How to Gain a Competitive Advantage on Customer Insights

Businesses spend billions of dollars each year to gather information about their customers, buy data from market research firms, conduct study after study, and use big data and sophisticated analytical models to make sense of it all. However, most of this data is likely available to your competitors and falls short of your quest to gain a meaningful understanding of your customers’ behavior.

To truly differentiate yourself and stay on top, you need to implement a system of privileged insights – unique and relevant information you gain about your customers, known only to your business.

Unlike market research, privileged insights provide information about the real needs, wants and experiences of your customers. These insights can be gained in a variety of ways. In general, there is a need to engage with customers in a way that directly inspires trust and value. This may include offering services and solutions beyond products, creating a more robust and engaging customer service experience, integrating customers into product and service development, and observing and interacting with customers while they use your products.

For our latest book Beyond Digital: How great leaders are transforming their organizations and shaping the future, We researched more than a dozen companies that have made significant transformation to position themselves for success in the digital age including Adobe, Cleveland Clinic, Citigroup, Eli Lilly, Hitachi, Honeywell, Inditex, Komatsu, Microsoft, Philips, STC Pay, and Titan. It’s not that these companies are necessarily better at using technology or were the first to build a consumer data lake — it’s that they have an incredible focus on bringing a deep understanding of customers to the heart of their business models, their operations and integrate their sales into everyday decisions. They are passionately focused on increasing value for their customers while absorbing and utilizing a wealth of information that their competitors do not have. This allows them to further differentiate themselves and remain relevant.

How can you build such a privileged insight system that drives the success of your company? Here are some lessons learned from the companies we’ve researched and others we’ve worked with.

Create a basis of trust and values

Make it clear how you will gain customers’ trust in contacting you and the benefits they will derive from doing so. This is at the core of how customers trust you to consistently deliver results they value. Customers who see that their lives or business are inseparable and improved because of what you offer are far more likely to engage with you and more willing to share unique information and insights into their key needs and challenges.

Building trust also involves impeccable clarity about your values, principles, and governance when it comes to handling customer data. Will you only use the data to drive your own business or to improve customer experience and value? Do you take responsibility for not misusing the data? Will you have strict enforcement if an issue arises? Leaders need to ensure that people across the organization understand that it’s not about extracting data from people and turning people into products – it’s about making customers an integral partner in the value chain.

Ashley Still, senior vice president and general manager of digital media at Adobe, is clear on the company’s guiding principle for handling customer data: “We are committed to privacy and are sensitive about how we use data. Responsible use of customer data can create better experiences, but the second we start using it to gain a tactical advantage, we’ve missed the mark.”

These practices, along with the trust and value embedded in the user experience and value proposition that Adobe provides, form the foundation upon which the Privileged Insights system is built.

Integrate the way you gather privileged insights into your daily actions

Make gathering insights a by-product of your engagement and relationship with customers, not a separate process. This allows you to gain customer insights while You create value for them, whether through your physical or digital interactions.

This should start with all of your existing customer touchpoints (e.g. customer service, warranty support, product delivery, etc.) and extend to many new opportunities to engage and enhance your value proposition. The ultimate question you need to answer is whether customers feel positively impacted by the information you collect.

Consider fast fashion company Inditex, owner of the Zara brand. Retail associates are trained to act as frontline eyes and ears, tracking data, observing customers and gathering informal impressions – all while helping customers find the styles that best suit them. Stores compile information about customers’ choices, their requests for missing items, and their suggestions. Are buyers looking for skirts or trousers? Strong or subtle colors? These impressions are sent directly to a group of designers and operations experts at headquarters, along with detailed daily data on exactly what is being sold where.

Combined with deep insights into what people search and buy online, it gives them a distinct advantage over online-only fashion companies. All these insights are collated, aggregated, scaled and analyzed in near real-time and translated into designs for new garments or improved production, logistics and marketing practices.

The key is the flexibility to adapt to customer preferences and the precision to create and produce what customers demand in the moment they ask for it. By the end of the year, Inditex’s more than 700 designers will have designed 60,000 different creations and stores worldwide will have received new waves of collections twice a week.

Network your privileged insights into the way you work

Deploy your privileged insights by embedding them into your operations – change structures, processes, incentives, metrics, information flows, etc. so every part of the organization can make decisions based on your unique insights.

The most obvious (though not always well-executed) example of this is incorporating privileged insights into your company’s innovation process, using them as a basis for idea generation and looking for many ways customers can be integrated into the actual development process ( z example in beta pilots). But privileged insights need to be linked to many areas beyond innovation, including determining investments in tools and technologies that enable ongoing experiences, how your sales and account teams interact, and your forecasting and strategic planning. Be prepared for these insights to fundamentally change the fundamentals of your business and not just result in incremental changes or a new feature in some of your products. And rethink how you measure the impact of your privileged insight ability; The metrics most organizations use today fall far short of the mark, and more innovative measures such as Return on Experience (RoX) should be considered by organizations aspiring to this capability.

Think Salesforce. From the beginning, Salesforce recognized the need to build its business on trust—no wonder given the sensitivity of the data customers share on the platform. This values-based relationship with users allows the company to gain deep insight into what is working well, what needs improvement, and what additional services customers want.

These insights feed directly into and fuel Salesforce’s product development strategy and enable the company to expand its value proposition. With a customer success orientation at the heart of the relationship Salesforce builds with its customers, the company has created a unique platform that enables it to leverage insights from customer usage data to create strategies that increase long-term customer value, thereby driving customer retention growth . These insights allow Salesforce to more effectively collaborate with partners and customers to build solutions, tailor them to different industries, and offer them as part of their platform as new industry clouds. This unique system of product development and innovation, powered by proprietary customer insights, is one of the key factors that have made Salesforce the fastest growing software company of all time.

The power of a privileged insight system stems from its self-reinforcing nature: the more customers trust your company and derive value from your products and services, the more likely they are to open up and engage with you. The more you do this, the more insights you can gain about what customers want and need; And the more insight you have, and the better you can incorporate that insight into everything you do, the more you can improve your customer experience, products, and services, and build additional trust and connection with customers. It’s a real flywheel.

For the flywheel to work and drive your organization’s success, you must work on all three areas, beginning with a brutally honest assessment of the actual gaps you may have in each area and realizing that creating a system of privileged insights is not possible is without meaningful transformation.

It’s easy to see how neglecting one area will result in the entire system failing. In fact, if customers don’t trust you, they won’t open up. When providing insights is a two-way street, it may only appeal to the most loyal and passionate of your customers. And if you let your customers down and don’t act on the feedback, you most likely won’t get a second chance to get it right.

This is a tall order and requires a fundamentally different way of thinking about data, research and the entire customer touchpoint cycle. But it’s one that every company in every industry needs to adopt to stay relevant. We can’t think of any other ability that is so universally needed.