Beyond the Buzzwords: Defining Consumer Insights (Part 1)
Accountants have it so easy. When they go to work, their decisions are closely guided by millions of pages of regulations. A veritable alphabet soup of regulatory bodies, government agencies, and international standards boards tell accountants exactly how to go about doing their jobs. If they need to know whether to depreciate, amortize, or deplete patent costs on intellectual property in Yemen, it’s IASB to the rescue! Need to know whether corporate inversion will result in a material change to asset liquidity of WIP inventory? Well, that’s almost certainly complete gibberish, but at least GAAP can help confused accountants define the terms.
Things are much different for marketers. They live almost perpetually in the business equivalent of the wild west. Creative by nature, marketers develop new terms, job titles, even industries on a nigh annual basis. (What the heck is neuromarketing?) And although major organizations like the American Marketing Association can help guide adoption of nomenclature, there certainly aren’t any codified standards (let alone laws!) governing how marketers talk about their field. Ironically, term adoption tends to come down to how well marketers market their own ideas. It’s marketing inception.
One constantly evolving term that is starting to transcend its status as mere buzzphrase is consumer insights. Sometimes referred to as customer insights, sometimes broadly considered market research, consumer insights are finally becoming well-defined, even tangible in the minds of business executives. And definitions are important because standardization leads to scalability.
At Return Path, we define consumer insights as unique, non-obvious consumer information collected and analyzed in order to improve customer experience, gain competitive advantage, and/or directly feed the decision making process for business operations. This is broad enough to encompass the myriad ways companies collect and develop insights, while establishing key areas for implementation. Nevertheless, a simple definition does not suffice for truly understanding something so complex. Real world examples are useful for bringing life to the term.
In one sense, consumer insights consist of data that helps marketers, researchers, and business analysts paint a more complete and colorful picture of their customers. A retail clothing company likely has access to individual purchase histories for regular customers; they might even be able to determine some demographic and payment preference information. However, they often have no clue what their customers do when they walk outside their store (or leave their website).
Third-party consumer data can tell retailers more about how much their average shopper spends at competing stores, which brands they prefer for non-competitive, non-substitute products, and even provide a glimpse into customer psychodynamics. (Promise, that’s not a new buzzword, but gets at the why behind consumer purchase behavior.)
This is a good stopping point for now. The term consumer insights and the underlying art/science that turns insights into action are still shaping into something meaningful, but let this be the first step on a journey to understanding what consumer insights really are. Be sure to visit our blog on a regular basis for more articles on this topic. And give a little love to your accounting department. Terms and processes might be neatly defined, but theirs truly can be accrual world.
For more information about Return Path’s own Consumer Insight solutions, check out our website.