More than 75% of CEOs, presidents, and chief operations officers believe CI is critical to accelerating growth.
Companies today face rapid changes in both technology and consumer behavior. Mobile apps are generating large streams of data from online behavior patterns, social media, user reviews, geolocation data, and mobile payments. Shopping is now fully integrated into daily life, and millennials have far different shopping habits than older consumers do. Consumer demands for information, “newness,” and interactions with brands are increasing, as is the ability of brands and retailers to anticipate the needs of individual customers. As a result, sectors that once were predictable and stable—and could survive a more internal focus—have become more volatile and uncertain.
In this challenging environment, companies must rewire their customer insight (CI) capabilities and teams—and they know it. In a 2016 survey conducted by BCG's Center for Customer Insight (an update to the 2009 benchmark), respondents cited CI and business development as the top two capabilities they needed to foster.
Many companies struggle to make CI more than just a market-research operation. Those that succeed in elevating CI to a strategic position and source of competitive advantage do so only with the commitment of top executives.
CI functions at companies can move through four stages of maturity:
In this stage, CI functions are mostly tactical and research-oriented. They are focused on uncovering historical trends for sales of existing products and services, largely in existing channels and geographies. The group works on a project basis to produce data in response to line managers’ requests. It is limited in budget, head count, and scope of influence within the broader organization, and it receives limited support from senior executives.
At this stage, CI research has a real-time focus on short-term innovations such as packaging, form and flavor extensions, pricing, and promotions. The group aims to translate customer insights into business recommendations.
The CI function at this stage typically has active support from the most senior marketer in the company and access to senior leaders, but business leaders set priorities. Significant parts of the CI budget may exist outside the control of the function, and the group’s representation on executive teams and exposure to the board are limited.
At this stage, senior executives believe customer insights should guide most commercial business decisions—where the CI function is both a strategic partner and trusted adviser. In addition to specialized research skills, CI team members demonstrate critical thinking, sound business judgment, economic and strategic understanding, and a willingness to challenge ideas.
An executive team member (not the chief marketer) champions strategic research, and the CI team works with line management to translate customer knowledge into key business decisions. Together, the CI team and line managers form an organization capable of anticipating customers’ needs.
This stage remains elusive for many companies. At this level, the CI function is focused on new-to-the-world innovation, foresight, and predictive inquiry. CI is used in business decisions and core processes beyond market decisions, including research priorities, new-product development, strategic planning, M&A and portfolio strategy, employee engagement, and company branding.
The CI function at this advanced stage offers an independent perspective on high-priority topics and specializes in innovative, experimental methodologies. Functional leaders have executive roles, such as head of strategy, analytics, or marketing, and they often report directly to the CEO.
Executive teams can take three steps to begin the process of improving CI maturity:
Companies whose CEOs and executives are not committed to a fundamentally different CI operating model should not undertake a CI transformation. For companies whose CEOs do support the transition, senior executives should be updated regularly on the progress with regular reports from a steering or strategy committee. They should create an activist project management structure that ensures functional transformation through transparency, a “single source of truth,” a focus on results instead of the completion of activities, accountability, accelerated decision-making, and interventions when change initiatives are off track.
Consumers leave a digital trail. To follow it, and act on it, business leaders and customer insight leaders must close the gap between their groups.Read the report
Though most companies understand the need for consumer insights prowess, most CI functions are not a source of competitive advantage. Learn why this is and how to change it.Read the report