Written by: Ian Kahn, Paul Leinwand and Mahadeva Matt Mani | Published by: Harvard Business Review
Companies spend billions of dollars every year to gain information about their customers, buying data from market research firms, running study after study, and using big data and sophisticated analytical models to make sense of it all. However, most of this data is likely available to your competitors and not living up to your aspiration of gaining meaningful behavioral understanding of your customers.
To truly differentiate and stay ahead on an ongoing basis, you need to implement a system of privileged insights — unique and relevant information you gain about your customers that only your company is privy to.
Unlike market research, privileged insights provide intel on your customers’ real needs, desires, and experiences. These insights can be gained in a variety of ways. Generally, it requires engaging with customers in ways that directly build trust and value. This might include offering services and solutions that go 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 recent book Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future, we’ve researched more than a dozen companies that have undertaken 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 isn’t that these companies necessarily use technology better or were first to build a consumer data lake — it’s that they’re incredibly focused on wiring a deep understanding of customers into the heart of their business models, their operations, and how they make day-to-day decisions. They passionately focus on increasing value for their customers, all while absorbing and leveraging a wealth of information that their competitors don’t have. By doing so, they’re able to further differentiate themselves and remain relevant.
How can you go about building such a privileged insights system that fuels your company’s success? Here are some lessons learned from the companies we studied and more that we have worked with.
Establish a foundation of trust and value
Be clear about how you earn customers’ trust to engage with you, and the benefit they gain from doing so. This goes to the heart of how customers trust you to consistently deliver outcomes they value. Customers that see their lives or businesses intrinsically linked and improved because of what you offer are much more likely to engage with you and more willing to exchange unique information and insight into their core needs and challenges.
Building a foundation of trust also includes having impeccable clarity on your values, principles, and governance around how you will treat customers’ data. Will you use the data to only advance your own commercial position, or to improve the customer experience and benefits? Will you take responsibility to not misuse the data? Will you have strict enforcement if an issue happens? Leaders must ensure that people across the organization understand that it’s not about extracting data from people and making people the product — it’s about making customers an integral partner in the value chain.
Ashley Still, senior vice president and general manager for Digital Media at Adobe, is absolutely clear about the company’s guiding principle for how it uses customer data: “We are committed to data privacy and sensitive to how we use data. Responsible use of customer data can create greater experiences, but the second we start using it to gain tactical advantage, we’ve missed the mark.”
Together with the trust and value that is embedded in their users’ experience and the value proposition Adobe offers, these practices lay the foundation on which the privileged insights system is built.
Integrate how you collect privileged insights into your day-to-day actions
Make the collection of insights a byproduct of your engagement and relationship with customers, not a separate process. This will allow you to gain customer insights while you create value for them, be it through your physical or digital interactions.
This should start with all your existing customer touch points (e.g., customer service, warranty support, product delivery, etc.) and extend to many new opportunities to engage and improve your value proposition. The ultimate question you will need to answer is whether customers feel positively impacted by the information you are collecting.
Consider fast fashion company Inditex, owner of the Zara brand. Its retail employees are trained to serve as its frontline eyes and ears, tracking data, observing customers, and gathering informal impressions — all while helping customers find the styles that suit them best. The stores compile information about the choices customers make, their inquiries about missing items, and their suggestions. Are shoppers looking for skirts or trousers? Bold or subtle colors? These impressions are sent directly to a group of designers and operational experts at headquarters, together with detailed daily data on exactly what is selling and where.
The combination with deep insights from what people are searching for and buying online puts them at a clear advantage over online-only fashion companies. All these insights are rolled up, aggregated, scaled, and analyzed almost in real time and turned into designs for new garments or into improved production, logistics, and marketing practices.
The key is in the flexibility to adapt to customer preferences and the precision to create and produce what customers are asking for, at the moment they are asking for it. At the end of the year, Inditex’s more than 700 designers will have come up with 60,000 different creations, and the stores worldwide will have received new waves of collections twice per week.
Wire your privileged insights into how you work
Put your privileged insights to work by connecting them into your operations — changing structures, processes, incentives, metrics, information flows, etc., to enable every part of the business to make decisions that are based on your unique insights.
The most obvious (though not always well-executed) example of this involves wiring privileged insights into your company’s innovation process, by using them as the basis for ideation and looking for many ways in which customers can be integrated in the actual development process (for example, in beta pilots). But privileged insights need to be linked to many areas beyond innovation, including the determination of investments in tools and technologies that facilitate ongoing experiences, the interaction of your selling and customer teams, and your forecasting and strategic planning. Be prepared for those insights to materially change the fundamentals of your business, not just lead to incremental changes or a new feature in some of your products. And rethink how you measure the impact of your privileged insights capability; the metrics that most companies use today don’t go nearly far enough, and more innovative measures like, for example, return on experience (RoX), should be considered by companies pursuing this capability.
Consider Salesforce. From its inception, Salesforce has been acutely aware of the need to build its business on trust — not surprising given the sensitivity of the data customers share on the platform. This values-based relationship with users allows the company to gain deep insights into what works well, what needs improvement, and additional services customers would like to get.
These insights directly feed into and fuel Salesforce’s product development strategy and allow the company to extend its value proposition. With a customer success orientation at the heart of the relationship Salesforce builds with its customers, the company has established a unique platform that allows it to leverage insights from customer usage data to inform strategies that enhance long-term customer value and thereby drive customer retention and growth. These insights enable Salesforce to more effectively co-develop solutions with partners and customers, tailor them to various industries, and offer them as part of their platform as new industry clouds. This unique system of product development and innovation fueled by proprietary customer insights is one of the key factors that has made Salesforce the fastest-growing software company of all time.
The power of a privileged insights system stems from its self-reinforcing nature: The more customers trust your company and derive value from the your products and services, the more likely they are to open up and engage with you. The more they do so, the more insights you’ll be able to gain about what customers want and need; and the more insights you have and the better you are at wiring those insights 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 true flywheel.
For the flywheel to work and fuel your company’s success, you need to work on all three of these areas, starting with a brutally honest assessment of the real gaps you may have across each area and realizing that creating a system of privileged insights will not come without meaningful transformation.
It’s easy to see how neglecting one area is going to keep the whole system from working. Indeed, if customers don’t trust you, they’re not going to open up. If providing insights is a one-way street, it may only appeal to the most loyal and passionate of your customers. And if you’re letting your customers down and don’t act on the feedback, you will most probably not get a second chance to get it right.
This is a big task and requires a fundamentally different way of thinking about data, research, and the entire cycle of touch points with customers. But it’s one that any company in any industry needs to take on to stay relevant. We can think of no other capability that is so universally needed.
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Ian Kahn is a principal with PwC US and a leading practitioner for PwC’s front-office transformation solutions practice. He has spent two decades helping brands transform customer relationship management capabilities in order to unlock new growth opportunities, enable better customer experiences, and realize productivity improvements.
Paul Leinwand is the global managing director for capabilities-driven strategy and growth at Strategy&, PwC’s strategy consulting business. He is a principal with PwC US, an adjunct professor of strategy at Northwestern University’s Kellogg School of Management, and a coauthor of several books, including Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future (Harvard Business Review Press, 2021) and Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap (Harvard Business Review Press, 2016).
Mahadeva Matt Mani is a principal with PwC US. He leads the transformation platform for PwC and for its strategy consulting business, Strategy&, advising executives on business model transformations and operational value creation and productivity programs. He is a coauthor of Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future (Harvard Business Review Press, 2021).
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