice of the customer, helping you understand strengths, weaknesses, opportunities, and (what’s the T for swot?)

To complement the review data, you can conduct other market research methods like surveys, questionnaires, and focus groups. These can help you get a more rounded picture of attitudinal data.

The process of utilizing customer intelligence: 5 steps to follow

It’s time to get down and dirty.

When trying to utilize customer intelligence, there are five key steps that need to be taken. It’s important to keep these steps in order and not miss any out, as they’re all necessary to obtain a complete picture.

Keep in mind, however, that you can always cycle back a step if your data is confusing. If it’s hard to analyze, hard to decide what to do with, etc., you might just need more data or data from a different source.

Before we begin going over the steps, though, a brief disclaimer.

Customer intelligence is highly contextual, meaning that when you’re performing it you absolutely need to have your aims in mind.

You can’t just perform customer intelligence for the sake of it, as the algorithms and data collection methods will differ depending on what area of the customer experience you’re trying to take a look at.

That said, let’s begin.

???? Step 1: Sourcing

The first step in the process is to choose your sources.

While each source that you could draw from will give some amount of similar data, there are distinct differences between how they operate and what data you can obtain from them.

You can split sources into three types: transactional, behavioral, and psychographic. We’ll talk a little more about them later on.

???? Step 2: Collection

The second step is data collection.

Once you have your sources, you need to collect data from them. This can be done via website monitoring, heat maps, surveys, and more.

The data collection methods you should use are heavily dependent on the type of source you’re drawing from, so keep that in mind.

???? Step 3: Categorization

Next, you need to categorize your data.

This step is usually done while keeping the different facets of your organization in mind. If you’re looking to improve a specific area of your business, you should place the most weight on the relevant data.

Data can fall into the following categories:

Direct feedback, such as reviews & ratings.
Indirect feedback, such as comments & chatter.
Inferred feedback, such as history, cookies, and location-based data.

Direct feedback can be seen as a reflection of the customer experience, meaning it’s up to the marketing & customer service departments to use.

Indirect feedback is more broad but generally valuable for marketing & product testing departments.

Inferred feedback is all about website data, so it’s the domain of your dev team & design team.

All of these categories contain useful information, but some are more useful in specific contexts than others.

???? Step 4: Analysis

Once your data is all sorted into neat little packages, it’s time to analyze it.

This step is where customer intelligence software packages really shine. It’s one thing to know how to analyze data in theory, but a whole other ballpark to actually perform it.

Some common analyses methods that come pre-programmed include:

Customer lifetime value predictions.
Customer behavior modeling.
Predictive customer analysis.
Dynamic micro-segmentation.
Actionable insights.
Customer persona modeling.
One-to-one insight generation.

By using these pre-existing software packages, you’ll save yourself countless hours of hard work. We’ll discuss some of the platforms to generate customer intelligence available later on, as well as their features, advantages & disadvantages.

???? Step 5: Taking action

Finally, once your data has been analyzed, you need to take action.

This step is the crucial one where a lot of customer intelligence strategies fall apart. You see, in order to take action on your data, you need to be able to use the methods necessary to utilize it most efficiently.

Whether this is integrating new software into your website, adding this information to customer journey maps & workflows, or even altering your marketing campaign approaches entirely to account for different responses, you need to commit to these changes if you plan to get the most out of your data.

Change is scary, we can all agree on that, and many businesses would rather stick with tried and true methods than take a chance on something that may or may not work.

So why should you act on customer intelligence? Why should you risk your profit margins?

Simply put, if you’re thinking of these actions as entirely new strategies, you need to reframe your perspective on them.

Customer intelligence isn’t about telling you what to do. It’s about finding out what you already do, to some degree at least, that is the most effective.

When taking action, you’re not altering your direction, merely refining it.

You can use customer intelligence to measure responses to new methods, that’s true, but the information you gain is useful in all aspects of your organization.

What are the sources of customer intelligence?

As mentioned above, the different sources of your data will grant you different information on customer behavior.

Selecting your sources is the first step in the customer intelligence process, and making that selection depends heavily on what you’re trying to achieve.

So, what are the types, then? Well, they generally fall into three types, transactional, behavioral, and psychographic.

Transactional

Transactional data is all about purchase history.

Think back to the last few times you’ve ordered items online. There are probably several of those items that fit a trend or are even repeat purchases. Sound about right?

Purchases rarely take place in a vacuum, and what you buy today is likely going to have an impact on what you buy in the future.

In the same way, what customers have bought from you in the past will show trends that can indicate what they might want to buy next. Using these, you can tailor your recommendations, discounts, etc., to each individual’s tastes.

If you received a discount offer for a product you were thinking of buying in the future anyway, wouldn’t that tempt you to go through with it?

Behavioral

Behavioral data is concerned with customer behavior. In the realm of e-commerce, that translates to how they behave while using your website, emails, app, etc.

Now, you might be thinking, is it possible to track these factors? Well, yes.

With emails, I recommend tracking mostly clicks rather than opens. Clicks are a strong indicator of subscribers’ intentions, while opens are much weaker ones. Further, with Apple MPP causing inaccurate open data, it’s best not to rely on this metric as it can lead you to false conclusions.

On your website and app, you can track various metrics such as time on page, viewed products, abandoned pages, and much more. In fact, there’s so much data readily available that it’s best to hone in on your goals before diving into them.

Psychographic

Psychographic data is about customer intentions.

You can think of it as the underlying reasons behind purchases and what encourages someone to buy certain products.

You can get psychographic data in two ways.

First, there is the direct route where you simply ask them. Customer surveys, questionnaires, preference centers, and reading reviews all fall into this category.

Remember though, while customers are mostly honest when filling out these forms, they may not remember or even be aware of the full story. Thus, treat these answers wisely.

Secondly, there are indirect indications that can inform you about customer intentions.

Transactional & behavioral data are often the sources that lead to this type of psychographic data, as what they show allows you to infer factors that otherwise might have been missed.

To give an easy example, imagine you’ve just received an order for some hockey equipment. It can be described as:

Good quality.
All bright red or white.
Dispatched to New York.

These facts alone don’t tell you much about why the customer purchased these particular items. However, when you take a look at their purchase history, you find that a previous order was dispatched to Detroit.

Taken together, these two factors indicate that this person might be a fan of the Detroit Red Wings and was motivated to buy these particular items as they resemble the team’s uniform.

Indirectly obtained information can be wrong sometimes, as there can be factors that appear together simply by coincidence. When dealing with a customer for whom you have little information, this is expected, and you can adjust your software accordingly.

As time goes on and more evidence is gathered, you can relax and become more confident in your deductions.

After all, if it walks like a duck, swims like a duck, and quacks like a duck, it’s probably a duck. ????

Customer intelligence platforms to help you understand up from down

The customer intelligence platform you should use will largely depend on what you intend to do with it.

Some are built for large-scale enterprises, some smaller, and some scale. There are also key differences in how each platform operates, with some being better than others at certain tasks.

As you can see in the below chart from SoftwareReviews, users of each platform rate them differently in two different yet equally important aspects, features & vendor experience.

Overall, you should look carefully at each option before you decide, but let’s go through some of the more commonly used ones and assess their capabilities.

Revuze

Not to toot our own horn, but the Revuze platform does a stellar job at gathering and analyzing data, providing you with easy-to-understand reports and insights.

Not only that, it does everything in real-time and in a couple of clicks.

This means that you can respond to customers’ needs and demands swiftly, allowing you to gain a crucial advantage over competitors.

But don’t take my word for it.

Our recent case study with Georgia-based grill innovator Char-Broil tells that story much better.

Adobe Analytics

Adobe Analytics, a part of the Adobe Experience Cloud, has the ability to interface with all other pieces of software within the Cloud. In particular, the AI-powered Adobe Target.

The downside? Like most Adobe products, it’s difficult to interface with software from other providers, so if you already use these, you’ll need to build an interfacing program to translate between the two.

Gavagai Explorer

Gavagai Explorer’s text analytics boasts multilingual features, quite useful for those working across borders.

It also boasts an API that allows for interfacing with third-party platforms, notably Slack, SurveyMonkey & Zendesk.

Pricing starts at $130 per month, with a limitation of 20 ongoing projects per user.

Graphext

Graphext is a Spanish company that supports six languages in its main version, with another four being in beta versions.

Their seamless translation abilities are particularly useful for those wanting to operate in Europe, Latin America, and South America, as English, Spanish & Portuguese are among the languages that have been fully developed.

Users have noted that Graphext is cloud-based and limited to small or medium businesses due to its capacity limits. The platform is also available to individuals for small use with zero charges.

The downsides? As a small company, Graphext isn’t able to easily respond to queries, only offering a text-based chat solution currently. They’re also fairly new and thus not well established in terms of API integrations.

Microsoft Dynamics 365

Microsoft Dynamics 365 is a Microsoft product line, so you know it’s going to be able to run on almost any Windows system. It’s also available in both cloud and on-site versions.

Dynamics boasts excellent ratings for usability, good ratings for support, and mixed reviews for its user interface options.

As a Microsoft-provided app, it also boasts the ability to interface with dozens of third-party applications. It speaks the same language as your operating system, after all.

One complication is that Dynamics is not one app but a series of twelve applications. Naturally, these all seamlessly work together. However, for those working on mobile devices, this isn’t ideal.

Optimove

Optimove CI is known for its user-friendly interface, flexibility, and easy learning curve.

As an organization founded in 2009, Optimove has had a long time to refine its processes. It’s known for great database organization abilities, as well as for learning exactly what customers want.

One of their greatest strengths, according to reviewers, is its very visual interface which makes visualizing concepts easy.

Downsides quoted include manual importing of data, issues with integrations, and an inability to delete templates which can quickly leave you swamped in them.

People Pattern

People Pattern comes from a US-based company operating outside of Silicon Valley. It’s rated highly for its data import abilities and its analytics but less highly for support & integrations.

One aspect that sets People Pattern apart from its contemporaries is its highly-rated customization abilities, which users have cited as their main reasons for purchase.

On the flip side, this software is only really useful for small & mid-size businesses or individuals.

Signal CI Platform

Signal’s main pros are all about integration and scalability. That said, ease of use isn’t quite up to standard with some of the other platforms on this list.

Signal CI also suffers from dataset size limitations, making it unideal for larger businesses. It more than makes up for this, however, with its Rules Engine feature that allows for automatic data filtering during collection & segmentation.

Overall, a solid choice for anyone from individuals to medium-sized enterprises.

Takeaways

Customer intelligence can be tricky to get to grips with, but once you’re more familiar, you’ll have access to a wealth of customer information.

Ultimately, customer intelligence in e-commerce is driven by the need to personalize and customize the user experience, lest you be left behind by others who do this more effectively. It’s one thing to know what your data says you need to do and another to actually put that into action.

Fortunately, we’ve recently published an article on that very topic, so check out our complete guide to e-commerce personalization next, so you can put your customer intelligence insights into action!

Customer Feedback Analysis: Analyzing & Understanding What Your Customers Are Saying

Posted on Feb 17, 2023Feb 15, 2023 by Emily Louise Spencer

Customer feedback is a treasure trove of information with a wealth of insights to offer businesses seeking to improve products and boost revenue. But having feedback is not enough on its own. To understand what customers tell you, employing customer feedback analysis is a must, especially when done at scale. Learn what it means and how to do so successfully.

One of the most impactful approaches you can take to help your business grow is to become a customer-centric company.

Because not only do customer-centric companies win over the loyalty of their audience for the long term, but they also see the financial benefit of doing so, being 60% more profitable than their competitors.

In order to truly center your business around your customer, you’ll need to create a culture that commits to listening and catering to the customer’s opinions, thoughts, and needs. And there is no better tool for this than customer feedback analysis.

By allowing you to systematically and regularly tap into your customers’ opinions, customer feedback analysis enables you to make smarter, more strategic business decisions that help you retain a highly loyal customer base.

In this article, we review everything you need to know about how to successfully implement customer feedback analysis in order to improve business outcomes.

What is customer feedback analysis?

To understand what customer feedback analysis is and why it’s so important to modern businesses, let’s break the term down into its parts.

The customer part of customer feedback analysis

The customer, or the individual or entity that makes a purchase from your company, is absolutely key to your business’s success.

As much effort as we may spend in building audiences, courting prospects, and attracting users, it is ultimately the paying customer who directly contributes to your bottom line.

In understanding your customers, their needs, their pain points, and their opinions of your brand and your product, you’ll be able to make strategic decisions to improve e-commerce customer experience and customer satisfaction, and boost revenue as a result.

The feedback part of customer satisfaction analysis

Customer feedback is all of the qualitative and quantitative data you receive from your customers that reflect their opinions, preferences, and concerns as they relate to your industry, company, and product.

You can collect customer feedback through a number of channels, including but not limited to:

Emails
Surveys
Customer service portals
Social media messages and comments
Third-party review websites

Feedback may be solicited or unsolicited and can come in several forms, including written comments as well as scores and ratings.

The analysis part of customer feedback analysis

Customer feedback is a form of raw data that contains a multitude of valuable insights for your company.

It is the process of analysis that helps you take this raw data, structure it, and explore it in order to find patterns, identify problems, and extract actionable insights that you can implement in order to make improvements to your product and processes.

???? For more analysis examples, check out our blogs on product performance analysis and competitive product analysis.

Why should you analyze customer feedback?

Satisfied customers are the lifeblood of a successful business.

By creating a superior, satisfying customer experience, you are motivating customers to take a number of desirable actions, including

Paying more.
Recommending your business/products to others.
And coming back for repeat purchases.

Indeed, 86% of customers are willing to pay up to 16% more for a superior customer experience. Further, a better retention rate is paramount for businesses seeking growth as existing customers are easier to sell to and are likely to pay more for new products than first-time customers.

Customer feedback analysis holds the key to creating an exceptional customer experience that keeps your customers coming back for more.

By collecting, analyzing, and acting on the insights you find in customer feedback, you will be able to give customers what they want, address any problems, and gain a reputation as a customer-centric company like massively popular and successful brands.

How do you analyze customer feedback?

While analyzing customer feedback isn’t as simple as throwing numbers at a computer, it doesn’t have to be overly complicated.

In the next section, we break the process into five steps. And when working with dedicated customer feedback analysis tools, you can even skip most of them.

Step 1: Collecting customer feedback

The first step of customer feedback analysis is collecting customer feedback. Here are a few important sources of customer feedback.

Customer calls, chats, and helpdesk emails

This unsolicited form of customer feedback is incredibly valuable, as it represents problems and concerns that customers feel strongly enough about to have actively contacted your company to discuss.

For this reason, it is best practice to automate a system in which helpdesk emails and customer service call transcripts are automatically added to a feedback database.

In this chatbot conversation from TheKnowledgeGym, a customer shares important feedback, including how they found a brand, how often they use its product, how they use the product, and more.

Surveys

There are a number of customer satisfaction surveys that are commonly used to collect customer feedback. These include:

Net Promoter Score (NPS) – This metric measures how likely customers are to recommend your company to a friend or family member.
Customer Satisfaction Score (CSAT) – This metric measures customer satisfaction by directly asking how satisfied customers are with a product, service, or customer service interaction.
Customer Effort Score (CES) – This metric measures how hard or easy a customer finds a product or service to use.

You can solicit answers to these surveys through a number of channels, including your website, your mobile app, text message, and email. Individually – and even more so collectively – these surveys can all reveal highly valuable data about customer satisfaction and loyalty.

Here, clothing company Hem & Stitch uses an NPS survey to measure customer loyalty.

Social media comments and messages

Your social media is a fantastic source of customer feedback, with many users these days preferring to reach out to a company with a problem or question over Twitter, Facebook, or Instagram rather than through traditional customer service channels.

Like with customer calls and emails, it is recommended to automatically forward communication received over social media to your feedback database.

However, not all mentions of you on social media will occur on your account, and not all will tag you. For example, a customer might tweet their opinion about your product on their own personal Twitter account without using any tags or hashtags to alert you to the mention.

For this reason, it’s wise to engage in an ongoing practice of social listening, or actively monitoring social media in order to find mentions of your brand, even if it’s untagged.

On Twitter, users are regularly mentioning and posting feedback about brands and products without tagging them.

Online reviews

A final source of customer feedback that we highly recommend tapping into is the online review, a go-to place for customers to share their opinions. You may be able to find reviews of your company in a number of places including:

Through your own website.
Through general review websites like Yelp and Google Reviews.
Through industry-specific review websites like MakeupAlley or Angi.
On the app store if you have a mobile app.
Reviews on marketplaces such as Amazon, Etsy, and eBay.

A customer shares a wealth of important feedback about a product’s color, quality, and sizing through an Amazon review.

Step 2: Structure raw data

Once you have collected customer feedback data, you’ll be the proud owner of a giant mountain of unstructured data. In order to be able to learn something from this information, you’ll have to find a way to organize and categorize it into something more useful.

First, we recommend going over the data to identify important keywords such as product names, locations, features, etc. Then, you’ll be able to organize the data into categories, which will allow you to identify trends in the data.

Great, now we have neat and ready-to-analyze data. What’s next?

A great way to draw insights from your data is to categorize it. There are endless ways to do that, so it’s important to know what you’re looking for before starting.

Here are some ideas to get you inspired:

Topic – If you seek feedback on a specific topic, such as price, delivery speed, or sizing, it is best to categorize data by topic.

Sentiment – An approach that is often helpful is to split feedback up by whether it is positive, neutral, or negative. Sentiment analysis is one of the best ways to keep informed on how your product is doing.

Type of feedback – Another option is to categorize based on what the feedback is aiming to do. This can be customers that complain, suggest a new product, request a new color, etc.

Priority – Some feedback may point to something that needs urgent fixing, like a bug. This is why it can be helpful to organize by priority ranging from less to more urgent.

Customer type – You may find useful insights by splitting up feedback by customer type, including paying, trial, non-paying, premium, or VIP/rewards status.

Location – If your company has multiple locations or is international, you can categorize feedback by city, state, or country.
Product – If you have multiple products, it may be helpful to group feedback by which product it pertains to.

Structuring raw data is something that can be done manually.

However, not only is it incredibly time-consuming, but error-prone humans are liable to make mistakes every now and then.

Instead, most companies will rely on some form of technology for this step, whether it’s simpler Excel sheets or more sophisticated dedicated data structuring software.

Step 3: Identifying insightful data

The next step is to separate the insightful data – or new data that either confirms a hypothesis you had or contradicts your prior working assumptions – from non-insightful data, which is data that points to an issue you already knew about.

When determining whether or not data is insightful, ask yourself:

Does this data validate a hypothesis we had?
Can this data motivate us to think more critically?
Can this data lead us to take action to make an improvement?
Can this data reshape our strategies?

For the rest of the steps of customer feedback analysis, you can set aside the non-insightful data to focus exclusively on the insightful data.

Step 4: Write a customer feedback analysis report

A customer feedback analysis report is a document summarizing the findings of your customer feedback analysis and laying out recommendations for how to follow up.

How do you write a customer feedback analysis report? We recommend including the following five key sections.

???? Background – Discuss your company’s current state and why you are engaging in customer feedback analysis. Lay out any hypotheses you may have about what you might find in the data. Mention any relevant changes that the company has made recently.

???? Methodology – Explain how you conducted your customer feedback analysis. Review what sources of feedback you used, how you structured your raw data, what tools you used, what your sample size was, and any other relevant details.

???? Results – Display your data in as easy-to-understand a way as possible. Quantitative data can be displayed through graphs and charts. For qualitative data, you may want to choose select quotes to display that demonstrate relevant trends in the data.

???? Analysis – Discuss the insights that you found in the data. What problems came up, if any? What new features or products did your customers request? What surprised you? Were your hypotheses confirmed or contradicted?

???? Recommendations – Make your recommendations for the next steps. Based on the insights you found, what actions can your company take in order to improve business outcomes?

Step 5: Act on insights

It’s important to emphasize that customer feedback analysis is only the beginning of a process of ongoing improvement.

Feedback analysis can serve as an arrow pointing the way in a direction that your company can go in order to improve customer satisfaction and experience.

It’s up to you to follow the arrow and fix the problems, create new products, and make the tweaks your customers ask for.

Example of customer feedback analysis

Let’s say you own a start-up that built an app customers can use in order to identify problems in their house plants, such as pests, underwatering, and insufficient sunlight. One of your company’s values is being data-driven, and you aim to become the go-to plant diagnosis app by becoming customer-centric and offering the features customers will prefer most. For this reason, you have decided to implement an ongoing customer feedback analysis process.

You choose to collect customer feedback through several channels including:

App store reviews.
NPS, CSAT, and CES surveys.
Social media mentions.
Customer calls, emails, and chatbot messages.

Once you gather a sufficient sample size of customer data, your business decides to categorize it by topic into the following groups:

Feedback about pricing.
App bugs.
Feature requests.

Once you’ve removed non-insightful data and used an AI tool to group your insightful data into the relevant categories, your business intelligence team generates the following important insights from your data:

Trial users aren’t converting into paid users because they feel that the monthly price of the app is too high.
Customers are expressing interest in a feature that allows them to browse photos of other plants with the same issue as theirs.

Based on these insights and your BI team’s customer feedback analysis report, your company has decided to lower the monthly subscription fee by 10% and begin work on building the new feature your customers asked for.

Customer feedback analysis and acting on it isn’t some pie-in-the-sky process. It’s something you can do, and your competitors are most likely already doing it.

Customer feedback analysis tools

As we mentioned above, manually conducting customer feedback analysis can be challenging.

The manpower required to go through hundreds or thousands of comments, transcripts, and messages is tremendous, requiring more resources and time than many companies have to spare.

To help you be more efficient and accurate in your customer feedback analysis, here are some tools worth looking into.

Revuze

Revuze is a powerful insights tool that uses AI technology in order to automatically collect unstructured customer feedback data from multiple sources, structure it, and organize it into granular, actionable insights.

Revuze’s machine learning algorithm operates independently to discover relevant topics and trends within the data and analyze sentiment in order to accurately report on customer satisfaction.

This is a great all-in-one customer feedback analysis solution perfect for implementing a more efficient, scalable customer feedback analysis strategy than what you’d be able to achieve by hand.

Typeform

Typeform is an online survey creator known for being highly intuitive and user-friendly. This tool is great for building and sending out customer satisfaction surveys in order to collect feedback to analyze.

Power BI

Power BI is Microsoft’s interactive data visualization software that can help you create reports and model the customer feedback data you collect.

By helping give you a clearer, more visual picture of your data, Power BI can help you better understand it in order to reach valuable insights.

What comes after analyzing customer feedback?

In today’s consumer landscape, it takes more than a great product to win market share.

The modern consumer seeks an exceptional customer experience from brands that makes them feel seen and understood.

In order to satisfy customers, win their loyalty, and gain a brand reputation as a company that puts customers first, you need to tune into what customers are saying about you, what they want from you, and what changes they’re asking for.

Customer feedback analysis is an incredibly powerful process that allows you to keep your finger on your customers’ pulse in order to remain on top of things and continually deliver a delightful experience.

Best of all? With the right tools, you can automate and optimize these workflows so they can become an integral part of your process without eating up all of your time.

Analyzing your customers’ feedback is a never-ending process. One way to gain insights into the minds of your customers is by conducting focus groups. But to make the most out of them, you’ve got to ask the right questions. Find out more in our blog on the topic.

53 Focus Group Questions to Ask for Better Insights

Posted on Jan 31, 2023May 7, 2024 by Emily Louise Spencer

Focus group questions allow discussion to be used as a means of gaining detailed qualitative information. From issues regarding PR to product specifications, nothing brings more information than an in-depth, interactive conversation. Find out below how to ask the right focus group questions to understand the market better.

Focus groups can be highly useful, but too often, you won’t get the information that you need from them. They have disadvantages; whether that’s due to misinterpretations, misunderstandings, or simply recording information the wrong way, you can end up more confused than when you started.

Focus group questions can lead to confusing & conflicting information if not asked in the correct manner.

The key to great focus groups appears before you’ve even opened your mouth, and that’s writing excellent focus group questions.

In this piece, we’re going to help you nail this aspect. We’ll talk a bit about focus groups, and discuss use cases, but – more importantly – we’ll provide you with dozens of amazing focus group questions that will help you refine your market research and understand what your customers want and need.

Sometimes, it’s not what you say but how you say it that makes the difference.

What are the four types of focus group questions?

Focus groups function similarly to any conversation or debate you might have. You need to break the ice and introduce the main topics in a way that is easy to understand.

There are four types of focus group questions you can ask, and these should be used no matter the topic that you’re exploring.

These consist of:

An introduction.
A prompt.
A discussion.
And a way to wrap up the discussion without leaving anything unsaid.

In that way, focus groups are similar to an essay or article in structure.

Let’s take a look at the four types in more depth and learn why they’re necessary.

Introductory focus group questions

Introductory questions are the foundations upon which your group will form their discussion.

Essentially, introductory questions set the stage for what is to come next. They’re ideal for ensuring that everyone is on the same page, but more importantly, they allow the group members to relate to one another.

They should be simple and easy to answer, as it can prove difficult for participants to answer fully and honestly to strangers.

Introductory questions also serve as a means to gauge everyone’s experiences with the topic that you will be discussing. Someone who’s been interacting with you on a monthly basis will have more insight on the topic compared to someone who does so once in a blue moon.

Some examples of introductory questions might be:

❔ “Welcome to our focus group. Today, we’ll be discussing [topic]. Could each of you please share a story about how you’ve interacted with [topic] recently?”

❔ “Hello, and welcome to our focus group. How did everyone find the journey here?”

❔ “We’re [brand], and today we’re leading this focus group. Can you tell me when you last bought something from us?”

In each of the above examples, a context is given, and a simple question is asked. While these might seem irrelevant to the larger discussion, you should always ensure that the results are noted down for context.

Information is power.

Exploratory focus group questions

These are the sparks that will light a fire in your participants.

Exploratory questions are always directly linked to the topic that you intend to gather information on and are designed to provoke discussion among the group.

These questions should be carefully designed with customer personas in mind so as to steer the conversation in the direction that you desire.

Each exploratory question should be specific enough to determine what your group will discuss but vague enough so that there isn’t a straightforward and easy answer.

While that might sound paradoxical, remember your aim is to get your participants talking, not simply to get a yes or no answer.

Some exploratory questions that you might ask are:

❔ “Could you give me an example of a bad experience you had with us?”

❔ “If you could choose {this feature} or {that feature} when looking for product features, which would you pick and why?”

❔ “What alternative features do you think we should include with our product?”

Follow-up focus group questions

Follow-up questions happen in the discussion period and are intrinsically linked to exploratory questions. They’ll always come after an exploratory question has been asked and are related to that specific discussion.

Because of this, some analysts might place them within the same category. However, there are distinct differences between the two.

The key difference is their focus. Exploratory questions are vague. They’re designed to provoke a whole host of potential opinions from coming forth.

Follow-up questions are precisely the opposite. They’re designed to get pinpoint accurate information on how your participants feel, think, and might act.

Some examples of follow-up questions are:

❔ “You said that you dislike this feature. Why specifically would you say that?”

❔ “You’ve pointed out that there isn’t much flexibility. How would you go about improving that if you were the designer?”

❔ “When you use this item, you said you felt frustrated. Could you tell me a little bit more about what frustrates you about it?”

In each of the above examples, context is taken from the previous discussion and used to form the question.

It can be very tricky to write follow-up questions in advance since they’re so intrinsically linked to how the discussion evolves. Humans are unpredictable factors, and these discussions don’t always go in a direction that you anticipate.

After all, if you could perfectly predict what people were going to say, what would be the point of a focus group?

The key to forming good follow-up questions is thinking on your feet. It’s not easy, but if you know the topic well, you should have an idea of what information you need and how to aim these questions correctly.

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Exit focus group questions

Exit questions are exactly what they say on the tin, questions designed to end the discussion and wrap up the focus group.

While it might seem easy, there are several factors that you should keep in mind.

Not everyone may have gotten to air their opinion fully over the course of the discussion.
Someone may want to mention something tangentially related.
Even with hours and hours, you’ll never be able to predict every facet of the topic that someone may want to mention.

Exit questions are designed to solve these issues. Essentially, their purpose is to ensure that you get all of the information you can possibly get out of your focus group.

Let’s take a look at some examples:

❔ “Thank you for your time. Before we wrap up, is there anything that you’d like to mention?”

❔ “Do any of you think there’s something that we missed in our discussion today?”

❔ “If we were to cover other factors involved, which do you think would be most relevant to the discussion we’ve had today?”

Each of these is short and to the point, but also open to interpretation. This way, any information not already given can be obtained with ease.

Are you ready for even more focus group questions?

Focus group questions examples to focus your participants

Describing the four stages of questions in an abstract sense is all well and good, but how do you make it relevant to your topic?

Don’t fret, for we’re here to provide you with some fantastic examples of focus group questions. Each of the following sections will contain several questions on a specific topic, as well as some general advice on how to use them.

Remember, though, context is key! Be sure to mold the questions to fit your business, your products & services, and your way of doing things.

Focus group questions for new products

❔ “Were we to create an updated version of [product], what features would you like to see added?”

Features are the backbone of most products, and unfortunately, you can’t usually put them all into a single package. This is especially true of physical products but applies to software too.

When asking this question, you gain insight into what features that were left off would be of use to your customers, and by delving deeper with follow-up questions, you can find out why. By using this information, you can make your product better in the next iteration.

❔ “Who or what product do you think would rival any new launch we put out?”

There’s no use in launching a brand-new updated product if your competition surpasses it a week later. Knowing who and what your customers would view as competition lets you know what you have to account for in your marketing and placement strategies.

Remember, customer perception doesn’t always equal reality. You might judge your competition by cold, hard facts, but the general public won’t have access to all your information. It’s entirely possible for an inferior product to beat you out.

❔ “Would you be interested in beta testing the new version of [product]?”

Not only will the use of this question potentially gain you willing testers that are enthusiastic about your latest releases, but it allows you to see whether your customers are interested in testing products before launch and/or becoming involved in the design process.

Focus group questions for marketing

❔ “How did you first come across us?”

If you know where your marketing strategies are seeing the most engagement, you’ll be able to judge how well they’re doing.

This question is most often used in surveys where you can judge proportions from a high number of responses but is useful in focus groups too.

The discussion that comes with a focus group can reveal not only where customers first encountered you, but what their thought processes were afterward.

❔ “When you shop online for [product], what sites do you generally use?”

While not directly related to your brand, knowing where your customers would look to find a specific product or service tells you where you should prioritize your efforts.

To use a rather extreme analogy, there’s no use putting up a great big billboard in the middle of New York if your customer base is located in Los Angeles.

❔ “What methods of communication with us do you prefer?”

In the 21st century, there are dozens of different ways in which you can communicate with others.

The problem is, different demographics have preferences for different means, so which do you choose? Well, you ask.

Your customer will generally have qualities in common with each other, and one of those is communication methods. You’re likely to have more than one demographic of customers, so expect different answers here depending on who you ask.

❔ “How often would you prefer for us to communicate with you?”

If you’re anything like the average person, you probably get newsletters & similar email marketing materials that you subscribed to but don’t actually read.

While it’s a harmless nuisance to most email users, what you might not know is that unopened newsletters can actually harm your credibility as an email sender! Oh no!

By matching your customers’ schedules on when they prefer to receive communications from you, you can ensure that they’re more likely to actually open and read them as opposed to simply deleting them, or worse, sending you to the spam folder.

While a focus group is a great start to understanding your customers’ preferences, creating an email preference center where each subscriber can tell you exactly how they want you to communicate with them is a must.

❔ “Would you consider our advertisements intrusive, or say that they know too much? If so, where have you experienced this?”

When dealing with personalization, there’s a fine line between being relevant and coming across as knowing a scary amount of details about you. Computers, which we rely on for advertisement algorithms, aren’t the best at knowing where the line is; bless them.

A key factor in e-commerce is product recommendation, however, you need to balance that against coming across too strongly. Once you’ve identified the areas in which your advertisements put customers off, you can reassess the methods you use in order to lessen further damage.

Customer experience

❔ “How has your opinion of us shifted in the past X amount of months/years? Why would you say that is?”

Customer experience isn’t static, and knowing how opinions are shifting can help you decide whether your CX strategies are working or not.

One thing to keep in mind when asking this question is that time periods and the experiences tied to them are highly contextual, and the specific events happening around that time need to be taken into account.

❔ “Do you use our products more than you did in the past? Or would you say your usage is decreasing?”

Customer interactions are the basis of customer experience. You can’t say you’ve experienced something if all you did was observe it from afar, after all.

This question aims to judge how these customer interactions are progressing and whether or not you need to make changes to your strategies in order to retain customers.

Once again, this question is highly contextual. As the worldwide COVID-19 restrictions come to an end, a disposable mask manufacturer would expect purchases to decrease. This wouldn’t be a CX red flag for them, as the underlying reasons behind the drop aren’t within their control.

❔ “Are there any particularly positive experiences you’ve had with us? What made them stand out?”

When dealing with customers, it’s the standout experiences that affect opinions more than most.

Let’s say you’ve had a particularly rough day, and the cafe you go to is busy. You don’t expect much, but the person behind the counter notices your bad mood and tries to cheer you up.

You’d remember that more than if they simply gave you your order and waved you away, right?

Standout experiences let you know when your brand went the extra mile and can give you a blueprint as to how to perform brilliant customer service in the future.

❔ “Are there any particularly negative experiences you’ve had with us? What made them stand out?”

On the other hand, there are bad experiences that stand out too.

To use the analogy from above, you’ve had a terrible day, and when you drop by the cafe, your coffee is cold! “That’s it,” you say to yourself. “I’m never coming here again!”

While not exactly a fair and rational judgment, it’s nevertheless the thought process that many of your customers (or ex-customers?) would follow if they had a particularly bad experience with you.

It’s been proven that negative interactions are far more impactful on a person’s feelings than positive ones, and one bad experience can override dozens prior.

These experiences provide a blueprint of what not to do, essentially, as they’re the events that stuck in the minds of your participants as particularly bad. While it’s unfortunate that they had these experiences in the first place, you can turn them into teaching moments to ensure that they aren’t repeated.

❔ “From your experiences, can you say what you expect when purchasing something from us?”

Experiences create expectations. That’s true whether you’re talking about business or baseball, and the experiences that your customers have with you will shape what they will come to expect from their interactions.

Sometimes these experiences are controllable and influenceable, sometimes not. The key is to identify which parts of said experiences & expectations you can replicate and make a part of your repertoire.

Focus group questions for customer perception

❔ “Would you recommend our brand to others? Why/why not?”

This question lets you get to grips with one of the basic questions of customer perception, whether or not you’re a brand to recommend to others.

While it’s not absolutely essential in business to have customer advocacy, it is a huge boost to your sales ability without you having to spend a penny.

❔ “What made you choose us over the alternatives?”

The root differences between you and your competition reveal a lot about how your brand is perceived. Knowing what you do better than others allows you to maintain an edge, whether that’s an advertisement, product features, or simple availability.

❔ “What would make you choose an alternative over us?”

On the other hand, there are always things that your competition will have the edge in. By identifying these, you can factor them into your product strategy and hopefully overcome any weaknesses it possesses.

❔ “Where would you expect to find our products?”

Are you a part of the eye-level shelf where the premium brands lie or are you on the bottom shelf with the discounts? Are you found solely in specialized stores, or could you be found in a supermarket?

When you know exactly where your customers expect to find you, it can tell you a lot about how they view you.

❔ “When you compare [product] to the previous version, how well do you think we incorporated customer wants & needs?”

This one is applicable to all types of products barring those expected to last a lifetime but is mostly aimed at those with short lifetimes.

Essentially what you’re asking is, “do your customers feel heard?” which has been rated as one of the most essential qualities for a brand to possess.

Focus group questions for competitor research

❔ “If you intend to buy [product], what brand comes to mind besides us?”

When you think of a certain product, there are usually go-to brands that you’ll look for, no?

In most cases, there is more than one brand that fits the bill. Knowing who your customers think of besides you when looking for a certain product allows you to identify your biggest rivals on a practical level.

❔ “Who do you see as our biggest rival? The Xbox to our Playstation, if you will?”

Sometimes you may have a direct competitor, and sometimes not. It’s always useful to see who your customer base sees as an alternative, even if, in practice, they might not purchase from them due to said rivalry.

❔ “Is there any situation where you’d prefer our competitor’s product to ours? Why is that?”

Knowing what your competition is doing is important. Knowing what they’re doing that’s better than what you do is even more so.

Specifics are key here. You should ask your participants to provide information on features, availability, etc., in order to judge these situations and how you might turn them to your advantage.

❔ “What would you recommend we do to become more useful/enjoyable than [competitor]?”

Specifics are good. By narrowing the field to a single competitor, you allow specific strengths of theirs to come to light, ones which you can learn from.

When you delve further into this topic, you can use follow-up questions to find out why these competitors are preferred to you.

❔ “In what areas does [product] succeed where its competitors fail?”

In the world of product design, it’s often more important to be better than the other option than it is to simply be good. By finding out where you stand out, you can ensure that future versions maintain and amplify these qualities to retain customers.

Focus group questions for branding

❔ “When you see our brand, what immediately springs to mind?”

Knowing what gut reactions customers have to your brand is important. These feelings are the root motivations behind every interaction that they will ever have with you. Knowing what customers feel will allow you to shape the way you interact with them in the future.

❔ “How much more would you be willing to pay for our products over an alternative?”

Brand equity is the ability to charge more for products with your logo on them. It’s a form of trust and it shows that customers value your brand highly.

By asking this question, you’re able to both measure your brand’s value and quantify it with a numerical value (often a percentage).

❔ “What kind of reputation does our brand have when it comes to X?”

Of course, a brand can have a good reputation overall but a bad reputation when it comes to certain practices.

Knowing precisely how you are viewed in certain circles is key to improving your practices, as well as maintaining the ones in which you are held in high regard.

❔ “Can you name a few positive aspects of our brand?”

Another vague question, this one allows you to open the topic to any and all answers, not simply the ones that you anticipated.

By asking about the positive aspects of your brand, you’re going to know what to continue doing in order to keep customers loyal.

❔ “Can you name a few negative aspects of our brand?”

On the flip side, there are going to be negative aspects, no matter how hard you try to purge them.

By knowing your weaknesses, you can improve upon them. Remember, these are merely the negative aspects in the minds of customers and can be inaccurate!

If that’s the case, you should look to spreading awareness about your practices rather than improving them.

Focus group questions for industry trends

❔ “Have you noticed any new trends in our industry recently?”

While you’re certainly going to want to keep on top of industry trends, there’s always a chance that you’ll miss something or simply not be able to see it because of perspective bias.

Not only can your focus group identify trends that you may have missed, but you’ll also get information on their perspective about what’s going on in the industry and what they expect to change in the coming months.

❔ “What sources do you get your industry news from?”

When you’ve identified where your customers obtain their news, you can look to involve yourself with these sources further.

Whether that’s interviews, collaborations, etc., becoming more visible to your target audience should be your aim.

❔ “Is there anything in our industry that you think is lacking?”

Industries are made up of businesses, which are made up of people, and people miss things sometimes.

There’s every chance that customers are looking for something but haven’t been able to find it because it simply doesn’t exist in the industry yet. If you’re the one who asks them about it first, you’re the one who gets a leg up on the competition.

❔ “Are there any individuals or publications that you see as industry experts and would trust their opinion?”

Whatever the industry, there are always those big-name sources or people with lots of letters after their names that are trusted more than anyone else.

Why? Well, mostly it’s because they’re seen as knowing what’s up. They can tell the good stuff from the bad, the value-for-your-money from the ripoffs.

Whether these big names are actually experts, that’s largely irrelevant. The important thing is that your customer base will think they are, so it’s best to either get them on your side or avoid their wrath.

❔ “When you’re keeping up with our industry, what type of content do you prefer to engage with?”

Knowing what type of content your customers engage with is just as important as knowing where they look to obtain it.

Short-form vs. long-form, essays vs. articles, technical specifications vs. overall statistics, all of these are different forms of content that say and do different things. If you know which of these is preferred, you can keep your industry engagement in those forms so as to appeal to your customer base.

You’ll likely have more than one type of customer, which means you’ll have more than one type of content that is preferred.

Focus group questions for positive aspects of your products

❔ “When using [product], what are you always satisfied with?”

By using the term “always,” you ensure that you receive the most positive aspects of your product. You can also use this question as a starting point to rank product features and aspects, asking when they are “mostly satisfied” and “usually satisfied.”

❔ “What situation would make you reach for [product], as opposed to an alternative?”

Asking for the motivations behind the purchase will grant you insight into customers’ thought processes. The strengths that are the root causes of their purchase are what you should aim to obtain, whatever those may be.

❔ “What made you decide to purchase [product]?”

This question allows for any motivation behind the purchase to shine through, even some that you may not expect. Sometimes products have uses that even the creators didn’t think of!

❔ “When you first saw [product], what stood out to you?”

When looking through the eyes of someone unfamiliar with a product, the first things they see will shape their experiences with it. Ensuring that you know which features are the most prominent will allow you to influence that first encounter in a positive way.

❔ “What features of [product] are the most useful to you?

Product purchases are driven by their usefulness. If you know what features are essential, you can ensure that those are preserved and advertised further in the future.

Conducting a focus group vs. a survey

A focus group is a small group of people who are brought in and asked questions about their experiences with your brand. You ask them questions, they answer, and you analyze the results.

So what makes this any different from customer satisfaction surveys or other forms of collecting feedback? Why should I bother bringing a group of people into a room together when I can just as easily send out emails?

The answer to that is simple, and it lies in group dynamics.

You see, in a focus group, the participants don’t just rattle off answers like a computer. They talk about them with others and can come to conclusions that an individual couldn’t reach alone.

Ever had a feeling that you needed to put into words but never could, only for someone else to describe it perfectly? That’s the type of interaction that can happen in focus groups.

While surveys can give clean, easy-to-analyze answers, they often lack the depth that focus groups can provide.

If you’re looking to the future and offering “what-if” scenarios, a focus group’s in-depth discussion will give you a much better idea of your customers’ responses to those scenarios than surveys ever could.

There’s also the fact that focus groups usually have a moderator, someone who represents the company and will be actively involved in the group.

They’ll ask the questions, set the stage, and keep things on track. You can think of them as being akin to a courtroom judge, only not as likely to bang on a gavel.

Why are focus groups useful?

So, focus groups can give you in-depth information. But how can they be used? What information can they help you find?

Well, as mentioned before, the key to focus groups is discussion.

Focus groups are all about diving into the minds of your customers, about understanding what they want, what they need, and what drives them.

Unique perspectives coming together

Different people will have different perspectives depending on their situations in life. That’s true in any regard, but especially important with respect to focus groups.

You see, different perspectives combined will give you a much clearer picture of the situation you’re in than simply seeing from those angles independently.

Thank you to our friends at CCRC for showing this concept perfectly. Their VIEWPOINTS podcast exemplifies this concept, bringing different perspectives togetherto fully explore topics.

Combined perspectives exemplify the saying “more than the sum of their parts.”

Non-verbal information

There’s a lot of information in what people say, but even more information in how they say it.

Take, for example, sarcasm. It’s hard to detect in writing, and might even cause you to think that a person believes the opposite of what they actually do.

There’s also tone, body language, and a whole host of other indicators that can tell you a lot about how a person feels. Using cameras to capture these provides you with an easily accessible, accurate idea of what’s going on.

The more strongly you feel about something, the more it shows up in how you present your case. You can say that you dislike two individual aspects or features of a product, but if your tone is clearly stronger when speaking about one of those, it’s obvious which one you hate more.

All in all, when done right, focus groups can give you a lot more information than any text-based source of information.

Interactive questioning

When answering a survey, you’ll often put down the first thing that comes to mind when answering a question.

After all, most people’s aims when completing a survey are to get it done, not to think it over for any great length of time.

The facet that puts focus groups in a different light from other methods is the fact that you can interact and respond to the answers that are given to you. This provides more information, more depth, and a greater understanding of what the person in question is thinking.

Surveys, questionnaires, and ratings are all well and good, but nothing gets to the heart of the matter like a conversation.

Which focus group type should you pick?

It might not come as a surprise that there are multiple types of focus groups. These largely perform the same function but differ slightly in their methods.

Let’s take a look at the most common types.

Single-focus

The single-focus group is the traditional focus group, where a group of participants actively discuss topics when prompted by a moderator.

There is no split in the group, no division that sets participants apart from each other, and as such, all participants are treated as equals.

Two-way

In a two-way focus group, you have two separate groups. One discusses the topic, while the other observes the discussion. Following that, the second group conducts their own discussion.

The key to this type of focus group is that seeing the way the first group interacts with the topics can alter the way in which the second group thinks, opening them up to new ideas and perspectives without introducing a direct form of conflict.

Two-way focus groups are useful when you have a split customer base, where two or more demographics might think about your brand or product differently.

Dueling moderators

So, we get the moderators to face off with pistols at dawn, right?!

Hehe, no, that’s not the meaning of the word duel that happens here, but the general gist is the same.

In a dueling moderators focus group, you have two moderators who take specific sides in an issue that’s being investigated in order to prompt discussion of opposing viewpoints.

These types of focus groups are intended to investigate how an opposing viewpoint might affect customers’ opinions. You can think of it as playing devil’s advocate, whereby conflict is purposefully used to gain more in-depth information than you’d otherwise get.

After all, if everyone in the group agrees on a certain topic, you’re unlikely to delve further.

Wrapping Up

In the end, a focus group is about as useful as you make it.

The way you deal with the information that’s given to you by your focus group is just as, if not more important, than what you obtain from it. That’s why having a good brand strategy is crucial to modern business.

Your brand strategy should revolve around your customers – what they want, think, say, and do. Customers are the lifeblood that drives business, and without them, your brand will falter.

Great focus group questions can assist you significantly in creating a customer-centric brand strategy, using the knowledge you’ve gained to become relatable and reliable, and creating a brand identity that truly stands out.

You can find out more about brand strategy and innovation in our guide here.

How Brand Equity Can Positively Impact Your Business and Drive Growth

Posted on Dec 23, 2022Dec 23, 2022 by Emily Louise Spencer

Brand equity is the ability to be recognized and acknowledged as more than simply another face in the crowd. Some brands have it, and even fewer know how to build it. With time and effort, you can learn how to become a master of brand equity, similar to giants like Apple & Microsoft. Your Journey Starts Here.

Brand equity is a great tool to have in today’s ever-changing competitive markets.

The main benefit of having strong brand equity is that consumers will continue considering your products even when the cost is high.

Consumers perceive them as having innate value or quality solely because they associate it with your brand.

Being the top brand whenever consumers think of your market sector is the ideal position, but it’s not quite that straightforward.

I’m sure you’ve heard of the Pepsi vs. Coca-Cola, Apple vs. Microsoft feuds, etc. No one side can claim to truly be at the top of the market, despite all having strong brand equity.

Still, it’s a great position to be in.

In this guide, we’ll take you through the steps of creating strong brand equity, allowing you to dominate the conversation.

Let’s begin with the basics.

What is brand equity?

The definition of brand equity is a brand’s perceived value according to consumers. It can also be defined as the level of positive feelings that consumers have about a brand when compared to others in the same market space.

For example, if you order a rum and coke at a bar, you might be asked if Pepsi is okay. Some would answer yes, some no — that’s brand equity. If you buy a new gaming console and are dead set on having a PlayStation? You guessed it, that’s brand equity once again.

Some brands even dominate the market to the point where their name becomes the commonly used word for the item they produce.

Coca-Cola and Sellotape, for example, have become synonymous with their markets, despite being only one among dozens of brands. That’s strong brand equity at work.

If you have strong brand equity, you have a dedicated customer base and the option to charge premium prices.

When launching a new product, you’re guaranteed to get customers’ interest no matter what it is.

That said, you can’t coast by on brand equity alone. You must ensure your products are still top-quality and are within the market’s expectations. Microsoft learned that the hard way with Windows Vista and even Sony with the $600 PlayStation 3.

Keller’s brand equity model (aka brand equity pyramid model)

It’s worth mentioning the Keller Brand Equity model here. We won’t cover it in too much detail as that would be an article in and of itself, but let’s go over it to give you a general idea.

Keller’s brand equity pyramid model states that to gain strong brand equity, you need to shape the way your customers think and feel about you.

This starts at the base level with establishing your brand identity, then works its way up the pyramid by asking questions about what your brand might want to achieve.

It’s a step-by-step process that makes thinking about how you plan to position yourself and what feelings you want to evoke in your customers.

Each stage contains crucial components that evoke brand loyalty, so be sure to give it a look if you want to build your brand up to the next level.

The impact of brand equity on customer interactions

Now that you know what brand equity is, you might be asking yourself – “is it worth it?”

It’s true that building brand equity is a long and difficult process, but the results are well worth it.

Let’s take a look at some of the most tangible benefits, ones that you can point to when an investor asks why you’re putting so much effort into building your brand’s equity.

Customer spending

Brand equity impacts customer spending in two main ways.

First of all, if you have a high brand equity you can charge more for a product than you otherwise might. In fact, it’s often expected of you to do that. So much so consumers will become suspicious of a product line if you don’t.

When was the last time you saw a new iPhone going for less than $1,000? It would seem suspicious if it did, right? That’s Apple’s brand equity at work.

The second way in which customer spending is impacted is in making decisions about what to buy, especially in cases where a customer has little knowledge of the products in that market sector.

When a not technologically aligned parent decides to buy their child a simple phone for calls and texts, they’re left to rely on what little they know about a brand’s reputation.

What do they pick? An obscure and niche phone with specific uses? Or a well-known brand such as Apple or Samsung that they’ve probably heard of in passing? Probably the latter, right?

That’s brand equity in action.

Customer loyalty & advocacy

I’m sure you’ve come across a friend or acquaintance who buys only from a specific brand and won’t accept replacements. I mean, what other laptop could replace my trusty Macbook?

I’ve grown to love it and how it functions so much, that buying another Macbook when it’s time to replace it is a no-brainer. And there are millions like me.

That’s the epitome of customer loyalty, which is different from customer retention (coming up in a few paragraphs).

Customer advocacy is when that loyalty is taken one step further.

In essence, the customer becomes someone who will promote your brand to their friends and acquaintances, sometimes to the point of convincing them to switch brands.

Brand equity is of great help here. Not only do customers have a much easier time advocating for a brand that is well known, but the actual process of loyalty can be sped up tremendously.

Customer loyalty relies on great experiences, that’s true, but the opinions of others also matter. A HubSpot study on the topic found that 81% of consumers would rely on referrals from friends and family to choose & try a brand over an advertisement. This means that you’ll likely need a recommendation simply to get on the customer loyalty ladder in the first place!

Having strong brand equity means that people are more open to trusting you from the get-go, which makes climbing that ladder from customer to loyal customer to brand advocate that much quicker.

Customer retention

Your customer retention rates are one of the key metrics that help your business keep going. After all, if your customers leave unsatisfied and don’t return it’ll hurt your performance in the long run. A mere 5% increase in your retention rates can bring up to a 25% increase in profits!

Your churn rate, or the rate at which you lose customers over time, is another measure that’s similar to customer retention, just in the opposite direction.

It’s calculated by taking the number of customers who stopped interacting with you over a set period of time and dividing it by the number of customers you had at the start of the time period, then converting it into a percentage.

If your churn rate is high, your customer retention rate is low. Churn is often a more useful metric to look at than retention since it’s more directly comparable over different periods of time.

So, what does brand equity have to do with customer retention? After all, retention rates are solely about customer experience, right? Well, not entirely.

Research has shown that customers care about more than simply their experiences with you, with 80% being willing to change brands based on “a company’s social responsibility, inclusiveness, and/or environmental impact.” How does news on these topics spread? Via brand equity of course.

An apt metaphor to describe this would be meeting someone for the first time. Consider what would happen in the following circumstances.

You meet someone who is clearly in a bad mood, is rude to you, and snaps over minor things. You’d feel insulted, maybe even a little scared. You mark this person in your brain as bad news, and won’t want to deal with them again.

You then tell people that you know about this encounter, and how you felt. They have met this person before and reassure you that they aren’t normally like this, that it must have been a bad day or something similar.

From this, you decide to revise your opinion, and the next interaction you have with them is great! Clearly, it was just an off day and they’re not normally like this.

Having strong brand equity keeps customers coming back to you, even when they’ve had one bad experience.

It’s a sense of trust that the consumer population as a whole has with you, which means that individuals are willing to give you another shot even when they didn’t like what you had to offer the first time around.

Brand equity’s impact on your internal workings

Brand equity doesn’t just impact your dealings with customers, rather it shapes the very way your business will operate.

There are plenty of strategies and tactics that big brands with strong brand equity can use that smaller, less well-known ones cannot.

One example that springs to mind is the TV show Rick and Morty, which premiered its third season completely unannounced back in 2017.

Any other television show would spend time hyping up a new release, using advertisements, press releases, and other means to keep the buzz going.

Rick and Morty’s strong brand equity meant that it didn’t need to do that in order to keep viewers engaged.

There are more internal benefits to having strong brand equity than pickles and portals. Here are a few.

Stock prices

Stock prices are a great indicator of how your business is doing. Of course, this is only applicable if you actually have them up for sale, but let’s go over them briefly anyway. If this isn’t relevant to you, feel free to skip to the next section.

Strong brand equity will increase your stock prices, as it brings with it the expectation that the brand will continue to perform well. This in turn can also increase your brand equity in a feedback loop, though there is a limit to it.

So, why are stock prices important? Well, they’re an indicator of how well your brand is doing in its market, as well as a status symbol that can open doors to you that would otherwise be closed.

Higher stock prices are also attractive to investors who will continue to put funding into your brand if they think it’s going to give them a good return on investment.

Easy expansion of product lines

Creating new product lines is never easy, however with brand equity you can make the process a bit smoother.

Imagine a completely unknown business releasing a new line of soda drinks. They’re unusual flavors that haven’t really been tried before, and overall the public seems uncertain. Would you buy that drink, or would you avoid it for your regular soda?

Now, let’s flip the circumstances. Let’s say that Coca-Cola releases lots of new and unusual flavors. You know the brand, and know what they usually make is considered good quality, so you’re more likely than not to try it out at least once.

There is actually a great real-world example of this with Walkers, the UK-based potato chip company that regularly comes out with absurd flavors such as Breakfast, Fish & Chips, and even Squirrel! That’s not a joke, they actually did this.

Thanks to their strong brand equity, Walkers have been able to turn their experimental product lines into a game of sorts, with the most popular limited-time flavor being kept and turned into a regular product.

Not only did the public do their research for them, but they actively engaged with their product testing and expansion.

Imagine a no-name brand releasing these flavors, they’d likely be considered a joke. That’s what brand equity is truly capable of doing!

Greater influence on the market as a whole

Strong brand names bring with them a sense of dominance.

With strong brand equity, you’ll be able to negotiate with others from a position of power rather than equal footing or from a position of weakness.

With this position at the negotiating table comes opportunity. Partnerships, sponsorship deals, and collaborations, all these are possible only if you have a strong bargaining position.

You also open yourself up to greater investment potential and maybe even get better deals from your suppliers once you’ve made a name for yourself.

Five ways of measuring brand equity

Alas, measuring brand equity isn’t straightforward. There are many factors to consider, and which one you put weight on will depend on your business model, industry, etc.

Further, brand equity isn’t something you can measure in cold numbers. Still, there are a few tried and tested brand equity analytics you can use. We’ve laid out five of them below for your consideration.

Competitive analysis

Competitive metrics set you up against your competitors and see how you’re doing compared to them.

It’s a more aggressive form of analysis that takes their marketing campaigns and yours, sees their results, and tells you how well you’re doing in comparison. If your competitors are lagging, that means you’re leading, and vice-versa.

Other factors you can look at to compare brands include relative customer sentiment, acquisition rates, social media engagement, etc.

Remember though, just because your competitors are below now doesn’t mean you can relax. They’ll be looking for ways to improve just as you are, and if you stop to watch, you’ll be left behind!

Financial data

Another metric you can use to measure brand equity is financial data.

Market share, profits, revenues, prices – these all tie into how well your brand is doing, since more brand equity correlates with more customers. Compare these to those of previous years or quarters, and you’ll be able to measure brand equity data over time.

Customer lifetime value is another strong indicator.

Essentially it’s the value that a customer brings to you during the entirety of their total interactions with you.

CLV = Average purchase price Average purchase rate Average customer lifetime

Strong brand equity correlates to higher CLV since loyal customers will bring in more revenue for you overall. Conversely, if you need to keep re-attracting customers, it might end up lowering their overall value to you since acquiring a customer is more costly than keeping a current one.

Also worth mentioning is the cost of acquiring new customers, which is a huge indicator of brand equity.

If said cost is high, it means that it takes a lot of incentive for a consumer to switch from a competing brand to yours, meaning your brand equity is low, and you need to work on your image.

Brand awareness

Brand awareness is another abstract quality that’s hard to measure, but nevertheless, it’s very valuable when you’re looking at your brand equity.

To put it simply, if consumers don’t know about you, then they won’t buy from you. Further, if they know of you only vaguely, you won’t be their first thought when looking for a product.

Having high brand awareness means that you’re synonymous with the market you’re in – like the examples of Coca-Cola and Sellotape mentioned earlier.

Being so well known comes with certain risks to your brand, as you lose copyright on any name that becomes the commonly used term for an item, but it’s a definite sign that you’re well up there in people’s minds.

Coca-Cola managed to retain its trademark since the commonly used term is the nickname Coke. Sellotape, However, lost theirs when the term was deemed genericized enough.

Ways you can measure brand awareness include:

Surveys.
Store traffic.
Search volume.
Google search rankings.

These aren’t the end all be all, but they’re a good start. You can also look to social media for hints, but this information will be highly polarized due to the nature of such spaces.

After all, when would you be more likely to post on social media? After a routine, bog-standard experience, or one that was absolutely awful?

Customer sentiment

Customer sentiment is about feelings, specifically customers’ feelings towards a particular product or brand, depending how you measure it.

Customer sentiment is a measure of how strong the emotions associated with your brand are, and how positive or negative they are.

It’s especially important in today’s markets, as 86% of customers are willing to spend more after a positive experience with a brand.

Generally, customer sentiment is generated by surveys or similar methods, asking customers to rank their experiences based on how they felt about their interactions with you.

However, it can also be found by scraping review data with sentiment analysis or analyzing social media chatter.

It’s not straightforward at all to measure customer sentiment, and you may need to use specialized platform like Sentimate to analyze the data for you.

Brand audits

Something to consider when you’re analyzing your brand’s equity is what’s the total value of the brand itself, or what it contributes to the business simply by existing.

There are a myriad of factors you can measure when doing this, but depending on who you are and what you do some will be more important than others.

In general, things to consider when auditing your brand are:

The cost to build the brand. How much money did you pump into advertising, trademarks, etc.?
The market value of the brand, or how much value it brings to stamp it on a product. Can you charge more for a branded product compared to a generic equivalent?
The income value of the brand, or how much money it brings in by making customers aware of your products. Can you launch a new product and expect high sales, or would you need to put funds into advertisement?

How to build & develop brand equity (with examples)

Brand equity develops in two distinct ways.

Firstly, there’s the way in which awareness about a particular brand can spread over time from person to person naturally. This is often overlooked as a method of building brand equity as it is a slow process but nevertheless is important.

The second way is to build it yourself, taking action to increase your brand’s visibility, reputation, and relationships with consumers.

We’ve outlined below the processes by which these two methods take place, as well as how you might go about beginning the latter.

How brand equity develops organically

Brand equity is something you’d ideally want to craft, however, it’s also something that can develop naturally over time.

Back in the 1950s, for example, they didn’t have the knowledge we do on how brands can build equity for themselves, yet Ford was still considered a top-tier manufacturer of cars.

This happened because information can spread organically from person to person by word of mouth, which increases brand equity without any input from the brand itself.

Let’s take a look at the process by which this happens.

Awareness

In the first stage, a consumer becomes aware of your brand’s existence. This can be via spotting products on shelves, seeing advertisements, or simply by word of mouth.

They will have no immediate opinion on them beyond what others might have told them and their immediate gut response to anything of your brand’s image they’ve seen.

At this stage, it’s not likely that a person will buy from you, but a small number of them might do so. If they do, they skip the next step and go straight to the third one.

Recognition

Next, the person in question will come across your brand again. This time they’ll recognize it, and it won’t be completely unknown to them.

Their prior experience with your brand will add to the current one, forming an opinion.

This is where good advertisement comes into play, as many potential customers simply gloss over a brand at this stage if it doesn’t catch their eye, forget about it, and do not progress further along in the process.

Trial

In the third step of the process, a consumer will feel comfortable enough with your brand to test one of your products. This might come after coming into contact with your brand just a few times, or it may take longer.

The important part of this step is that the person takes the leap from consumer to customer. They’ve invested money into you, and their opinions will be highly polarized by their experiences with your product or service.

If the customer likes what you have to offer, it’s likely that they’ll come back. If they don’t, they won’t, and might even badmouth you. This fact is why businesses will often advertise their generic products more, leaving the more niche ones aside as fewer customers would prefer those as their first experience with the brand.

Preference

Next, a customer who has had good experiences with your brand will begin to prefer you to others in the market. This step absolutely requires that you get the previous one right, with most potential advocates straying from the track at this point.

It’s not enough to simply be good, you see, you have to be better than their previous brand in order to convince them to prefer you. It’s been shown time and again that humans are creatures of habit, and won’t change their habits unless given an incentive to.

In this case, that incentive is a better experience than your competitors provide.

Loyalty

When a customer has had repeated good experiences with a brand, they will not only prefer it but begin to recommend it to others.

After all, wouldn’t you want your friends to have a good time just like you did?

It’s at this stage that a customer can be considered an advocate for your brand. They will spread information on you to another person, who will then begin this whole process all over again as they’ve just become aware of it.

Advocates don’t just help spread awareness either, their efforts can be seen at every step of the brand equity process.

If you’re aware of a brand but haven’t yet tried it out, someone recommending them to you might convince you to give them a go.
If you’ve tried out a brand, but haven’t committed to them, the opinions of others might help sway you.
If you’ve tried out a brand, and had a single bad experience, hearing about the good experiences of others might convince you to give them another try.
If you have a preference for a brand but aren’t comfortable talking about them to others, seeing another person do so might put you at ease.

Keep in mind, however, that not everybody finishes these steps. Some may simply prefer not to air their opinions so openly, others might simply be stubbornly stuck to their current brands. That’s okay though, not everyone needs to be an advocate in order to spread brand equity!

Building brand equity yourself

Brand equity spreads organically, though this is a slow process. In order to speed things up, there are several things that you can do in order to increase your brand equity artificially.

These factors really dive into the why and how of your brand. Consumers want brands that stand for something, that have a purpose and a meaning behind them.

You need to have more tangible business goals than simply “be successful and make money”, and they need to be ones that consumers can relate to in order to truly create brand equity.

The sections below aren’t steps per say, but rather overarching guidelines that you should always keep in mind when attempting to build your brand equity. There’s no point at which you can say you’re finished, you should instead be constantly analyzing your brand and the world around it.

Understanding your brand’s drive

The purpose of your brand needs to be clear in order to build strong brand equity. If you take a look at the most prominent brands today, you’ll find that they put their purpose and drive at the forefront of their communications.

That’s not to say that they all have the same messages or goals. Each brand has its own unique approach, meaning you can’t simply copy someone else’s drive if you want to set yourself up as unique.

So, what kind of messages are there? Let’s take a look at two prominent examples in the tech industry – Apple and Microsoft.

Apple

Apple’s stated purpose is to stretch the limits of technology, to create things that no one else can. To that end, they portray themselves as providers of future technology.

Apple’s advertising tends to focus on the brand itself, more than the products, which has allowed them to break away from their initial focus on computers and into phones, tablets, and even TVs.

Overall, Apple’s strategy has been to present itself via dazzling and simplified displays that cling to people’s minds. It’s certainly worked, with their advertisements being some of the most memorable and creative in recent years.

Microsoft

In contrast to Apple, Microsoft portrays itself as reliable, down-to-earth, and hard-working. In other words, similar to your average working Joe. Instead of being a futuristic, out-of-this-world brand that dazzles you, they stick to the practical aspects.

Microsoft positions itself as the good old reliable company that will never let you down, one that keeps working people in mind.

While certainly less exciting than Apple’s dazzling displays there’s no denying that the straightforward, practical-centered message resonates with a lot of consumers worldwide, resulting in Microsoft’s systems being the most used by far.

Of course, a brand’s drive can change over time. Markets change, technology evolves, and the needs and desires of consumers change too. A business that aims to provide dial-up internet service would find it extremely difficult to attract customers today, for instance, despite it being a fairly attractive, low-cost option just 20 years ago.

Developing your brand’s message

When you’re creating messages that consumers will encounter, it’s important to make sure that they’ll find them appealing and interesting in order to further engage with you.

In other words, it’s not just what you say, but how you say it too.

The key element of your brand’s message is taking your drive and translating it into real-world problems that consumers face. Specifics and details are extremely important, as consumers are put off by vague wording and ill-defined tones.

So, how do you find out what consumers would relate to? In one word, data.

Consumer opinion surveys can tell you directly what worries them.
Search traffic is a great indicator of what topics are growing in importance.
Social media is a goldmine of opinion data and is searchable and segmentable.
Reviews and ratings of similar products or services to yours can give insight into consumer desires.

One thing to keep in mind is that deciding your message isn’t something that you do once and then stick to. As times change, you need to change too, and altering your message in order ot appeal to consumers more is standard practise for most brands.

Driving awareness of your brand

Being aware of a band means more than acknowledging its existence. You want customers to understand both what you stand for and how you plan to uphold your values.

Awareness comes with long-term strategies, and taking actions that align with your values. It’s a trust factor, one which will only come after you’ve demonstrated your commitment to upholding the values you’ve stated.

The most important thing you can do with your awareness strategies is to be consistent. Consumers connect the most with brands that they can form emotional bonds with, which onloy happens if that brand is consistent in its ways. You’ll get more out of long-term, loyal customers than you ever would by simply partaking in one-and-done sales.

In short, focus on the broader future of your brand instead of simply the next transaction. While you might profit in the short term, you’ll lose out in the long run.

Maintaining consistency & transparency

Once you’ve established your brand, don’t change it unless you have to.

This might seem completely opposed to everything we’ve spoken about in the previous few sections but bear with us here.

When we say keep your brand the same, what we mean is the personality and tone behind your brand needs to remain consistent in order for customers to continue to relate to you.

While there have been a few instances of brands radically altering their image in order to refresh themselves – see Savage Wendys – it’s generally better to maintain your image.

If you do pivot, make sure to stay consistent. Wendy’s has been roasting ordinary people and antagonizing their competition on Twitter for over half a decade now, and has become something of a sensation.

The customers that you retain tend to do so because they relate to you and your brand. If you wipe the slate clean, you’ll have to re-acquire loyalty from them all over again.

Sometimes, newer isn’t always better. Then again, that’s up to you to decide.

Customer experience

Customers are at the heart of brand equity. News can travel faster than ever in the age of the internet, and bad news always seems to spread the fastest.

The solution? Simply providing a good customer experience.

Brands aren’t defined just by what they do anymore, they’re also known for how they do it. Unless being rude to your customers is part of your appeal, and yes, there are actually businesses that do this, you need to put great customer experience at the heart of your brand.

Social media is a great place to let customers air their praises and grievances to you. By taking note of the former you can continue to provide great experiences in the future, and by responding to the latter you’ll be potentially turning a negative into a positive. Almost all brands, even smaller, local ones, have some kind of social media presence.

An often overlooked way to gain insight into what kind of experience your customers want with you is simply to ask them. While it’s not always possible to get real-time feedback, asking your customers how you did at the end of each interaction can get you detailed information on how your strategies are working.

At the end of the day, the customer is king – at least when it comes to brand equity, anyway.

Real-life examples of building brand equity

All this talk of brand equity sounds very impressive, but you might be wondering – if it’s all hypothetical, nothing guaranteed, what’s the point of it?

Well, we’ve gathered below some real-life examples of how brand equity was built, as well as the lessons you can learn from them.

Maggi

You might know Maggi as a provider of cheap, filling instant noodle snacks. What you might not know is that they were banned in India in 2015, after regulators determined that their products weren’t as free of MSG as they claimed, and even contained lead!

The validity of these tests was later called into question, but you’d expect there to be some damage to their reputation … right?

Despite the fact that these noodles were banned in the entire country of India for almost six months, and that production had been halted during this time, there was still an enormous demand from the Indian population for their one-pot snacks.

So, why is this?

Well, Maggi’s success was in adapting to the culture present in India. In quite a few nations, offering noodles as an alternative to rice would be seen as sensible, however in India, the idea of “rice for dinner” is so ingrained (no pun intended) that they needed to try a different strategy.

Instead, they advertised their noodles as an afternoon snack, something that could be made and eaten quickly by those in a rush – for instance, parents who needed to feed their children quickly after school.

In essence, Maggi offered itself as an “in-between” option and did so with great success. The convenience of their products meant that even after a scandal that halted sales for six months, many households still returned to consuming them almost immediately.

The lesson here? Adapt yourself to the demands of the market you find yourself in.

Netflix

Netflix is a huge success story when it comes to brand equity. Once they were nothing but another video rental company, now they’re synonymous with online streaming services.

They’ve even entered our casual vocabulary as a verb … to Netflix and chill. 😉

Netflix was able to build its brand equity by being one of the first organizations out there to expand into what it’s now known for – streaming services.

In fact, I’d bet that a few of you reading this don’t even know that it did anything else before streaming.

Netflix was in the right place at the right time to begin the streaming revolution, launching its platform in 2008. It may not have been the first streaming service, but it was definitely the first major one.

Why was this the case? Well, they were already established as a video rental company at the time.

With the rise of the internet, Netflix saw that they had an opportunity to expand their services. Eventually, as their streaming service gained momentum, they turned it into their primary source of revenue.

Today, Netflix no longer offers video & DVD rentals.

The lesson here? Adapt your brand’s strategy and identity to changing times.

Conclusion

Hopefully, after reading this guide you’ll know a little more about brand equity – what it is, how it’s grown, and how it’s maintained.

Brand equity requires knowing your brand, and knowing what your brand’s greater purpose in the world is. That’s a big question to ask, and a lot of brands can’t even boast of having one.

By having a purpose, a message, and the means to spread awareness of these, you can propel your brand to great heights. People naturally seek purpose in life and align themselves with those brands that hold values they can understand and empathize with.

It’s not entirely out there to say that these purposes sometimes matter more to them than the products & services that these brands provide.

Take a deep breath, and ask yourself – what is our brand’s purpose? What can we do to make sure this purpose is fulfilled? Do that, and you’re on the right track to having brand equity for yourself.

How Competitive Intelligence Lets You Stay Ahead of Your Rivals

Posted on Dec 16, 2022Jan 6, 2023 by Emily Louise Spencer

Businesses don’t exist in a bubble. Competitors always try new tactics to gain market share, leaving you behind. That’s why performing competitive intelligence isn’t optional these days but a must. This guide will walk you through the details of competitive intelligence, from basic definitions to actionable strategies explaining how to perform it and gain the upper hand.

Imagine, if you will, that you’re a baseball player who’s up to bat.

You’ve no idea what pitch the pitcher is going to throw.

You’ve got no clue where the catchers are planning to move to.

All you can do is make your best guess, right?

Well, not exactly. Each pitcher has their preferred throws, and there’s a good chance they’ll use one that they think you’re weak to. If you prepare for such a pitch, you’re more likely to score a home run ????.

In a way, the world of business is just like the game of baseball. Being able to predict what’s going to happen next will give you a huge advantage. You’ll be able to see your competitors’ latest moves to try and squeeze you out of the market and counteract them.

That, quite simply, is competitive intelligence.

What is competitive intelligence?

Competitive intelligence is data collection and analysis by your organization on its competitors. This is done using openly-available sources, such as:

Press releases.
Patent filings.
Whitepapers.
And more, which we’ll cover later on.

Public companies are much easier to gather data on, as they are lawfully required to publish their quarterly earnings. Private companies are a little bit more difficult to examine, but there are methods you can use. Legal ones, that is.

Competitive intelligence vs. industrial spying

When we say competitive intelligence, you might think that you’ll be aiming right for the target and getting ahold of your competitors’ strategies directly.

This is not actually the case.

You see, competitive intelligence is done legally.

Every business has a right to keep its inner workings a secret, especially concerning its information. Stealing that information is highly illegal as it would involve either breach of contract or hacking into their servers.

Information gathered illegally can, of course, be used to make decisions, but that’s not competitive intelligence – it’s industrial espionage, which we strongly discourage.

How do you get competitive intelligence?

Competitive intelligence has many sources.

Which ones you turn to will largely depend on your intentions when performing your research. Nevertheless, all of them can provide valuable data if analyzed correctly.

Blog content

The content that your competitors write about on their blogs is a gold mine of information. Not only does it tell you what type of consumer they’re hoping to attract, but how they’re hoping to attract them.

Just like our blog, you’ll find a variety of topics based around the general market that your rivals are in being written and posted. Some of them might seem to have little relevance, but when you analyze them fully, you’ll find ways in which they link back to your competitors’ game plans.

We wouldn’t be writing about competitive intelligence here at Revuze if our software couldn’t help in that regard, now would we? Our AI can help you obtain competitive intelligence in real-time, so feel free to book a demo if you’d like to learn more.

Social media

Social media often has a news component for businesses, whereby they keep their stakeholders updated with their new and ongoing dealings.

Thanks to this, they’re prime information sources. New product launches, new deals, and customer responses, you can find a lot of data on these platforms.

You might think that a lot of social media information can only be used in reactive responses rather than proactively, and in a sense, you’re both right and wrong.

You can only respond to each individual piece of information, however, they may reveal a trend that shows your competition’s ongoing strategies.

Take, for instance, the example below from Nestle.

Taken individually, each advertisement gives off a different message. The first one showcases the benefits of plant-based food, the second promotes involving children in your cooking.

When looked at together, they tell a different story. Nestle is promoting healthy eating, presumably because they want to boost sales of their healthy eating product lines. This is a bold new direction for a company known mostly for its chocolate and confectionary sales.

Reviews & feedback

Whenever your rivals launch new products or services, the first thing you should look at is their reviews.

Not only will they give you insight into what your competition is trying to achieve, but they’ll tell you the audience’s response to it.

There’s no use creating the perfect egg scrambler if your customers want their eggs fried, after all.

Reviews are useful for existing products too, with any changes reflected in the feedback they receive.

Job boards

While not the most intuitive of places to look, job boards can nevertheless be a valuable source of information.

Imagine for a second that your main rival has suddenly posted a lot of job openings in their R&D department. This is pretty unusual since they typically have a low personnel turnover rate.

So what’s going on? Well, there are several options:

They’re looking to expand their R&D department permanently.
They’re starting an experimental project which they aren’t sure will succeed.
They’re feeling behind on their research and want to hire more staff to catch up.

In the case of the first option, the job listings would be permanent posts. In the case of the other two, they’d likely be temporary.

The second option might also be listed as “temporary with a possibility of becoming permanent.”

Just like that, simply by keeping an eye on the job boards, you’ve gained valuable information on what your rival is up to.

Financial statements

As mentioned previously, public companies have to release their financial statements quarterly. With this data in hand, you can see:

Where they’re earning the most money, in essence, what areas they rely on.
Where they’re earning more money than last quarter, therefore growing their operations.
Where they’re investing their money, what they’re buying, and what they’re not.
Which strategies of theirs are working, and which aren’t.

Press releases

Business news is absolutely full of valuable information. There will be announcements about new products, new hires, expansion moves, and more.

Some businesses even have a News section on their websites or apps, which coalesces all this information in one place.

Local information

If you’re part of an industry that has brick-and-mortar stores, you can look at the local information surrounding said stores in order to gather information.

What times do your competitors open and close? What area of the town or city are they located in? Do they have a decent amount of floor space dedicated to customers? Do they keep their stock on hand in a back room or a nearby warehouse?

All these little details can tell you what might and might not work in your own stores. Of course, copying your rivals exactly isn’t ideal as they might be constrained by circumstances and not able to operate as they would ideally, but it’s a start.

Legal papers

You can look at legal papers filed by your competitors as they are typically publicly viewable.

For instance, a planning permission request for a large industrial building would indicate that your competitor plans to build a new manufacturing plant or similar establishment.

This tells you that your competitor is trying to expand their manufacturing processes, and if it’s in a new location, you can assume that they’re trying to expand into a new market.

Another great source of information is patent filings. These will tell you not only what your competition is doing but what they plan to make legally exclusive.

It’s sometimes said that there’s not an original thought under the sun that someone hasn’t already had at one point. That’s true in R&D as well.

You might have to end up abandoning your projects or adjusting them not to break copyright law if your competitors patent what you’ve been working on.

Industry conferences

Conferences are similar to news reports, except more detailed. They’re designed to showcase all of the best aspects of a business to others within their industry, whether that’s to attract new customers or collect new talent.

Conferences are often the most detailed sources of information on this list, and that’s for one simple reason. You can actually talk to participants and get their opinions and perspectives.

All news, legal papers, and social network content are heavily moderated by those who release the information. When talking to someone face to face, you can often get far more information.

The downside is the unorganized nature of gathering data at conferences. You also have to factor in the ability to get to the conference, accommodation, etc.

So are conferences worth it to attend? It’s up to you, but we’d say definitely. The rise of virtual conferences is also making attendance easier, so keep an eye out for these opportunities.

What are the goals of competitive intelligence?

So, you might be thinking, why use competitive intelligence?

If it’s all indirect information, is it really going to give me an accurate picture of what my competition is up to?

Competitive intelligence is akin to following footprints in the sand. You might not be there to see the person walk it, but you can see which direction they’re going in, and when they shift or double back on themselves.

You can infer a great deal from indirect information. If you want an example from history, look no further than when Kodak accidentally discovered the Manhattan Project, simply by noticing that they were getting reports of radioactively-contaminated film in the area around the test site.

Anticipating your competitor’s moves

“Know thy enemy, and know thyself,” said Sun Tzu in the Art of War.

While not quite a battle between armies, business is no less competitive. If you know your rivals’ moves before they begin, you will be able to counter them with great effect.

Let’s say that both you and your competitor are in the e-commerce business.

You know from experience that your competitor has put on a Black Friday sale every year, thus you can anticipate that they’ll do the same this year and develop a strategy that accounts for this.

There’s also the option to take a look at their past sales, as well as current hot items, which will give you a clue as to which products they might put on sale this year. If you know which categories they plan to target, you can sidestep or counteract them.

All in all, the best way to counter an opponent’s strategy is to never let it get off the ground in the first place.

Driving your innovation

You always need innovation in order to keep your business fresh and on top of things. This goes doubly so for those dealing with the ecommerce market, where trends and habits change faster than anywhere else.

Competitive intelligence can uncover what it is that your competition has, but more importantly, it can also reveal what they lack and what consumers are after. No one can cover all bases, after all, and by keeping an eye on new opportunities, you can really get ahead in the game.

Keeping track of market conditions

Markets change, and you need to change with them in order to survive.

One of the greatest examples of decision-making in business is Netflix, which in 2007 launched a streaming service alongside its video rental one. This proved a huge hit and allowed Netflix to become the giant that it is today.

Netflix saw which way the wind was blowing as music consumers turned more and more to digital media and decided to follow it. It allowed them to survive a major upheaval in the industry, which many, including Blockbuster, did not.

Netflix’s changes showcase a great example of strategic intelligence in action. Video rental was still popular back in 2007, after all, and they could simply have stuck to it.

Instead, they took account of trends that showed a shift towards online streaming and were able to adapt and weather the storm.

Blockbuster, on the other hand, continued to have faith in their traditional methods and failed to take into account the long-term implications. There’s only one Blockbuster left in the US now, and for a good reason.

Growing your brand to customer expectations

Times change, and so do people. Nobody would say that applying the same business tactics that worked in the 1950s is appropriate in today’s world, but few realize just how fast expectations can change in the age of the internet.

This is something that e-commerce-based businesses especially need to be aware of, what with the internet being an ever-evolving pace.

Payment options, fonts and colors, images – especially if you try to use internet humor to sell your brand – links and plugins, all these can have a massive effect on your ability to sell.

If you use unusual plugins, for instance, you’ll turn off most customers who won’t want to install one to use your store.

If you’re given the option between two sites, one of which requires you to download extra features to use while the other is free of such inconveniences, which would you choose to use?

Links can also break or be archived over time, meaning what worked perfectly one day won’t the next. Relying on other websites to grant information is a tricky business.

If a certain brand that you’re displaying prominently has bad press, you may want to decrease its visibility on your store lest you get a bad reputation by association. Conversely, you can increase the visibility of other brands that have a surge in popularity.

Competitive intelligence will help here, telling you what customers expect from you and what you need to do in order to meet those expectations.

A good example of growth meeting customer expectations is Amazon’s adoption of Venmo as a payment option, allowing those who don’t want to use their bank accounts directly a more secure way to pay.

Credit and debit card fraud has been on the rise over the past few years, making more and more consumers wary of using their cards online.

When using Venmo, your bank information is never directly given to the vendor, meaning that phishing attacks or breaches in Amazon’s security are unlikely to put consumer data at risk.

The COVID-19 pandemic showed just how fast brands needed to be able to change to survive, with plenty of businesses not making it through 2020 intact.

While not exactly a typical event where markets are concerned, it does nevertheless highlight how much circumstances can change in short periods of time.

Knowing your position within the market

Another great example of where competitive intelligence can help you is in finding your market position.

You see, it isn’t always obvious from sales figures and other such indirect data exactly where you stand nor how you are perceived by the consumer base.

Data sources such as reviews, ratings, etc., can give you an insight into the consumers’ minds and how they perceive your brand, letting you assess your standing.

Are you seen as a first-pick, top-rate seller? Are you just a reliable alternative when the usual options aren’t available? Or are you seen as someone niche who fulfills specific demands that only a few consumers would have?

By using this information and comparing it to your strategies, you can see if you’ve achieved your targeted market position. If you have, great! If not, you’ll gain insight into why this is the case and how you might resolve that in the future.

Remember, Spotify was able to alter its position from merely a simple music player to a content creation platform in just a few years, proving that anything is possible if you have the right intelligence.

Staying ahead of your rivals

Let’s go back to the baseball metaphor. Your biggest rival has started upping their game by purchasing new players specifically to beat you.

You can’t stop them from doing this as the people selling the players aren’t going to stop just because you ask nicely. So, what can you do?

Well, there are several ways in which you can undermine them, all above board.

For starters, you can either coach your team in strategies that counteract theirs, or you can hire new players yourself to counteract their changes.

If one pitcher they obtain is known for their difficult-to-hit fastballs, you can hire a hitter who’s known for being able to knock them out of the park.

Secondly, you can put in bids yourself.

Not only can you stop your rival from obtaining certain players that way, but by entering into bidding wars with them, you can potentially limit the number of players they can buy.

An organization only has so much money to throw around, after all.

Following on from that, if you take a look at their team and the players they’re placing bids on, you might be able to see dazzling combinations that would work very well together and disrupt them.

For instance, if you split up a pitcher-catcher combination that is known for doing great together, you can disrupt their seamless play by having their players have to adjust to each other.

In short, just because your competition plans for something to happen doesn’t mean that they will be able to pull it off.

Helping decision making

Finally, we get to the main point that underlies most use of competitive intelligence, that it helps you decide what to do next.

All of the previous examples we’ve mentioned today allow you to make better choices, ultimately helping you make data-driven decisions that will elevate you in the market.

The more information you have, the better a decision you will be able to make.

If the British had known that Washington planned to cross the Delaware, they wouldn’t have simply let him slip through their fingers.

Knowledge is power and some would say knowing your competitors is a superpower.

Types of competitive intelligence

Now that we’ve mentioned why you want to use competitive intelligence, it’s time to take a look at what it is in more depth.

We’ll start by defining the two types, strategic and tactical.

Strategic intelligence

Strategic intelligence is all about long-term thinking. It’s information that could affect the business’ direction over long periods of time.

This type of intelligence isn’t something that you need to worry about right away. However, you shouldn’t let yourself be lulled into a false sense of security.

Some examples of strategic intelligence include how consumers use the internet, for instance, which social media sites they use, which plugins are considered essential, and which browsers are in favor.

Tactical intelligence

Tactical intelligence deals with things that alter your plans in the short term.

This type of intelligence demands an immediate response if you’re going to act on it, and in some cases, you may have to act without having the complete picture.

That said, you shouldn’t let that stop you from making a decision.

In business, it’s often best to make a decision with the information that you currently have rather than miss the opportunity.

Examples of tactical intelligence include new product launches by competitors, new government regulations being introduced, new stores being opened in your area, and disrupted supply chains due to road accidents.

How do you perform competitive intelligence analysis?

If you’ve read this far, you’re probably convinced that competitive intelligence is the right type of analysis for you.

So, how do you go about performing it? We’ve laid out the seven crucial steps below that will assist you in undertaking your analysis.

Decide what you want to achieve

The first step, as with many a project, is to determine what exactly it is that you want to achieve with this analysis.

Do you want to know your position within the market? Perhaps you’d like more information on what your rivals are up to? Or maybe you’d like to scour the market for a gap that you can fill?

Your aims will determine everything, from your information sources to your analysis methods. If you don’t make a firm decision here, you’ll be floundering about during the entire process.

Remember, your business will likely have several different markets that it stretches into. By segmenting your analysis into different sections for each market, you’ll be able to collect data that’s relevant to each without muddying the waters.

The narrower your field, the more precise your information will be.

Identify your competitors

Once you know what you aim to achieve, you can then identify your competitors. These are those businesses who are:

Within your market.
Selling similar products.
Aiming to appeal to the same audience.
Able to take away your customers.

This is a fairly straightforward step in most cases since you can simply look at who is selling similar products or services to you. The more similar these are, the more they are a direct competitor.

Determine the data you need to collect

Now that you know what information you want to find, and who you want to find it on, it’s time to determine what data will showcase that information.

Are you looking for information on new products that your rivals are launching? Look to reviews, your rivals’ websites, and unboxing videos.

Do you want to know what your competition is up to with their advertising? You need to look at their campaigns and observe the trends.

You can be more specific too, splitting advertisement into online and offline, email and social media, etc. Remember, the more segmented the data, the more precisely you can guess your opponents’ moves.

Find your data sources

Once you’ve determined the data you want to collect, you can pick your data sources.

Products? Find their reviews, look at their product showcases, and check out the product’s sentiment via sentiment analysis.

You can even go so far as to buy one of their products for more direct comparison and testing, and maybe find a way to get an edge that way.

Pricing strategies? Take a look at price trends offered by Amazon, at past offers and pamphlets, and compare them to your own.

SEO tools such as Semrush and Ahrefs will give you detailed information on a variety of topics, as they’ll easily be able to show you which keywords your competitors are aiming to rank strongly in.

If you know where they’re trying to appear in Google searches, you’ll know what kind of customers they’re aiming to attract.

Analyze your data

Next up is data analysis. There are plenty of methods to choose from, some involving software and some involving doing the number crunching yourself.

Some examples include but aren’t limited to:

Porter’s Five Forces.
Driving Forces Analysis.
Product Life Cycles.
Porters Four Corners.
SWOT Analysis.

Remember, while computers might be all the rage, they’re a little lacking when it comes to the emotional side of things.

Sometimes you can simply look at the information you’re presented with and come to a better conclusion than a computer could ever reach.

Convert your analysis into plans of action

Now that you’ve gained your information, it’s time to convert it into plans of action. Or rather, factor it into your existing plans to make them better.

To take the previous baseball metaphor, you need to adjust your stance once you’ve deduced what pitch you’re about to face. In the case of business, however, the pitch is anything that can alter the ideal outcome of your plans.

The direction that you take is extremely dependent on your situation, so for the most part it’s up to you. Your intuition and experience can be excellent tools here, allowing you to see solutions that wouldn’t ordinarily be obvious.

Repeat, repeat, repeat

Competitive intelligence isn’t just a one-and-done type of deal. Your strategies change, so why shouldn’t your competitors do the same?

Competitive intelligence should be a regular habit that you indulge in, not a one-off project.

After all, markets are volatile, consumer expectations change, and you need to be aware of all of this if you want to get ahead in the game.

When should you perform competitive intelligence analysis?

As we’ve previously mentioned, competitive intelligence analysis is something that’s ideally done whenever possible.

However, there are a few specific times in your business’s life cycle that you definitely need to be performing it.

Let’s take a look at some of the best points in time when you can be undertaking this.

When you’re starting out

Analyzing your competition should be one of the first things you do when you’re planning to start a business. Knowing who you’re up against, what they do, and how they do it is crucial to staying competitive.

Understanding the industry you’re in will tell you a great deal about how you should operate.

Is the market saturated with brands that seem indistinguishable? You’ll need to stand out by having a feature that’s unique.

Shopify, for instance, saw the world of ecommerce and decided to create a platform for small businesses to create their own customized online stores easily, rather than having to rely on pre-existing platforms that would limit their design abilities.

Your investors will want to know about the surrounding market too since it gives them an insight into how well you’re likely to perform and how risky an investment you are.

Very few businesses can get off the ground without funding, so this is a top priority.

When you’re developing & launching a new product

William Henry Perkin isn’t likely a name that you know, since he lived in the 1800s. In short, he’s best known for creating the first cheap purple dye, which until those times had been limited to the extremely rich due to the cost of its production.

He also created a red dye in 1869. However, another company beat him to the punch in patenting it by just a single day!

This showcases why you need to perform competitive intelligence both when developing and launching a new product – your rivals might be thinking along similar lines and get their product out before yours, at which point you may have to abandon the entire project due to patenting.

When you’re considering a change in market strategy

Change comes to us all, whether we like it or not. A crucial part of planning for change is analyzing the current market in order to assess whether or not your planned changes will be effective.

One of the most important parts of this is analyzing your competitors in order to make sure they’re not planning the same as you.

After all, it’s no good to plan a pivot that makes you stand out only for your competition to take the same direction.

When you’re seeing a drop in physical business activity

When business stagnates, there isn’t always an obvious reason why meaning you need to look deeper to find the source of your problems.

Of course, foot traffic and physical sales can decrease for reasons other than your competition, but by analyzing them, you can see whether they are stealing your customers or if there’s a bigger problem that you all are facing.

Are you all seeing a drop in foot traffic, but only within a specific area of your city? It’s probably a transportation issue that prevents customers from being able to reach you easily.

Maybe some of your competitors are seeing a boom, whereas others are seeing a bust also. There will be some correlating reasons as to why specific businesses are more attractive right now compared to others, and you will be able to find them.

Maybe everyone sees a drop in business activity. This points to a drop in consumer confidence, indicating that you should be prepared for them to spend less and spend only on products they really desire.

All this information adds up to an edge that lets you see where consumers are engaging with businesses and, more importantly, why. This enables you to adjust your approach and meet their expectations.

When you’re seeing a drop in online traffic

Getting hits on your website is crucial to ecommerce, and a big part of this is search engine optimization to account for organic searches, which are making up a larger and larger share of online traffic.

In essence, hitting the right keywords within your website and meta information makes sure that you’re at the top of the list when it comes to Google searches in your particular field.

The problem with this is two-fold.

First, the inner workings of search engine rankings are secret and will naturally change over time.

Secondly, the searches that consumers perform will change over time as their needs and wants evolve.

Both of these factors add up to one single outcome – you need to keep on top of your optimization to stand out.

If you see a drop in traffic, you likely need to redo your metadata to upstage your competition.

Hitting a home run with competitive intelligence

With this complete guide on competitive intelligence, you should be able to get the edge your need over competitors.

You’ll understand what competitors are after, their plans, and indirectly – what customers want.

The journey doesn’t end here, though. Once you have customers’ attention, you need to provide them with a show they won’t forget. Check out our ecommerce customer experience guide to get up to speed on the topic.

How Convergence Marketing Empowers Your Brand and Customers

Posted on Oct 31, 2022Oct 31, 2022 by Emily Louise Spencer

Today’s world is all about data, and bringing your data together is the heart of convergence marketing. When every department can access it, your customers stand to win through personalized and improved experiences. Let’s dive in to understand how convergence marketing benefits everyone and how to apply it successfully.

Traditionally, a business’s marketing, communications, and IT divisions are kept separate. These sections run independently of one another, interacting only when necessary.

This allows businesses to operate smoothly without having the burden of double and triple-check everything.

It’s a good approach, born from times when most management strategies were being developed. Times when keeping everyone up to speed meant sending paperwork back and forth between departments. It’s a lot of hassle, and efficiency dictated people should know only what’s needed for them to perform their jobs.

But we live in different times.

In today’s world, with technology allowing for instant communication and data sharing, this approach might seem outdated. Siloing your departments might be what’s always been done, but that doesn’t mean it’s the only way to go. That’s where a new approach comes in, called convergence marketing.

Keep reading to discover what potential it holds for your customers and company.

What does convergence marketing mean?

Convergence marketing is more of a philosophy than a strict step-by-step approach. In essence, it’s the art of merging your marketing, information, and design divisions in order to allow a unified message across all forms of marketing media you use.

The main idea of this approach is to place the customer at the center of all forms of communication, seeking to ensure that all messages they receive present a single, unified front.

This reduces the number of mixed messages the customer receives, allowing for greater brand recognition and trust to flourish.

Convergence marketing generally applies the most to digital or digital-supported forms of marketing. That’s because digital information can flow freely and seamlessly, as it’s retrieved from a database within milliseconds.

As such, attempting to converge marketing strategies that are mostly offline will be very difficult.

Convergence marketing vs. integrated marketing

A similar yet different term is integrated marketing.

Integrated marketing is all about coordinating marketing messages across different communication channels to increase brand awareness.

While this might seem identical to convergence marketing, this approach only considers the marketing department, ignoring all other aspects of the brand that might serve as touchpoints for customer communication.

It shares the same idea as convergence marketing but applies it on a smaller, more isolated scale. That being said, integrated marketing often happens naturally when you do convergence marketing, as you’ll likely factor in all communication channels.

What are the advantages of convergence marketing?

Now you may be thinking, this sounds like a lot of work, and that’s because it is.

Bringing separate departments of a business together is never easy, doubly so if you want them to be able to communicate in real-time.

If it’s that difficult to employ convergence marketing (which means it’s likely to cost a decent sum of money), why do it?

The benefits of convergence marketing tend to outweigh the costs if done correctly, as presenting a unified message on all fronts has numerous benefits. Let’s go over the most immediate ones.

Customer empowerment

By putting the customer at the center of your marketing strategy, you’ll be empowering them to act and provide feedback, giving them a voice in future decisions.

Any customer-centric marketing strategy takes in feedback, but where convergence marketing empowers customers is the linking of marketing and communications channels. Each piece of information collected by the communications team will be passed on to the marketing team and vice-versa.

This has the effect of not only increasing the customers’ voice within the organization as a whole, which allows you to tailor your marketing campaigns appropriately but increasing brand recognition overall.

While it might seem as though useful customer data is difficult to get, it’s been proven that two-thirds of consumers will willingly share their data with you if they think it will improve their overall experience.

They’re also willing to let you use first-party tracking cookies and other means of observing their online behavior if they think they’ll get something out of it.

In other words, convergence marketing is like symbiosis. Each party gives and takes, and both benefit overall.

Improved customer experience

Convergence marketing necessitates a shared database of information to which all sections of the business have access.

By creating this cross-transfer of information, various departments of your business will have access to all data collected on customers, enabling them to see previously documented interactions, and provide a better overall customer experience.

A Google report showed that up to 85% of digital customer journeys use more than one form of interaction with you. That’s a lot of data that you might miss if you’re relying only on information from one IP address.

With all available information on a particular customer, you will be able to learn what experiences they’ve had with you in the past, what approaches they respond best to, and even what might cause them to walk away satisfied.

Remember, engaging your customers is the best way to make sure they walk away happy!

Integrated communication between departments

Convergence marketing requires departments to collaborate, which means you need to have a robust communications system between them. Integrated communication isn’t so much an unintended benefit as a necessary part of convergence marketing.

Once the channels of communication are open, they can be used for more than they were designed for. Departments can share ideas and get feedback on them, ask for help from one another, etc.

Another factor is post-purchase customer service. Almost 60% of consumers would use social media to get this, but without information from the sales team on what’s been purchased, whoever is running the social media won’t be able to do their job.

Collaborations are also an option. With the traditional siloed form of organization, the different departments wouldn’t know about each other’s plans and, therefore, wouldn’t be able to offer assistance or request adjustments.

One of the greatest examples of inter-departmental collaboration in modern times can be found in Apple’s Transparency Report, designed to keep track of both government and private party data requests to Apple.

Apple’s aim here was to keep their customers reassured that their data was safe and wouldn’t be sold to third parties.

In order to achieve this massive task, Apple had to keep a record of any and all requests for data, the reason for such, and whether or not the request was granted.

This quite obviously involved their communications department. The collaboration also involved their legal team, who determined whether or not to release data in the face of law enforcement requests, and their information security team, who decided how to release the data.

They pulled all information together and released it in the form of their Transparency Report, released annually. In the above table, taken from their 2021 report, you can see that over 70% of private-party data requests were rejected. Apple is practicing what they preach, being open and honest about its responses to data requests when needed.

Apple scored a major PR win with customers who want to keep track of their data and be reassured that Apple would only release it as a last resort. It’s arguably their greatest collaboration and one that perfectly exemplifies convergence marketing.

Instant access to information

Converging your departments necessitates placing information within a shared database. It also means that your data will take a standardized form and that anyone within your organization who has access can use it.

Imagine you’re a member of the marketing team who’s had an idea about using some of the latest designs in your new marketing campaigns. Without a unified database, you’d have to:

Request the designs from the design team.
Wait for a member of the design team to read your message.
Wait for the design manager to okay sending the designs over.
Wait for the design team to actually send the designs over.

Each of the above steps takes time, whereas with a unified database, you can simply hop into the relevant folder and pull the designs out for use.

Where and how can you apply convergence marketing in your business?

Convergence marketing isn’t something that you can apply overnight. It’s a slow and steady process that brings different sections of your business together, requiring careful preparation.

The simplest, and altogether the most sensible approach, is to alter each of your departments’ approaches little by little until they’re aligned with each other.

Once the processes and guidelines that each part of your business uses are similar, you can begin the sync, allowing them to work in harmony.

Let’s go over what each department needs to do to get the convergence ball rolling.

Marketing department

Convergence marketing, as the name suggests, is focused on marketing. It should come as no surprise in that case that the marketing department will be at the center of your efforts to converge.

When implementing convergence marketing, the first step in the process is to begin documenting and recording your marketing efforts within a database. That is, if you have not already done so.

The next step is to take a look at the way you store information, including but not limited to:

Acronyms.
Filetypes.
Naming conventions.
Database layouts.
Access protocols.

These all need to be standardized into a form that the other departments involved in your efforts will be able to read and understand.

Once information is standardized it can be read by anyone who knows the syntax used, which should be provided to all other teams involved. Other teams may not necessarily use the same software as the marketing team, so you’ll need to take this into account.

You might be asking yourself, why is data standardization important? Surely anyone who needs to use the data can simply convert it into a form they can read.

The answer is two-fold.

Firstly, errors can crop up in translation. The data you end up with might not match the data you started out with, and it’s not feasible to manually check every piece that comes your way.

Secondly, your staff is only human. It’s inevitable that someone will forget to convert data, use the wrong conversion methods, etc.

If you think this is overstating the matter, please remember that NASA lost an entire Mars probe in 1999 thanks to someone forgetting to convert from inches to centimeters. Hopefully, any mistakes that crop up in your departments won’t cost $125 million and involve crashing objects into planets.

While standardized information is vital for all departments involved in the convergence efforts, it’s especially important for the marketing department.

And since marketing plays an integral part in your efforts, you should consider convergence within the department.

Internal convergence

Converging your marketing efforts can mean many things. Perhaps the most important aspect you should look at is converging your online and offline forms of marketing.

Due to their different philosophies, it’s common for businesses, especially larger ones, to silo these two forms of marketing into different teams so their operations flow smoothly.

Online marketing is a far more advanced approach, crunching big data from each particular consumer and personalizing ads and offerings based on behavior, interests, and more.

Offline marketing, on the other hand, needs to be far more general. It’s not that you can’t make offline forms of marketing more personalized; it’s that the amount of effort that it takes means it’s not always worth it.

In today’s world, attention spans are shorter than ever. It’s estimated that the average human’s attention span is just over 8 seconds, a drop of nearly 5 seconds from the year 2000. This puts the average human’s attention span at less than that of a goldfish!

This drop doesn’t come as a surprise, given how technology has sped up in the past 20+ years. With this information in mind, it’s more important than ever to grab consumers’ attention early on in your interactions.

That doesn’t mean you should ditch offline marketing efforts. Some can work brilliantly. Take the billboard below as an example.

It was created as part of a Minnesota anti-smoking campaign.

It’s a simple design, with only the website link on the billboard itself, but the pole beneath dressed up as a cigarette makes sure that we know the purpose of the advert.

The green color often associated with hospitals is the final nail in the board, subconsciously reminding the reader why they should consider getting in touch.

In short, the billboard has conveyed:

What service is offered.
How to best contact them.
Why you should do so.

Online marketing can learn a lot from offline forms. Digital designers may be tempted to make elaborate and attention-grabbing content, but paradoxically it’s best to keep things simple even when you have a theoretically unlimited amount of space.

No one wants to keep scrolling forever, after all. It’s estimated that the average website user stays on a webpage for only 50 seconds, and that’s with an engaged audience, so you want them to take in as much information as possible in that time.

This is where the convergence of online and offline marketing comes into play, with the two learning from one another and leaning on each other. In all forms of media, you have to present information in a very efficient way. It’s not enough to simply make a consumer aware of your product. You need to tell them what it is and why it’s the best option for them to purchase.

The below images taken from IKEA’s website showcase how simple designs can convey a lot of information.

This image displays a sense of aesthetics that would make the viewer see IKEA positively while not being too complex or distracting from the point.

The second section, shown below, uses extremely simple outline images to get the point across, displaying all of IKEA’s services in a readable form.

Simple, easy-to-read marketing.

Communications

Communications refer to the part of your business responsible for communicating with outside parties. That’s anything from customer service helplines to writing emails to your shareholders.

In small businesses, this department might be merged with another or simply have its responsibilities spread across several other teams. Still, the principle behind convergence marketing extends whether you have a dedicated team or not.

Your communications department greatly benefits from convergence marketing, with the most obvious advantage being access to the other departments’ data.

With access to all the data your marketing department has collected on a particular customer, you’re better able to tailor your approach to them. This can extend to:

The channel of communications.
The tone used in communications.
The complexity of the language used.

You might think that that’s all there is to it, but there are other benefits as well. Not only can the information you get improve your communications department’s operations, but collaboration with your other departments can provide benefits that neither could produce alone.

Take this creative approach from Capital One as an example.

The company was on the ball with their Capital One Cafes, a re-imagined form of banking where their branches doubled as cafes with co-working spaces and workshops.

Despite the fact that most banking is done online, there is still demand for in-person interaction when dealing with problems. Capital One saw this and decided to use its spaces as a means of connecting with the community better.

This strategy was the brainchild of combined marketing and communications thinking. Not only is the cafe a great marketing stunt, but it’s also a relaxed setting that consumers can use to communicate with the business without fear.

Going up to a teller screen can be intimidating after all, and many consumers are put off by the formality of the whole process. By removing the physical barrier between the bank workers and the customers, a more welcoming environment is created.

It’s doubtful that either department would have been given the go-ahead without collaboration. Altering your entire business strategy is extremely costly and risky, but with multiple departments backing it, the alterations went ahead.

Management

Finally, let’s talk about the management side of things, specifically the upper management. While there isn’t much to say regarding implementation, it’s easy to see the benefits, especially in terms of decision-making and cohesiveness.

It’s often said that the upper management doesn’t know nearly as much about the goings-on below them as they should. This is mostly due to how difficult it is to pass information and manage it in a centralized and standardized manner.

CEOs and COOs make the decisions, but how can they make them reliably when they aren’t getting the complete picture?

In the traditional approach, department directors report to their superiors, passing along different strategies, suggestions, and requests at once. Keeping track of all of that can prove difficult even for the most qualified managers.

By converging your marketing, there is a single, unified goal that the business wants to achieve. This means that anyone who makes these decisions can always fall back on that, rather than having to keep track of all the different strategies your business might be going after.

Convergence marketing is all about passing on information in a clear manner. Better information means better decisions, which make for better business strategies, and a more unified organization.

What tools can help enhance convergence marketing?

If you’ve read this far, you’re probably looking to apply convergence marketing to your organization. There are many ways and tools to go about it. So many that you may get overwhelmed at first.

To help make sense of all of this, we’ve prepared a list of the most useful tools and why they’re useful in tackling convergence marketing.

This isn’t an exhaustive list. It has to be on the general side of things, as each industry and context requires a different approach. So, if you think you have a better option, we encourage you to go for it.

Social media

Social media is a powerhouse of the current digital marketing age. It’s a tool that can create a lot of data for you to utilize, while also allowing for better interaction between your communications department and your customer base.

Social media communications is a tricky business, with even the most innocuous of comments being able to spark outrage or dissent among your viewers. By looping back real-time information into your marketing department, you will be able to mitigate any crises.

This is where social media monitoring comes in. Social media monitoring software can assist you in keeping track of your online statistics, flagging any urgent or suspicious data, and allowing you to give feedback and responses to questions rapidly.

The software is fairly new but has already made great strides. Some countries have even used it to monitor the accuracy of news shared on social media sites, with the aim of keeping their population informed when electing their new leaders.

In short, social media can be used as both a form of marketing and a form of communication, sometimes simultaneously.

The platform you use will depend on your market, target demographics, etc., but all share the advantage of global reach. Their downsides are also similar, with rapid responses and careful monitoring being crucial.

Mailshots

Mailshots, also called direct mail marketing, is the art of using mass production of a single advert to market to large numbers of consumers at once. Typically, the term has been used to refer to letters or leaflets you send through the post, but it is also applicable to email marketing.

The advantage of convergence marketing when using email mailshots is immense.

You can combine clicks and conversion statistics, along with other forms of data you’ve collected on customers to further personalize communications. Something you wouldn’t see in a siloed system.

And it’s a big deal, as segmentation and personalization are by far the most effective email strategies.

Consider the following scenario – a customer is after a specific brand of eyeliner, so they send an email to a store, asking if they have it in stock.

If your departments are siloed, the marketing department won’t know about this instance, and future newsletters and promotions will be less relevant for that person.

With your marketing and communications departments converged, this information will be communicated between them, allowing for it to be used in future personalized marketing efforts. The customer gets more relevant content, and you get a happier customer. Everybody wins.

To sum it up, mailshots are all about information. The more relevant you can be, the greater their chance of paying off. Keeping the flow of information open between departments means everything can be considered, not just what the marketing department has immediate access to.

Apps

When you create an engaging app for your brand, customers are more likely to use it for browsing, purchasing, and interacting with your company.

This gives you heaps of data about your customers in a simple and efficient manner. It’s especially true with apps as they’re usually linked to an individual account, leaving less margin for errors.

Another great thing about apps is they can be heavily personalized according to the data you just collected. Whether that’s to do with how the content in your app is laid out or specific times you’d like to use push notifications. There are even capabilities to change the design with AI-generated art, though these processes are still in the early stages.

All in all, apps are a sandbox for you to create your perfect customer contact point.

Cloud software databases

Market Report

To move information between the different sections of your organization, you will need a database of some kind. In essence, each division needs to know what the others are doing and why they’re doing it. This prevents your sections from conflicting or producing mixed messages.

Cloud software is a particularly efficient method to use, with many tools to choose from. The main players are SalesForce, PipeDrive, and Zoho. Your choice will mainly depend on your organization’s:

Size.
Goals.
And ability to implement technology.

Let’s go through a list of the benefits that cloud software can provide and discuss why they’re superior to other options.

Scalability

If you’ve ever used a flash drive or similar device to store your files, you know that they can very quickly become full. Data takes up space, and the amount of data you collect won’t always fit into the storage space you’ve allocated.

If you’re using traditional data storage means, you’ll need to physically go out and obtain more storage space, install it, link it to your data collection software, etc.

All that takes time, time in which valuable data will be lost. Cloud-based services offer expansion as your organization’s data storage needs grow. Perhaps more importantly, you can also decrease the capacity when you see a drop in your needs.

Cost-effectiveness

Cloud software is a far more cost-effective solution than traditional forms of information storage.

For one, you don’t have to store the data yourself in a physical location which would come with maintenance costs. You also don’t have to maintain and replace the storage drives every few years when the technology moves on, which is quite costly.

Another factor that bears mentioning is the time cost of duplicating files, emailing them to relevant people, and of those people downloading them. This might not seem like much, especially with smaller files, but when this process happens thousands of times a day, it starts to add up.

Easier collaboration

As mentioned before, the instant transfer of information between different people greatly benefits cloud software. However, the ability to collaborate goes further than that.

In traditional collaboration, one person might send a draft to a second, who suggests edits and sends it back. Then, if the first person doesn’t like some of those edits, they would suggest something else.

This takes time, causes great delays in projects, and is very inefficient overall. The key issue here is that each person cannot see what the other is doing until the edit is complete, and if they disapprove of it, that’s time and energy (and money) wasted!

With cloud software, the projects can be hosted online in a place that both participants in this hypothetical example can see. Each edit can be reacted to live as it is being done, saving time and effort in both parties’ cases.

Enhanced data security

Physical means of data storage aren’t the most secure. Once a connection is made, it’s very easy for a hacker to steal data and very difficult for you to stop them without physically severing the link to your server.

Cloud computing offers a unique opportunity in the data security world. Since your providers will necessarily have great data security measures in place (that’s their entire point), your customers can rest safe and easy knowing that their data won’t be stolen.

Cloud software is necessarily shared over multiple parties, which needs to be transmitted in real-time. This makes it an ideal candidate for blockchain security measures, which are considered almost unbreakable.

While data can be extracted from an external source, doing so requires the consent of all parties involved, so hackers would have to go the extra mile. Furthermore, a complete block in the chain cannot be altered, making most run-of-the-mill hacking methods ineffective.

Wrapping up

It’s not always easy to switch to new methods of thinking, but converged strategies are the future as customers are expecting a more personalized approach.

Convergence marketing ensures your customers will get it, as each department will be able to fetch, understand, and send data from across the company.

The next step would be to measure how customers feel about your new approach. Luckily, it’s something you can measure via advanced tools that provide sentiment analysis, providing valuable insights for your business. Read more about it here.

Sentiment Analysis For Brand Building

Posted on Sep 9, 2022 by Emily Louise Spencer

They love me… they love me not.

It’s a question most people ask themselves about loved ones. But what about asking this question from the position of a CEO or a data analyst?

When you do that, you’re conducting sentiment analysis, albeit without stripping a flower of its petals.

When building your brand, one of the most important things you can do is read your audience.

How people feel about your product is imperative to its success. And understanding the nuances of these feelings will help you get a leg up over your competitors.

It’s not just about a general “they love my product; they love it don’t.” It extends to minor details that make up your products or services and how you present them.

If there are things that rub customers the wrong way, keeping on top of them is key to success.

What customers want isn’t always obvious and consistent. If something works in one place and time, there’s no guarantee it’ll work in another. This is certainly true in trendy industries like fashion, where there’s an emphasis on culture and everything changes quickly.

So how do you keep on top of consumer perception and your response to it? Especially in the internet age, where social media posts and website reviews are published every few minutes. There’s simply too much data to analyze manually.

That’s where sentiment analysis comes in.

What is sentiment analysis?

Sentiment analysis, also known as “opinion mining,” is the automated process of analyzing a text and interpreting the sentiments behind it.

Through machine learning and text analytics, algorithms can classify statements as positive, negative, and neutral.

Companies and brands often use this process as a strategy to manage large amounts of data coming from Yelp, Twitter, Amazon, you name it.

This data allows businesses to learn more about customers’ feelings for their products and competitors’ offerings.

How sentiment analysis works

Sentiment analysis relies on an AI engine powered by machine learning (ML) and natural language processing (NLP) to extract information.

Machine learning allows the software to learn independently and become more accurate at predicting the outcome of analysis without being programmed for that explicit scenario. Essentially, it allows the software to “learn” from past examples to improve itself over time.

NLP analyzes human language and the meaning behind it. This covers text segmentation, grammatical analysis, and terminology extraction.

Which algorithms are used for sentiment analysis?

ML and NLP are tools to help the sentiment analysis algorithm produce the final results. There are three types of algorithms that are usually deployed:

Rule-based – This is the basic and easy approach to implement. It’s based on manually pre-defined rules, helping the system analyze the text it reads. The drawbacks are clear, with having to rely on manual inputs that take plenty of resources and aren’t able to evolve automatically.
Automatic – This is the advanced approach, using both NPL and ML. The system is first fed with thousands of expressions that are pre-defined as either negative, neutral, or positive. This is the “training” stage. Then, with its newfound knowledge, it can venture into its “prediction” stage, understand new terms and classify them appropriately.
There is a downside here, though. The algorithm is bound to make some mistakes, and it’s often hard to pinpoint exactly why this happened.
Hybrid – It’s the best of both worlds and the most effective algorithm. This approach Enjoys the high accuracy of the rule-based algorithm while running through new terms and expressions in the blink of an eye.

With these sophisticated algorithms in place, the sentiment analysis tool can go over the endless text and score it based on negative, neutral, or positive sentiment.

Further, when dealing with customer experience, it can also break down the text to topics such as:

Product quality.
Speed of service.
Ease of communication.
And more.

Let’s look at a couple of examples to understand it better.

Due to the large variety of cordless vacuum cleaners and the breadth of functions, people will often turn to customer reviews and see something like this.

How does the sentiment analysis AI understand it? It breaks down this piece of text into smaller ones, such as:

“It’s lightweight, compact, and a brilliant all-round hoover.”

“I’d buy another in a heartbeat.”

“The tank is small.”

The AI then assigns a sentiment for each block of text. The first is very positive, and so is the second. The third is somewhat negative, though it can be considered neutral when taken into the larger context.

Decision makers can then understand what customers think about specific parts of the product or look at the overall – in this case, positive – picture.

Another industry where understanding customer sentiment is vital is the beauty industry.

This eyeliner review paints (no pun intended) a somewhat negative picture.

The review starts with “The pencil itself is great,” which the AI can mark as a positive sentiment. But then come blocks of text saying how it “breaks and is impossible to sharpen,” which are very negative. The review ends with a scathing “will not be buying another.”

Sentiment analysis will help the brand understand that the customers are disappointed with their product and why. In this case, they’ll know work is needed on the durability of the pencil rather than its quality.

As you can see, it’s something a human can do. But the key differentiator for sentiment analysis is the speed and accuracy it can analyze these reviews, something even a team of experienced analysts can’t achieve.

How Revuze performs sentiment analysis

The general themes of NPL, ML, and the various algorithms play a crucial part at Revuze. But to give our customers a competitive edge, we take a step further, using a personalized model for our automated sentiment analysis, helping to maximize accuracy and success rate.

We do it through “local models,” which allow us to adapt our technology to the specifics of each case study or client. We can generate local dictionaries and models within just a few days with 90% accuracy.

Here’s how it works: Revuze’s AI algorithms extract many unique topics, ranging from high-level ones (like user satisfaction and price) to granular topics (such as “softness” for toilet paper or “moisturizing strip” for disposable razors).

Instead of limiting ourselves to only 8-15 generic topics, we analyze 40-80 topics that are highly specific to each business or product we work with.

When you want to understand consumer sentiment around a certain product’s features, you cannot afford to use a sentiment analysis tool limited to generic topics. Personalization is key, and more on that later.

What are the challenges in sentiment analysis?

While algorithms can be very advanced, some text can be difficult for a machine to dissect and interpret.

Sarcasm

Users may write: “We had to wait 45 minutes to get a table. Great!” To a human being, it’s clear that the adjective “Great!” is used sarcastically.

How do we know it? Because of context.

We read the previous sentence, which talks about a long wait time, and we understand that the comment is not positive.

A good sentiment analysis tool has to be able to detect sarcasm from the broader context. Otherwise, you’ll get inaccurate data about your brand at the end of the analysis.

Nuance

Another issue has to do with nuance.

The comment “The movie was not bad” is saying that the movie was not bad, maybe even good. But it also implies that the expectations regarding this movie were so low that the movie is not as bad as one would have expected. This is called “negator.”

“Intensifiers” can also be challenging for sentiment analysis. A user who writes, “The company’s comment on this issue was pretty good,” creates a nuance that would not be there if we read the same sentence without the word “pretty.”

In conclusion, it’s important not to rely on basic sentiment analysis tools, which will not capture the complexity of human sentiments expressed through text.

Why is sentiment analysis important, and what can it do for you

Sentiment analysis gives you more information than simply whether an individual’s interaction was positive or negative.

Using advanced AI techniques, the specific emotion behind a person’s communication can be extracted, leaving you with a much better idea of how they felt when they wrote those words.

Ultimately, ecommerce customer experience is about emotions, and good customer experiences aren’t just about the end product.

A top-of-the-line service in which you were treated poorly will have a far more negative impression than a middling service in which you were treated well.

The specific emotion behind the text being analyzed indicates how you should proceed when continuing the interaction.

Is the customer angry at a perceived slight? Apologetics and problem-solving are the tones you want to set.
Is the issue that the customer dislikes a certain aspect of your product or service? You can point toward similar products that solve these issues.
Is someone excited about a new release and is sharing it all over the internet? Appreciation and thanks go a long way towards building a relationship.

As you can see, sentiment analysis isn’t just about correcting problems or gaining information on cropped-up issues.

You’re trying to build a brand – build a personality, as it were – which requires you to interact with those consumers who have positive words to say about you too.

Now that we have plenty of information let’s explore how you can actively use this data to improve everything surrounding your brand.

6 ways to boost your brand with sentiment analysis

In brand building, it’s important to focus on what information sentiment analysis can give you about your current positioning within the market – your reputation, product strengths, weaknesses, etc.

To that end, we compiled a list that will first help you understand your status, complemented with actionable strategies to improve it.

The various facets of customer experience

Real-time reactions

The key to dealing with customers is to factor in their emotional state and respond accordingly.

This is easy to do face to face but isn’t quite as simple when you’re performing these actions over a text-based medium such as email, social media, or other messaging services.

Sentiment analysis brings a vital aspect to customer service with its ability to flag negative comments or communications for quick responses, allowing you to respond promptly and hopefully end the problem before it spreads.

One disgruntled customer complaining can hugely damage your reputation as the story of their experiences spreads, especially when the reason for their bad experiences is one that other consumers will resonate with strongly.

In this case, sentiment analysis is paired with social media monitoring and other forms of software which will feed into it in real-time, letting you know as soon as a crisis of PR crops up and identifying the emotions behind it.

The approach to solving these crises will depend entirely on the emotion behind the negative PR, whether that’s an outrage, sadness, disappointment, etc.

Improving your product and service

The other way sentiment analysis can assist with CX is linked to product improvements and SWOT.

Identifying problems in your service or deficits with your products and improving them is a definite PR win. More importantly, it comes from listening to your customers and acting accordingly.

Consumers often rank wanting to feel heard and have their experiences taken into account as among the most important factors when choosing a brand or company to provide a service.

If you’re in the service field, paying close attention to what sentiment analysis can tell you about what your customers desire is crucial.

By monitoring the sentiment around your brand before, during, and after changes to your products or services, you can easily judge whether or not those changes were a success.

Because this is happening in real-time, it can all be measured to provide you with information on how you’re doing in the CX world and how to improve future relations with your customers.

Market research opportunities

Sentiment analysis isn’t just for customer experience. It can be used when you’re doing research too.

When performing market research, sentiment analysis helps you dive deeply into your audience’s attitudes in ways that a human being could simply not do.

Most traditional forms of market research use controlled surveys, star ratings, and other similarly structured forms of data.

While it’s certainly useful to use traditional forms of market research like controlled surveys, they are prone to human biases such as leaving feedback only after a particularly good or bad experience. These biases can skew information, affecting your ability to make data-driven decisions.

True, sentiment analysis uses reviews to provide you with information. But to give a more rounded picture, it can search the internet and take information from areas that talk about your market specifically, such as forums, social media groups, and blogs.

Information about what customers desire and what they’re willing to pay can be extracted from these areas, giving you deep insights into your target audience and how you want your business strategy to appease them.

Customer segmentation

Not only can you analyze customer sentiment with sentiment analysis, but with the right tools, you can break it down into segments that show a very different pattern than the whole. After all, not all groups of people are the same.

For example, customers who interact with you via a mobile app or website will have a different experience. Slicing and dicing your data by demographic factors such as age or gender may yield interesting results.

Each group will likely have a different sentiment towards different aspects of your product, and this information will help you cater to them.

Idea generation

Using sentiment analysis, you can analyze people’s behavior when certain topics are brought to light and examine what potential leads you might be able to follow up on.

For instance, a tin of paint sold in a certain size that a significant portion of your customers has been vocal about being too small for their daily uses.

It would be worth investigating whether you can produce the product in a larger tin or multipacks so that these customers might be satisfied.

You can also take positive sentiment and turn it into ideas for future usage.

Did you know that bubble wrap was originally sold as textured wallpaper? As time went by, the creators took note of the positive sentiment surrounding its ability to protect fragile items in transit (and how fun it is to pop!), adjusting their marketing approach until it had radically changed from their original intentions.

Competitive Analysis

Sentiment analysis doesn’t just give you information on your standing within the market. It can give you insight into how your competitors are doing too.

Online reviews and social media buzz are open and visible to anyone. Using them as a source of competitive intelligence is perfectly acceptable in the business world.

Sentiment analysis can give you information on how the consumer base feels about your competitors, whether as a brand or on an individual product-by-product basis.

Revuze has taken the step to combine consumer sentiment with other forms of data in order to give powerful pieces of information and insights into the minds of your competitors. A few examples of such are:

Sentiment vs. star rating: The perceived expectation of quality that a brand or specific product has in the eyes of consumers.
Sentiment vs. total sales: The ability of a brand or specific product to maintain customer satisfaction across a broad spectrum of consumers.
Sentiment vs. total product variations: How easily a brand can maintain overall customer satisfaction while expanding into a diverse range of products.

Our AI insight engine, Sentimate, can help you perform these analyses in great detail, from examining a brand as a whole to an individual product out of thousands.

Using data extracted from online reviews and chatter, you can gain an incredible amount of useful information as long as you have the tools to analyze it.

Ratings and reviews across an industry

Ratings and reviews are part of the User Generated Content (UGC) realm. It is exploding and is expected to be over 90% of the world’s data soon.

UGC (ratings and reviews in our context) is important to millennials, with 86% saying it’s a good indicator of a brand’s quality.

Further research from Spiegel shows that reviews by verified purchasers vs. anonymous ones can bump purchase likelihood by 15%.

This is why brands encourage customers to leave reviews and provide feedback.

Now imagine being able to gather all these consumer opinions from online retailers and analyzing them for sentiment and topics.

What consumers like or not – why they buy, what they like or hate about a product, a service, or a shopping experience.

This is possible across an entire industry – all brands, all products, all reviews, and ratings, analyzed via sentiment.

The reason it’s so valuable and important is because of the breadth of the information and the depth. This is the high-quality raw material (ratings and reviews) and is highly focused on this medium of commerce, meaning:

Low ratio of noise-to-insights (Low “chatter”).
High level of granularity.
Store-specific feedback (Walmart has it in stock, Amazon doesn’t).

Getting started with sentiment analysis: the four main steps

As we dig further into understanding this powerful marketing and branding tool, let’s look at the pipeline of steps usually applied in sentiment analysis.

We’ll consider sentiment analysis for a company or brand in this pipeline sample.

Step 1: data gathering

First of all, we need the data that we will later analyze.

We can gather data from social media, namely Twitter, using scraping tools, APIs, customers’ data feed, and so on. We can also gather data from user reviews on services like Google and Yelp.

We’ll be looking for all mentions of the company or brand over a specific time.

This practice is very common in all forms of social media listening.

Step 2: text cleaning

Text cleaning tools will allow us to process the data and prepare it for analysis by:

Removing stopwords (a, and, or, but, how, what…).
Taking out punctuation (commas, periods…).
Reducing words to their stem.

These tools will allow us to “clean” or “strip” the texts from anything that might be irrelevant to the analysis.

Step 3: analyzing the data

At this point, we can use our sentiment analysis algorithms to analyze the data we have gathered.

As we saw earlier, the most common classification is the spectrum between “positive” and “negative.” However, more refined tools may also identify more complex sentiments such as anger, sadness, etc.

The algorithms will use a sentiment library to identify opinions and classify them.

Step 4: understanding the results

At the end of the process, we should be able to see the data grouped into major categories. We should be able to see if we have more positive, neutral, or negative reactions.

Having each sentiment tagged with its original date is particularly important, as a timeline will show us if we had “peaks” (surges of positive sentiments) or “valleys” (surges of negative sentiments) at specific moments in time.

We might therefore be able to find correlations between something that happened on a specific date and a surge of opinions regarding our brand.

While we might identify a peak or a valley while performing sentiment analysis, the opposite might happen—we might notice a surge in mentions on Twitter and use sentiment analysis to understand the reactions.

So far, we have talked extensively about ideas and strategies. While it’s all well and good talking hypotheticals, nothing beats seeing sentiment analysis in action to get a feel for how useful it is.

Sentiment analysis examples

We’ve handpicked some examples from our Revuze Explorer & Sentimate engines to give you an idea of what this sentiment analysis looks like and how it can be used.

Sentiment analysis using product review data

Sentiment analysis using product review data is perhaps one of the most important things every company (and consumer insights expert) looks after. After all, the best way to understand if your customers like your product or service are by understanding their sentiment towards it.

The easiest way to find out what your customers think about your product is by asking them to review it. The job doesn’t end here. Not all reviews are created equal!

You must collect all the relevant reviews for a specific product, arrange them into the relevant hierarchies, and compare them against the industry and your competitors.

A good example we can share would be the sentiment analysis using product review data we did on Lysol VS Clorox.

In the report, you can find exactly how Revuze deciphered the relevant product features by tapping into the consumer sentiment and understanding what’s working and what’s not.

Further, these millions of verified purchasers’ feedback on your competitors’ products and yours can each be cross-referenced against its product rating.

You can learn which topics are positive drivers for 5-star reviews and which are drivers of negative reviews.

This correlation can be quantified with sentiment analysis to let you know the exact percentage of driving terms towards product ratings.

In this example, it’s clear here that the top drivers for 5-star reviews are:

Fit.
Comfort.
Shipping.

What is also pretty clear here is that this product could have gotten MANY more 5 stars if it was:

True to size.
Not suffering from fake sales.
More durable.

This is a measurable, quantifiable way to boost your product rating for consumer products and services in an industry that includes ratings and reviews:

SWOT analysis

Sentiment analysis can also provide SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats.

SWOT analysis is used in product design and marketing to great effect, as it shows not only the strengths and weaknesses of your product or service but also those subjects which may become strengths or weaknesses in time.

Using sentiment analysis, you can measure customer satisfaction rates of a specific aspect alongside its importance.

This example shows a SWOT analysis of a 24” laptop.

Looking at the chart above, we can see the following listed as strengths:

Display.
Color.
Compatibility.
Size.
Speed.

These are the areas of the product which customers are greatly satisfied with. More importantly, they’re areas where customers expect high quality. These can be assumed to be the main drivers of good reviews and high sales.

The weaknesses are as follows:

Battery & Charging.
Audio Devices.
Camera.

These areas are those in which the product is lacking and needs to be improved ASAP.

Product design teams should focus on improving these areas in the next model or making accessories that circumvent these weaknesses.

Further, you can see some opportunities in:

Performance.
Assembly.
Quality.
Mouse & Touchpad.
Upgrades.

These areas are where the product greatly satisfies customers but aren’t that important to overall satisfaction.

The laptop manufacturer has a couple of options. Emphasize these aspects to niche users, improve them further to give the product an edge over the competition, or simply leave them be.

Finally, the following threats were identified:

Keyboard.
Ports.

Threats are low-rated product features, but ones with a low importance rating to customers.

Threats aren’t currently problems that need solving immediately, but you need to keep an eye on them as times change, product uses shift, and what was once irrelevant becomes very important.

Let’s take a step back and look at the bigger picture, starting with the top two drivers of purchase are:

Color.
Display.

These two factors are rated the highest in customer expectations while also being highly rated. As color rates are higher in customer expectation than display, greater care should be taken to maintain quality in the next iteration.

However, this laptop could have gotten more sales and higher customer satisfaction for the least effort if the battery and Charging had been addressed.

Since battery & charging are rated the most important to consumers, they should be tackled first. Following that are two other weaknesses, slightly less important to consumers: camera and audio.

As the camera function is not only rated as more important but boasts a slightly lower customer satisfaction rate, it should be placed in priority before the function of the audio device.

Using sentiment analysis, we’ve identified the main features that drive purchases of this big-screen laptop. When tackled, we also identified which weaknesses would give the greatest theoretical return on investment.

Of course, this assumes that all weaknesses cost the same amount to overcome, which is incredibly unlikely. However, using SWOT analysis and cost estimates combined, you can judge which weaknesses will have the greatest benefit for the smallest cost.

Monitoring chatter to track overall sentiment

Customers’ importance on product features isn’t the only way to sort product features.

There’s also the volume of sentiment around said features, which lets you judge which topics will please the most customers rather than indirectly.

Let’s look at this 12-cup coffee maker and the chatter surrounding it.

As identified in the graph above, the product’s functionality is the most commonly discussed topic. This has an overall negative sentiment, which means it should be high on the list of adjustments.

Looking at the most negative topics, we can identify the water reservoir capacity, durability, and the lighting on the coffee machine as topics that create very negative chatter.

However, those topics all consist of a much smaller proportion of talk around the machine than that of functionality.

This means while fixing them will create the most positive sentiment in those who were unsatisfied, the overall numbers might not lead to as much of an overall increase in customer satisfaction.

Market comparisons

Another factor that you may want to consider in product design is the overall state of products in the market.

A quick look at the coffee maker mentioned above can make the following comparisons to the market averages.

The vertical lines above represent the market average sentiment for each feature, with the red and green dots representing the sentiment around those particular features.

Looking at the chart, we can see that while the functionality of the coffee maker is below the market average, it is only by a hair. Thus, improving the functionality of the coffee maker is something that would make it stand out.

Similarly, the machine’s durability is quite close to the market average, meaning that while the chatter around this topic is negative, it’s a market-wide issue and not a specific weakness.

Switching to the water reservoir feature, we can see that the sentiment is far below the market average for a machine of this type. Not only is this a problem, but it’s likely one that causes a lot of negative reviews. Similarly, product defects seem quite severe, causing a lot of negative sentiment.

In conclusion, comparisons to the market averages tell us our coffee maker should prioritize its water reservoir in the design stage.

Additionally, the manufacturer should take a look at their production to limit the number of defective products that seem to be received by customers. This can be achieved in various ways like stricter quality control.

Wrapping up

Product ratings and chatter are the gold standards that drive online sales and higher conversion rates. Finding a quantifiable, measurable way to analyze and impact them is imperative.

Sentiment analysis is an incredibly useful tool for extracting information, but when you pair it with other forms of software, the true strengths start to shine through.

With AI-powered engines capable of using machine learning to grow and expand when new factors are introduced, sentiment analysis software will continue to grow and adapt to the language, slang, and syntax changes.

This constant evolution will help sentiment analysis keep up with the growth of ecommerce ratings and reviews, offering a way to align with the top of mind of customers in your industry and what they like and dislike.

This is done by leveraging sentiment analysis across retailers, brands, and products. With this, you can drive conclusions as to what drives product rating success (or failure):

For your product portfolio.
Learning from your competitor’s portfolio.
Comparing across retailers/audiences.

Then, you can analyze, change and impact any product rating by:

Optimizing what consumers are happy about on a Product Description Page (PDP).
Fixing product issues that consumers care about and drive low product ratings.
Addressing product rating differences between retailers.
Understanding shopping experience and customer service impact on the product rating.

All of this is possible when you select the right sentiment analysis tool. We recommend that you prioritize solutions that are:

Holistic: Providing the data, data cleansing, and analysis all in one spot.
Cross-level: Provide sentiment analysis by product and feature, not just brand.
Self-serve: Do not require experts in the loop but allow direct use by business users.
Ecommerce focused: Focus on eCommerce retailers as a data source (Verified buyer’s feedback)

If you want to give Revuze a go, we’d be happy to show you around the platform.

5 Ways To Improve Ecommerce Customer Experience in a Post-COVID World

Posted on Sep 1, 2022Dec 15, 2022 by Emily Louise Spencer

5 Ways to Improve Ecommerce Customer Experience in a Post-COVID World

The COVID-19 pandemic completely transformed the way our society works. Suddenly, almost overnight in some cases, people went from crowded trains and bumping elbows in stores to having to stay away from each other for their own safety.

And when people couldn’t get into physical stores, more and more turned into online shopping. This change has happened swiftly, and many retailers were caught off guard, scrambling to make the necessary adjustments, resulting in a mixed ecommerce customer experience when visitors attend their virtual shops.

This isn’t a passing trend, and shoppers are taking a liking to shopping online. Businesses have to up their game and find creative ways to improve their ecommerce customer experience if they want to generate new sales and retain existing customers.

Luckily, it’s a goal that can be achieved.

Read on to find out how to provide your customers with the best ecommerce customer experience possible.

But first things first.

What is the ecommerce customer experience?

As opposed to User Experience (UX), the Ecommerece Customer Experience (a.k.a ECX) focuses less on the technical and functional aspects of the experience and more so on the overall feeling.

It starts from the customer’s first touchpoint with your brand and accompanies them every step of the way – before they purchase anything, and some would say until the end of time.
In every one of these steps, thoughts and emotions arise. Together, they’ll dictate engagement, conversions, and retention. All of these tie into the broad term of ecommerce customer experience that shapes how customers interact with your brand.

It’s understandable why it’s such a big deal. And the data backs it up, with 73% of respondents mentioning customer experience as an essential factor in their purchasing decisions.
Yet businesses aren’t prioritizing it, as only 49% say companies provide a good customer experience.

There’s a clear gap here and a fantastic opportunity for you to differentiate your brand by providing an excellent ecommerce customer experience that will increase customer loyalty and generate new ones.

How COVID changed ecommerce

2020 marked a noticeable shift in many aspects. Ecommerce was no exception to the rule, with the impact of the pandemic being felt far and wide throughout the market.
Thanks to being based digitally, ecommerce was able to dodge most of the changes that crushed other forms of trade and, in fact, only increased in market share during this time period, with it hitting 30% of overall UK commerce during the lockdown periods.

When such a massive behavior change occurs over a very short time span, it means systems are being thrown off balance.
Let’s review how the digital market rearranged itself to better understand how to provide shoppers with a better ecommerece customer experience.

Increased demand

With consumers unable to enter their local brick-and-mortar stores, whether due to restrictions or simply not having the time, they tend to switch to online forms of purchase. This is especially true of the younger, more tech-savvy generations, though older consumers also got in on the action.

In response to this, plenty of retailers upped their delivery game. Curbside pickups, increased number of delivery vehicles, and more flexible means of delivery were heavily emphasized, with ready-to-ship stock also favored.

Wider customer bases

As mentioned above, the number of those using e-commerce increased over the course of the pandemic and its subsequent restrictions. Something that also increased was the range of consumers using e-commerce.

It’s a common stereotype for those in the older generations to not know how to use new forms of technology. When a new form of technology is introduced, and you’ve grown up and lived without it, you can often carry on and get by just fine without ever learning to use it.

This isn’t the case in the middle of a global pandemic, especially one to which older people were considered more vulnerable. Whether it’s the elderly learning to use the internet or their children doing it on their behalf, the audience for online purchases definitely got wider as time went on.

The switch to pure ecommerce and the demand for interactivity

With the ratio of ecommerce to walk-in stores rising, many businesses found that it was actually more efficient and cost-effective to switch to a pure ecommerce approach than continue using brick-and-mortar stores.

Change is never easy, and though consumers weren’t likely to make the switch themselves simply due to habits, the pandemic was the perfect time to showcase the advantages of pure ecommerce.

The technology used in ecommerce also leaped. Virtual showcases, more detailed descriptions, and even interactive forms of media such as 3D models became widely used to improve the ecommerce customer experience.

Consumers like to try before they buy, a fact that has kept traditional retail stores afloat, but in the age where technology has become so advanced that you have ways of doing that from your living room, there’s very little need for them.

For example, Australian accessory company Bellroy leaves nothing to the imagination, showing potential customers what their wallets would look like.

Furniture companies employ 3D models that allow you to examine your new comfy chair from every angle to replicate the retail customer experience.

With the shift to online forms of communication, the demand for quick answers and information has shot up.

If you have questions about a product or service, asking in-store has traditionally been the go-to method of obtaining information. With restrictions in place and limited numbers of stores allowing full face-to-face contact, those who ask these questions have had no choice but to turn to online methods of communication.

Fast responses and clarity are the main concerns. If communication is slow and confusing, customers will likely shop with another provider who will answer their questions if a clear and quick answer isn’t provided.

This leads me to my next point.

Willingness to switch brands

Customer loyalty declined during the pandemic, especially in pure ecommerce stores.

When you’re walking down the street or through a shopping center, it’s not easy to find the motivation to browse alternate stores when the one you usually go to is lacking.

You might settle for a different brand or a lower quality item instead of taking the time and effort to travel to another store. With ecommerce, that other store is merely a click away.
To keep potential customers in your virtual store, you must provide the best ecommerce customer experience possible.

Here are our top 5 ways to do that.

5 superb tactics to up your ecommerece customer experience game

Naturally, the shift in consumer behavior means you will have to switch approaches to running an ecommerce store if you want to satisfy them. This is especially true of customer experience since the lowered loyalty levels mean consumers will likely switch away from your business after having a single bad experience with you.

If you want to keep up with your CX game but are unsure where to start, don’t fear! We’ve analyzed five major changes that have seen success over the past few years and cataloged them below so you can understand what they are and how to start using them.

Building a community

You might think that building an online community is as simple as running social media pages for your brand, but it’s not entirely true. This view doesn’t take into account the nuances of what your audience wants and the values they hold.

Forming a community is less about your business and your products and more about how you shape these to meet the desires of the people you cater to – from Millennials and Gen Z all the way to baby boomers.

For example, the younger generations care deeply about sustainability, with more than 50% saying that sustainability is important when making purchase decisions.
These people have grown up seeing the effects of climate change and the impact of unsustainable business practices on the world around them. They are willing to pay a premium if it means purchasing from a sustainable source.

International shoe brand TOMS caters to this audience by putting sustainability and the community front and center on its website, with the help of informational videos and articles to educate shoppers.

Older consumers, on the other hand, have been shown to care more about things that affect their own health and comfort, including a focus on luxury items that emphasize relaxation and security above all else.

How to build your community

The first step is simple – you need to know your audience.

No matter how it is performed, all commerce is limited by what consumers are willing to pay for. This extends to your company, your values, and how the population sees them.

In business, there are no absolutes. You need to change your strategies, processes, and approaches when there is a shift in the priorities of the community you serve.

When building a community around a brand, the first area you look to is often more straightforward areas such as social media pages or forums, rather than the expensive and time-consuming process of overhauling your website. This will help you spread the word about who you are and what you do immediately and at a minimal cost.

A brand’s community is all about emotional context and familiarity. Consumers’ attention spans are shorter than ever, so try and keep your messaging short, simple, and easy to comprehend if you want to expand your community.

Those who have an emotional connection to your brand, and through that to each other, will reach out to you if you make it possible. These consumers are already willing to communicate with you and share their opinions and desires, you simply need to make it happen.

From there, regular engagement, affiliation programs, and creating community platforms where consumers can discuss your brand without your input are sensible next steps. Which of these is most effective and how you should approach them depends entirely on the individual brand in question.

Social media interactivity

Using social media isn’t just a case of engaging with customers and giving out information upon request; there are actually many facets to it. Four of the main components that can be utilized are:

Social media listening: Using software to capture customer insights based on publicly shared information.
Social media marketing: Outreach and brand awareness, traditionally thought of as advertisement and spreading information.
Social media reputation management: Taking action on reviews or feedback left on social media, acknowledging customers’ difficulties and how you can solve them.
Social media engagement: Talking to your customers directly when they have questions, solving issues that they have in a publicly viewable way.

Each factor brings new information and new ways of improving ecommerce CX to the table.

Social media listening can grant you access to information from posts that both are and aren’t directed at you. In contrast, social media marketing allows you to present new information and opportunities to your consumer base.

Social media engagement allows you to directly connect with your customers in a publicly viewable and easy-to-see way, both forming an emotional connection with them and allowing others to directly witness solutions to possible problems that they can utilize themselves.

Social media reputation management consists of responding to reviews or feedback that isn’t directly visible to the average viewer unless they’re looking for it.

Interact with customers in both public and private depending on their preferences. This allows you to go into more detail and have fewer limits imposed by platforms.

Two good examples of social media reputation management in action are FAQs or customer questions on product pages within social media. Questions can be responded to either directly on the page or in a DM to the customer in question.

A good case for publicizing the answer would be to solve a similar issue for others. On the other hand, answering in private can help save face and avoid any potential embarrassment that might arise from certain questions.

While social media listening & marketing can be done formulaically and on a schedule, the other two facets require active monitoring as they’re reactive rather than proactive.

How to get started with social media interactivity

To begin, you need a social media page. Once that’s set up, you should assign duties to your CX team based on each of the four above categories of interaction.

An automated service can do the listening part of social media listening. Later on, it’s recommended that a team member will sift through and analyze the data for actionable insights.

Social media marketing can mostly be done routinely. That said, you should always strive to keep your content fresh and interesting. Using the same templates and information repeatedly will lead to consumers scrolling past you as their brain filters out your posts.

In addition, you need to consider each social media platform’s unique rules and limitations and the audience that frequents them. Tailor your posts to each one rather than simply copy-pasting.

Twitter, for instance, limits your text, so placing some of the information in image form. This will both make the post more eye-catching and circumvents the character limit. The end result is a post that will gain and hold readers’ attention.

Social media reputation management and social media engagement are both far more unpredictable. Consider assigning a dedicated night owl to manage these aspects. Social media runs 24/7 and won’t stop just because it’s after 8 PM or a weekend.

Another factor to keep in mind is speed. Like a series of dominoes, posts can come one after another, leaving your reputation in ruins. The same dedicated team can spot fresh posts mentioning your brand, respond promptly and avoid any potential fallout.

Personalizing the ecommerce customer experience

The idea of a personalized shopping experience is nothing new, it stretches back to the oldest forms of commerce on record. It’s the idea that what customers are exposed to should be relevant to them.

This isn’t just a theoretical idea. A vast majority of customers expect a personalized shopping experience. And when they don’t get it, they get frustrated. You can guess what will happen next.

How to get started with personalization

Personalization can happen in any form of communication. On your web pages, emails, SMS messages, and more. You just need a platform that can accomplish this magic and a wealth of data.

Here are some of my favorite ways to tackle personalization:

Localized content: language, interests, and region-specific information. Check out this example from Paul Valentine, as it recognizes the customer’s geo-location and sends them to the relevant region.
Recommended products: in side/banner adverts, suggested products, and email promotions. I’m sure most of you have received a “We thought you might also like” email filled with products that complement the one you just purchased.
Targeted discounts: relevant products in emails, pop-up promotions, and bundles.
Navigation adjustment/dynamic layouts: adjustment of website or app navigation functions and layouts based on the previous interactions a customer has had with you.

Dynamic supply chain planning

With the increase in online shopping, ecommerce demand and turnover have remained high even with COVID-19 restrictions being a thing of the past in most countries.

Those consumers who entered ecommerce during the pandemic largely did so as a replacement for in-store purchases. They demand instant processing and same-day dispatch where possible. They treat a website exactly like a brick-and-mortar store – a place to find answers and obtain products immediately.

This is complicated by the fact that the pandemic disrupted supply chains all over the world. Ships were stuck in port, flights were grounded, and vans were told not to start. While the gears of global supply have started turning again, various global factors have left it in less than optimal condition.

And this dramatically affects the ecommerce customer experience.

Fortunately, there are several factors you can plan for that allow you to make up for most bumps in the road when it comes to your supply chains.

The first step is to assume that there will be problems you cannot predict or fix yourself, as that’s true of any dynamic involving two or more parties. Once you’ve accepted that, you can begin looking at your supply chains and predicting what obstacles might crop up in your path, then start planning how to avoid them.

How to get started with supply chain alternatives

There are several things you can do to up your supply management game, all of which involve the use of technology to some extent.

Fear not, for during the course of 2020-2021, alterations were made to supply chain management (SCM) software, and most of the bumps have already been determined and accounted for by the experts.

Finding local alternatives to international materials/goods. With international trade being among the most disrupted, finding local alternatives to goods that you usually purchase from abroad is a must. This ensures that supply chain disruption is minimized and nets points with consumers who love to shop locally.
Factoring in scarcity. One of the main issues facing manufacturing in the current times is a shortage of rare materials and goods, either due to mines and plants operating at reduced capacity or supply chains having been diverted.
In any case, if you rely on these components or goods as the main facet of your ecommerce business, you will need to adjust prices and margins to account for the increased cost of acquisition. In addition, you need to be prepared for the possibility that supplies will dry up further and stockpile to keep your operations moving while the supply chain issues resolve themselves.
On the flip side, simply because shortages exist now does not mean they will continue to do so. The bullwhip effect, as it is called, is a well-known effect that causes supply shortages to be passed up the chain, overcompensating each step until an overabundance is created.
Using omnichannel for inventory management. Inventory management is a nightmare at the best of times, and when you’re dealing with ecommerce, where you might have multiple storage locations across different cities, it’s especially challenging.
Omnichannel approaches combine all your information into one database, often using cloud software to instantly transfer information. With demand for instant answers and speedy deliveries at an all-time high, knowing precisely what you have access to and where it is located is crucial for an excellent ecommerce customer experience and success.
Accounting for delivery delays and transportation issues. There will always be delays and other transportation issues. That much is inevitable even if the times of lockdown seem to be behind us. While you can’t stop these from occurring, what you can do is account for them in your delivery estimates.
Overestimating delivery times is often your best bet, especially in cases where the mode of transportation you use experiences regular delays. A customer who expects their order within fourteen days and receives it within seven is a happily surprised one, compared to the opposite scenario.
The uncertainty of demand. In the current market, it’s not always clear whether customers will continue their current spending habits or alter their behavior. The entire summer vacation of 2020 basically did not occur. It was a massive blow to retailers looking to capitalize on this regular, predictable demand increase for certain items. And with inflation rising, we may see purse strings tighten in the upcoming months.

In contrast to the advice given above, if demand is uncertain and you’re not sure if consumers will continue to purchase your products, do not stockpile. Some ecommerce stores have even switched to a model where they order goods from the manufacturer only after a customer has made an order. It may adversely affect the customer experience but will keep you in the black.

Informative & interactive product pages

When shopping online, consumers are unable to physically see products in person before purchasing.

Viewing a product remotely and fully analyzing its capabilities is an attractive proposition. It saves consumers time and effort while allowing them to view products from all over the country.

It’s long been believed by the general public that when you order online, buyers beware, but creating informative and interactive product pages puts this fear at ease.

How to get started with helpful pages

First of all, check what the platform you use offers. Some have strict limitations on page size and images, while others allow a more free hand.
Amazon, for instance, imposes a title limit of 250 characters and a description limit of 1,000 characters. In addition, only six photos are allowed in the main part of the listing for any individual product.

eBay imposes similar limits, though indirectly, as their pages will cut any description over 800 characters down to 250 characters on mobile devices.

Using your own website will avoid these limitations. But before you run off to the drawing board, consider if the value outweighs the costs and challenges, as creating a website that provides a great ecommerce customer experience can be tricky.

Ultimately, there is no clear line where it’s sensible to switch from a pre-existing platform to your own. It depends on your industry, reputation, and engagement, amongst many other factors.

Once you know your limits, work with them instead of against them. Aim to make your page as informative as possible within the text confines. This can include:

Hitting the right keywords to make sure you show up in searches (SEO).
Adding elaborate descriptions to give consumers accurate ideas of your products, dimensions, manufacturer, model numbers, etc.
Listing the parts included in your product. This is especially important if your product requires batteries or cables, etc.
Naming all the features of your products in order to give the customer an idea of versatility.

In addition, you should ensure that videos and images of your products are not only accurate but have a sense of scale.

Ideally, when customers view your page, they should be able to imagine themselves next to your product after seeing just the media content, knowing its size and weight, etc. Remember how Bellroy used an interactive slider to change the wallet’s look? Think like that.

Further, as consumers often view websites in other countries, it’s wise to have measurements in multiple units, i.e., in both cm and inches, both pounds and grams.

Lastly, ensure your page is optimized for all devices and operating systems. Customers move around between their laptops, tablets, and phones, and you need to make sure your page looks the part in every possibility to provide to ultimate ecommerece customer experience.

What’s after ecommerece customers experience

The world of ecommerce was shaken up immensely by the COVID-19 pandemic and the restrictions imposed on the world. Keeping up with consumers’ expectations is difficult, but after reading this article, you’ll better understand how to improve your ecommerece customer experience.

Remember, though, that the world of CX is constantly changing. What once worked may be rebuffed, and what once was reviled may become commonplace.

Ultimately, the decision about how to approach CX and what aspects to focus on is up to you, and there is no absolute right and wrong answer. Different demographics and industries have different needs, and you’ll need to test and figure out what works best in your case.

If you need a hand in analyzing what customers think of you, check out this blog post for further insights.

What Is Consumer Confidence?

Posted on Jun 24, 2022 by Emily Louise Spencer

What Is Consumer Confidence?

Consumer confidence is an economic indicator, one that measures the overall state of the economy based on how consumers feel about it and their own personal financial situation. It’s measured via either monthly or quarterly surveys targeted at households rather than individuals, with the Consumer Confidence Index (CCI) and the Michigan Consumer Sentiment Index (MCSI) being the main two indexes used in the US.

Both of the above indexes are released monthly, with relative values adjusted according to a standard. This makes reading these indexes at the basic level easy enough for the average layperson to do, with deeper understandings also being available with deeper analysis.

Consumer Confidence vs Consumer Sentiment

What is the difference between consumer confidence and consumer sentiment?

Consumer sentiment is another economic value that is measured via monthly surveys. While the two may seem similar, the term “consumer confidence” usually refers to employment and labor market factors, while “consumer sentiment” places more emphasis on individual household finances. You can think of consumer confidence as a subcategory of consumer sentiment, one aimed at examining employment stability.

While both the CCI and MCSI measure consumer sentiment, only the CCI is seen as a source of information on consumer confidence as the questions it poses are directly related to employment conditions and the financial security these bring.

The Consumer Confidence Index

The Consumer Confidence Index (CCI) is a monthly survey administered by the Conference Board, based on five questions that households around the US answer. Around 5000 households are surveyed each time, spread out according to population density in order to try and get an accurate picture for the entirety of the USA.

The questions the CCI asks are about the following topics:

Respondents’ appraisal of current business conditions
Respondents’ appraisal of current employment conditions

Respondents’ expectations regarding business conditions six months hence
Respondents’ expectations regarding employment conditions six months hence
Respondents’ expectations regarding their total family income six months hence

The answers to the first two questions can be taken and converted into the Present Situation Index, looking at the current situation that consumers find themselves in, with the answers to the latter three forming the Expectations Index, a measure of the outlook for the future. Together they form the CCI, though it’s been argued that the two measures are more valuable when separated than together.

Understanding The Consumer Confidence Index

Consumption is the lynchpin of the US economy. On a basic level, the CCI can be thought of as an indicator of willingness to partake in this process.. If consumer confidence is high, this indicates a willingness on the consumers’ parts to spend more money, thus stimulating the economy. If the outlook is low, spending will decrease and the overall economic health will be lower.

Overall, large drops in the CCI indicate periods of economic recession, while climbing rates indicate economic recovery. It should be noted that the line goes up and down periodically, so while all changes are noted only those of 5% or greater are considered “true economic indicators” by experts.

Going deeper, the two facets of the CCI can be contrasted in order to glean more insight. Below you’ll find the Present Situation Index (PSI) and the Expectations Index (EI) on the same graph for comparison.

As you can see, the two indexes are not always aligned. Since 2014 the PSI has sat above the EI, only dipping below it in early to mid 2020 at the beginning of the COVID-19 pandemic. This contrast indicates that while consumers are fairly confident in their current situation, they expect their economic situation to worsen in the future and thus will look to spend less as time goes on.

On the other hand, there have been moments where the PSI sits below the EI, for example the period between 2009 and 2014. This indicates the opposite to the above case, where consumers expect their situation to improve over time compared to their present.

Taking just the PSI into account, large drops over a relatively short period of time are an indicator of economic recession, as when the economy takes a turn for the worse employment stability is not guaranteed.

As you can see in the two shaded areas of the graph above which represent economic recessions, the EI also may dip but may also remain unimpacted. A dip in the EI indicates a longer-term economic impact, whereas if it remains stable the recession is expected to be short-term.

One crucial thing that you should keep in mind is that these numbers are all based on consumer beliefs, not economic data, and cannot take into account unforeseen problems that impact the economy. The COVID-19 pandemic is a prime example, with consumers being completely unable to see it coming and that being reflected in the EI on the chart above.

How Is The Consumer Confidence Index Measured?

As mentioned earlier, the CCI is based on responses to five questions asked to households around the US. The mathematics of the CCI are rather complex, but a simple explanation is that it is a relative value – it’s compared to a point in the past in order to make the numbers less complex.

In the case of the CCI, that number is currently the value that was received in 1985. All other numbers on the chart are measured as a percentage of that value, with 100 being equivalent to the consumer confidence that was recorded in 1985, less than 100 representing lower consumer confidence and more than 100 being a sign of greater consumer confidence.

Criticisms Of Consumer Confidence

The Consumer Confidence Index is considered one of the most reliable economic indicators in the US, with banks and corporations watching it closely. That doesn’t mean that it lacks flaws though, as no index can take into account every factor that affects the economy. Below you’ll find some of the criticisms of the CCI, and why those criticisms matter.

Strong Fluctuations
The CCI is prone to fluctuations, as can clearly be seen on the charts in the previous sections. Because of this, those monitoring the CCI and using it to predict economic outlooks may have a reaction to a perceived economic boom or downturn, when in reality it’s nothing more than a monthly fluctuation.
Plenty of organizations will ignore fluctuations that are less than 5% of the index in order to account for this, however even this doesn’t cover all cases. Others have started using a moving average of values, however the Conference Board does not provide raw data so these values are pulled from a chart and therefore not completely accurate.
Lagging Indicator
Critics of the CCI have long since classified it as a lagging indicator, one that can only react to changes in the economy after they have happened. While true that it takes time for economic impacts and the news of them to filter through to consumers, in the age of the internet and instant communication this criticism is less valid.
Oversimplification
The CCI covers the entirety of the US, and thus does not account for local economic impacts. For instance, hurricanes tend to hit Florida and the other south-eastern states fairly regularly and have a great impact on consumer spending in that area. The CCI, covering the entire US, will fail to show that impact and any business in those areas that takes it at face value will be in for a bad time.
Consumption vs Sustainable Investment
According to Adair Turner, former Chairman of the UK Financial Services Authority, “if credit finances consumption rather than useful investment, it is more likely that the debts created will subsequently prove unsustainable.”
What does this mean? Well, in short, it’s that using the CCI to make predictions about the economy will lead to organizations creating unsustainable business models that will eventually backfire. Unsustainable debt and an unstable housing market have often been blamed for the 2008 housing crisis and subsequent global recession. In short, consumption as an economic foundation has limits and the CCI can fail to acknowledge these.
Unreliable Data
A final criticism, one mostly aimed at the Expectations Index, is that consumer behavior in the future isn’t necessarily linked to how they expect it to turn out in the present. Minds can be changed, estimations can be wrong, etc. and some critics have slammed the EI as simply being guesswork.

The Business Cycle Indicators

The Business Cycle Indicators (BCI) serves as a means of examining economic prospects from the perspective of businesses rather than households. This index is gathered using similar methods as the CCI, however the respondents are higher ups in the business world with the questions aimed at their organization, rather than them personally. The BCI is far more useful to those who deal mainly in B2B transactions as the economic factors that affect these necessarily aren’t represented in the CCI.

The BCI is a far more complex and detailed report than the simple outlook of the CCI, containing dozens of different factors and indicators that may affect the business world. For this reason it’s often seen as more reliable but in turn more difficult to interpret. Categories of indicators examined in the report include:

New manufacturing orders
Claims for unemployment insurance
Stock prices
Building permits
Interest rates
Manufacturing hours
Export/import ratios

While the report mainly focuses on the US, there are comparisons made available at the end of each monthly report to other countries, including Japan, the UK, China, and Canada, with information pertaining to industrial production and exchange rates being among those included.

While the sheer volume of information may seem daunting – each report is around forty to fifty pages long! – you can narrow it down by focusing only on the information relevant to you. For instance, the manufacturing orders are split into categories based on industry thus you can ignore all not relevant to your business.

The BCI is an extremely useful tool to have in your pocket, and if you can decipher it even a little it will prove a great boost to your business. Information that you can take away from it includes:

The likely interest rate on a business loan at any point in time, taken directly from a chart of interest vs time.
Expected manufacturing output for a particular industry, useful to know as both a supplier and buyer as supply vs demand will affect pricing.
The number of business loans currently given out, as banks are less likely to approve new loans if many are outstanding.
The Federal Funds Rate, which can be thought of as an extremely short-term interest rate charged on overnight borrowing.
Price indexes, which can help you decide what to charge for your products.

Customer Sentiment

While all this is good information on the state of the market at large, it can’t tell you about how a specific product is viewed by its purchasers. Knowing how consumers and businesses alike react to a specific brand or product is known as customer sentiment, and it can be a great help when used alongside consumer or business confidence to determine the viability of products in the current market.

Customer sentiment is aggregated from existing reviews rather than surveys, as making surveys about hundreds of individual items is simply not feasible. Because of this, customer sentiment can be biased heavily towards either the positive or negative as customers are more likely to leave reviews after a standout experience with a particular product or brand, whether that is good or bad.

This doesn’t mean that customer sentiment is useless, far from it. The perception of a brand or particular product in the customer’s eye is a great indicator of how willing people are to spend money on it, which when combined with the CCI/BCI can give you an idea of how much they are willing to spend at any point in time. A low customer sentiment paired with a high CCI/BCI rating can still turn profits, while a high value of customer sentiment might still be a cash cow when the CCI/BCI is low.

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