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!

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.

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.

Ready to put your data and trend interpretation skills to good use?

Sentimate offers customer sentiment ratings on thousands of different products across a wide range of industries, with comparisons and deep analyses available.

You can put what you’ve just learned about consumer/business confidence to the test by creating a free account with Sentimate today!

How to Use Consumer Insights in Your Favor: The Definitive Guide (2022)

Posted on Oct 13, 2021Nov 4, 2022 by Simone Somekh

Consumer insights are your customers’ truth – how they experience your product or service, how they felt about it, what they want, need, and desire.

Understanding your consumers’ needs and wants is essential to ensuring your brand’s future. Scanning, collecting, and analyzing customer feedback empowers businesses to learn from their customers – so they can innovate and improve customer experiences and generate positive sentiment.

This blog post is your definitive guide to consumer insights.

We will explain what are customer insights, their importance, how you can use them in your favor, and what impact the spread of COVID-19 has had on customer feedback analysis.

Another note we would like to add, Revuze Explorer is one of the most advanced consumer insights tools out there. Our true strength is turning consumer insights into actionable action items for companies, all done in minutes instead of days & weeks.

Last update: November 2021.

What are Consumer Insights?

Consumer Insights are analyzed data businesses use to better understand customer wants, needs, attitude, and sentiment. Useful Consumer Insights are new, relevant and inspiring, and provide extensive knowledge of consumer desires, needs, and motivations. These insights help improve a brand’s interaction with customers, which creates better customer experience and improves revenue.

So, how do you find consumer insights? Well, data.

Consumer insights are a result of data interpretation and analysis. They are aggregated from data collected with different tools, like trend analysis, customer satisfaction surveys, focus groups, Social Listening, and more.

Why are consumer insights important?

First and foremost, consumer insights give the tools to make better business decisions. Improving customer experience, focusing marketing campaigns, and optimizing brand innovation will help drive brand growth and revenue.

In addition, customer insight analysis helps identify consumer and market trends, pain points and attitudes. This information highlights consumer sentiment and experience on different parts of the consumer journey, data that helps brands build and maintain customer loyalty.

How can consumer insights improve advertising?

I’m glad you asked.

Advertising and marketing your product can be hard. It is hard to know how successful your campaigns are or how your latest ad resonated with your target audience.

The job can be even harder when we talk about e-commerce. Online consumers come from all walks of life, from different generations, with varied interests, and unique needs. For example, Baby boomers, Gen X, Millennials, and Gen Z are all very different and come with their own particular wants and needs. So, what may work for one audience won’t necessarily work for all.

This is where consumer insights come into use.

Consumer insights allow businesses to get a better and deeper look into their customers’ purchase decisions and behaviors. Insights enable brands to identify the best marketing campaigns and strategies that will resonate most powerfully with the targeted audience.

Using consumer insights allows you to make a smooth and data driven shift from product-focused marketing to consumer-centric marketing. For instance, what if you could focus your ad campaign on a customer-desired feature? Quality consumer insights enable you to do just that.

Taking an example from our latest Headphones Market Report, after analyzing customer feedback we have identified noise cancellation as the latest trend in the wireless headphones industry. Just look at the noise cancellation topic volume chart below –

Using this data to create a more focused, optimized, customer-centric advertising strategy will allow you to achieve your marketing objectives more effectively and efficiently, saving you valuable time and money.

How to use consumer insights in your favor?

Now that you know what are consumer insights and why they are so important. It’s time to understand how to use them in your favor.

We already covered the positive impact consumer insights can have on your marketing efforts. Here are some other aspects of your business can profit from consumer insight analysis –

Consumer loyalty –

Consumer or Brand loyalty is a strong positive consumer sentiment, meaning people will choose a particular brand over all the others. Businesses with a strong and well-founded brand loyalty will enjoy returning customers that’ll make repeat purchases.

Quality consumer insight analysis provides information about which brand aspect is the customer’s favorite and why. Optimizing customer experience (or even the product itself) based on that data will make people feel heard, cultivating customers’ emotional connection and loyalty.

Customer service –

Identifying customer pain points using insight analysis helps brands stay ahead of the game. Knowing what is bothering your customers will help you improve your customer service – you can plan your response, prevent issues from recurring, and even train and educate your staff to better handle customer complaints and inquiries.

Optimizing your customer service will not only create and cultivate customer loyalty, it will attract new clientele through positive word-of-mouth, and might even improve brand equity.

Consumer Insights In the COVID-19 Era

As the novel coronavirus (COVID-19) spreads across the world, consumers and businesses are forced to dramatically rethink their commercial behaviors. This means customer feedback and its analysis must change as well.

People are afraid and worried not only for their health, but for their jobs and saving too. These financial concerns have resulted in major emotional and economical shifts, ones that have to be taken into account when collecting and analyzing consumer insights.

Maybe the most important thing you can do is listen. The constantly changing global reality calls for flexibility and open mindedness. For example, you might want to abandon the normal barrage of survey questions. Asking fewer, more open-ended questions will help you get more extensive, detailed answers from your clients, so you won’t miss vital insights.

Another much needed aspect these days is adaptability. Quick thinking and short response times are essential for brands to survive such tumultuous times. building up your brand’s capacity to make short-term changes largely depends on quality information. Consumer insights allow you to test changes and prioritize future ones. Knowing what your customers are feeling and thinking will help you adapt to the coronavirus crisis.

Getting started with consumer insights

Establish your goals – Make sure you know what you want to learn from your data.
Identify resources – It’s important to be clear on how you will get the data – who’s going to collect and analyze it, what’s your collection method, what audience are you targeting?
Create a plan – In order to make sure all your efforts won’t go to waste, planning is key. So, think about what departments, processes, and strategies will use and benefit data the most.

We know collecting and analyzing customer feedback can be quite a challenge. Find out how Revuze’s AI powered CX analysis can help you get quality consumer insights that’ll push you to the next level!