About 18 months ago I attended my first Centric event (Centric is Indianapolis' innovation think-tank). The theme was “Innovation is the shit”, or how Delta Faucet, well known for making faucets, came to manufacture toilets. It was a provocative title (and presentation), which focused on how deep consumer insight research can bring innovation.
I do agree that innovation is the shit.
How do you gather consumer feedback to bring innovation to your company? There are 3 main channels to collect consumer feedback. Focus groups, CRM/Big Data and consumer insight research.
This cartoon describes perfectly how it is hard to translate consumer’s feedback into a product. Along the way the message is lost in translation.
The danger of focus groups is that they make us feel like we’re getting close to our customers, which is good, right? The problem comes when we ask focus groups questions which they are not really equipped to answer. If you are trying to figure out which advertising approach to use, focus groups are great for getting comparative feedback on how people react to different ideas. If you want to get a handle on what people are thinking about a particular topic right now, focus groups are excellent. But they are not very good for helping us invent the future. This is because customers invited to be part of focus groups have their brain or their mind already formatted in a certain way. Their brain is pre-conditioned. Some of them come with their own agenda; others are easily influenced by “leaders” in the group; others are just there for the fun or the money, in other words not fully committed. You will never get objective, unbiased information from focus groups. According to Doug McColgin from Collidea, “focus groups are a great tool for validation, but are decidedly lacking when it comes to inspiration. If you're trying to get consumer insights from a focus group, you are depending on consumers to deliver objective truth on your topic from memory. This creates numerous problems: people like to give the answer they think you want to hear, people are swayed by others' opinions, people's perceptions differ from reality, and many opportunities lie in details that don't seem relevant enough to bring up”.
There has been a lot of emphasis on CRM and Big Data the past few years. CRM can be the enabler to driving significant improvements in marketing and sales performance – and significantly improved customer service, however its direct impact on innovation has yet to be defined. Database analysis allows marketers to get a more accurate idea of consumer preferences, tracking behavior across channels and synthesizing the information to render more complete behavioral pictures. CRM and Big Data are great at keeping records on buys and preferences, tracking present trends and identifying what might be future trends. However, both track only existing and expressed behavior, that is consumer habits from a plethora of data. Unlike focus groups or consumer insight research, with CRM/Big Data you don’t get the emotional behavior of the consumer. Big data is good at understanding the what and when of consumer habits. Consumer insight research captures the why and how. According to a study by Gartner, the leading Information Technology research firm, only 50% of Fortune-1000 companies using CRM systems reap a significant return on their investment.
People don’t know what they want. Focus groups or CRM can’t express what people don’t know they want. Tim Kastelle wrote a very good article about how he found out he was buying Coke for the wrong reason. According to Doug McColgin, “going out into the consumers' world is far more effective for exploring what could be. Observational research, or watching a consumer interact with products in their natural environment can provide value in several ways. Compensatory behaviors, or ways consumers will teach themselves to work around poor design or find unintended applications for existing products, can be the basis for a new product. Differences between what consumers say they do and what they really do can provide a foundation for new marketing copy. There's no substitute for entering into the end-users' world to see and hear and experience life as they know it”. Deep consumer insight research enables companies to uncover unmet and unknown needs. Needs that consumers don’t know they have, or simply can’t express it.
In other words, companies need to FUnK up the way they think.
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