This article was published in Issue 44 of the Results International Bulletin, September 2006. It was written by Robert Diamond, the founder and chief executive of Diametric Consulting.

What lies ahead for customer analysis and understanding?

There is little doubt that understanding customer needs and behaviours better, faster than the competition is more essential than ever. From data-rich online retailers to traditional product manufacturers who struggle along with a more oblique view of their end-user, the shared challenge is to unlock greater insights that can help to fuel profitable growth.

In many ways the position of customer understanding perfectly reflects where business is at today - a mish-mash of sophisticated, data-rich snapshots surrounded by more historical, aggregated trend data that tries to establish a context for customer decision making.

Conditions have steadied following the rapid rise of marketing analysis software tools, making it a good time to look forward to consider what lies ahead for customer understanding.

What lies ahead?

I.  Creating a joined-up picture

Many organisations hold a fragmented picture of their customers: sales data in one department; a marketing interaction database somewhere else; market trends within Strategic Planning; and deeper insights with Research and Marketing teams.

Future winners will be able to build up a clearer picture that captures a snapshot of customer behaviour today; where this is trending (from where, where to) and - critically - an understanding of why we are seeing this take place.

The main challenge in creating this picture is that it requires a rethinking of how organisations capture their insights, moving away from unconnected silos of understanding to a new approach that links sales data, customer segmentation and profiling and potentially bespoke research amongst specific behavioural groups.

II.  The need for actionable insight

Related to the need for a joined-up picture is the growing pressure for more actionable insight. Many businesses accumulate understanding that sits in the 'interesting but not actionable' box. At the same time, they rely on a rear-view mirror picture of overall market size and share to support business decision making. As well as driving thinking based around hindsight, not foresight, these panel sources can often eat up five percent or more of the overall marketing budget.

Looking forward, winning organisations will build up more actionable insights by recognising:

real time learning - establishing vehicles to understanding more granular trends
the power of intermediaries - recognising that sales, distribution or marcomms channels often 'own' the detailed information around customer spending
digital insights - harnessing the speed and relative low-cost of digital data capture, including more informal category insights such as blogs and message boards

III.  Understanding what you don't see

The complexity of understanding purchase and usage is magnified by the 'multi-channel' world we are living in. Previously, competing businesses tended to operate with the same broad level of understanding about a single sales channel. Today we need to make sense of a multitude of channels - some for information gathering (ie the web), some for comparison (friends and opinion formers), some for interaction (call centres), and others for purchases (shops).

Business leaders need to be increasingly careful that their decision-making is not dependent on what they can see or measure, which does not necessarily reflect the majority drivers of category behaviour. Additional questions should include:

the non consumer - why do some people reject the category or a specific brand?
the 'influence cascade' - mapping the different factors and moments that shape decision-making, not just looking at the end purchase
the role of the intermediary - what impact does the channel partner have on outcome? To what degree does a manufacturer's brand marketing have an impact on the consumer's perception of the intermediary as well?

IV.  Context is king - understanding users as shoppers

Once again, most insight work tends to consider markets as a series of unconnected category consumption occasions. In categories where the role - and brand - of the intermediary is often as important as the end-manufacturer, we must add the context around the purchase decision as much as usage.

'Consumer as shopper' is a critical battleground today. As well as the logistical challenges this presents - such as understanding decision-making at point of purchase - organisations must also overcome the fact that 'shopper behaviour' often falls into the remit of the sales department whereas product and service consumption is seen as the role of marketing.

V.  Using insight frameworks to focus investment

A fundamental implication of the complexity we operate within is that businesses cannot sustain the level of investment and resources to support all customers, all channels, all products or services at an equal level.

Segmentations will no longer be seen as another way of understanding how markets behave (or more accurately, how they behaved in recent months or years). Increasingly they will be used as a company-wide framework for deciding where investments should be prioritised, based either on the value of a customer today, their future potential value or even their likelihood of defecting if spend is reduced against them.

Clearly the fundamental importance of using customer understanding to help build sustainable, motivating offers for customers has not diminished. However, the ability of businesses to define a framework for actioning this - and also spot emerging competitive threats on the horizon - is emerging as the 'insight battleground' of the future.