KEY IDEA: According to Forrester “Companies have become over-reliant on big data to understand their customers. Brands misconceive which data properly measures how customers think and feel. As a result, 56% of brands say their strategy is informed nearly or fully by big data. This overreliance has led to challenges in customer understanding, technology, and organizational communication.
Small data is better at conveying how customers think and feel. Brands using small data as a basis for their knowledge of how customers think and feel are more likely to say they know why one customer chooses to buy while another doesn’t. They’re also better equipped to avoid or overcome key challenges in the areas of people, process, and technology.
The Forrester consumer survey revealed that a customer who has a positive brand experience is not necessarily a repeat customer. Eighty percent of the consumers who make one-off purchases described their brand experience as positive, but only 67% are likely to buy from that brand in the next three months (a 13-point difference).
Saving money tops the list of things that consumers say they get out of their positive experience. It’s not surprising to find that nearly half of consumers who had a positive experience say a key outcome was the ability to save money
Yet consumers who have positive experiences are also more likely to say they would pay more for that same brand. According to consumers who had positive experiences, saving money was
a key outcome of their positive experience. However, at the same time, they say they would pay more for the same brand over a competitor. A positive brand experience only partially explains how and why consumers decide to act — clearly there are other drivers of purchase, advocacy, loyalty, or paying a premium.
While many brands say they already know how customers
think and feel, far fewer understand why customers act. More than half of brands strongly agree that they understand how their customers think and feel (see Figure 2). Given that brands recognize how a deeper customer understanding would lead them to win new customers, it would follow that a majority of brands would then say they know why a customer buys from them. However, that’s not the case: Only 38% of brands strongly agree they know why one customer chooses to buy from their brand while another doesn’t.
In The Midst Of The Big Data Deluge,Customer Understanding Gets Buried
Brands wrongly believe CRM data will reveal how customers think and feel. We asked brands what types of data they use to understand how their customers think and feel. At the top of the list are customer data from their CRM, loyalty program activity, and past purchase behaviors.
Brands over-rely on big data to inform their overall customer strategy. We found that not only do brands have misconceptions of what data properly measures how customers think and feel, the data they then use to execute on the customer’s experience is greatly skewed — 56% of brands say their strategy is informed nearly or fully by big data.
Despite the obvious strengths of big data, we know it can’t do everything — brands are missing small data that reveals how customers think and feel
Customer insights and marketing are talking, but they are not speaking the same language. Even if the effort to better understand how customers think and feel were properly led by marketing or CI, rather than IT, we found that these two groups are often siloed. Only 54% say that CI and marketing regularly communicate with one another. Even fewer — 38% — say they regularly share data with one another in formats that the other can understand and use. This is worrisome — whether caused by technology, process, people, or all of the above, data silos hinder progress. Sharing data in easily digestible formats that enable self-service insights is critical because it may not be obvious who in the organization will get value from the information.