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Do Companies Care About Customer Insight?

by Paul Barsch  |  
April 27, 2006

The most recent Business Week on the newsstands (April 24, 2006) contains a special report on Innovation conducted with Business Week and Boston Consulting Group....

One key finding is innovative companies tend to have a better understanding of their customers including who they are, what makes them buy, and what makes them loyal. "Getting inside the minds of customers is essential for "aha!" moments that lead to innovation," the article says. Sadly, however, the article also notes, "true insight remains elusive: one quarter of our respondents still call customer awareness an innovation obstacle."

I'm not convinced that customer awareness is the issue, since I'm sure most companies are "aware" of their customers. I think "customer understanding" is a better phrase, since outside consumer packaged goods and retail industries, most companies don't have a firm grasp of what makes their customers tick, and more importantly how to make them satisfied.

I'll make an interesting observation. I'm not sure that many companies care about customer insight.

In my opinion, too many companies are still focused on "transactional" relationships with their customers, where they advertise and promote their products and services and then pray that a customer notices the company, actually has a need, gets the time to call the company, and actually follows through with a store visit or purchase.

In the B2C world, I've seen companies from small to large advertise and promote a product or service and then not bother to answer the phones or provide a pleasant customer experience once the customer decides to interact with the company. In the B2B world, where target customers are usually large enterprises, many companies still have a "build it and they will come" attitude or worse spread their marketing and business development dollars too thin (across industries and sub segments) to be effective.

If a company is truly "customer centric" (and I really don't like using that phrase because it sounds like consulting speak), then they are usually maniacal about their customers. Think Apple, Toyota, Starbucks etc... These types of companies pay more than lip service to customer care, and essentially fall over backwards to keep customers coming back and buying more.

Passion about customers is just a start, however.

Customer focus needs to come from the top down. It's easy to identify companies that care about customers by simply observing how much time the CEO and his or her direct reports spend with customers, and if customer interaction is encouraged or discouraged in middle management. It's also critical to have an infrastructure to support good customer care such as the right information technology to "mine customer insights" as the article suggests.

Innovation, drawn from true customer insight, need not be hard to master. But it takes a willingness, commitment and investment in time, talent and dollars to get there.

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Paul Barsch directs services marketing programs for Teradata, the world's largest data warehousing and analytics company. Previously, Paul was marketing director for HP Enterprise Services $1.3 billion healthcare industry and a senior marketing manager at global consultancy, BearingPoint. Paul is a senior contributor to MarketingProfs, a frequent columnist for MarketingProfs DailyFix, and has published over fifteen articles in marketing, management, technology and healthcare publications. Paul earned his Bachelors of Science in Business Administration from California Polytechnic State University, San Luis Obispo. He and his family reside in San Diego, CA.

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  • by Claire Ratushny Wed Apr 26, 2006 via blog

    I couldn't agree more with Paul Barsch's comments. When it comes to innovation, companies must understand that all of their latest product features can be knocked off in a matter of weeks. The only true differentiator is the establishment of deepening relationships with customers. As Michael Dell said: "We believe that the quality and nature of the customer relationship and experience is going to be the next competitive battleground." And that is where many companies are simply missing the boat. All of the innovative thinking of the world cannot make up for a lack of customer relationship building. True insights come from relationships and dialogue built on trust with the customer. Interestingly, in repeated surveys, the American Customer Satisfaction Index, in existence since 1994 at the University of Michigan's Ross School of Business, has demonstrated that companies have not delivered improved customer service over the past ten years. That should be a wake-up call for business. If they truly want to innovate, companies have to start making changes from the inside out.

  • by Marsha Keeffer Thu Apr 27, 2006 via blog

    Tom Peters really had it right about customer delight. In the B2B space, companies need to look beyond their customer to their customer's customer. What value does your product or service have if it doesn't help your customer win their customer? Listening to customers challenges us to let go of our assumptions and comfortable concepts - hard stuff. When we do that and develop a deep understanding of needs, solutions and the value placed on that solution, then we can innovate and provide meaningful services and products.

  • by Daria Radota Rasmussen Fri Apr 28, 2006 via blog

    You are so right Paul. Some people say that 50% of your marketing budget gets wasted. No wonder if the companies miss the basic insight - understanding and being passionate about consumers. Companies has to make a choice - short-term goal and making only transactions with customers or long-term goals and building releationship with customers.

  • by Christelle Tue May 2, 2006 via blog

    Involving customer in the process of innovation is a good idea ... The Customer Driven Innovation is a good shape of C.R.M policy. I think that the secret is to do not try to reach R.O.I too early, but taking time to listen in order to reach the loyalty of your customer and to answer, and even bypass its needs ...

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