Do you ever wish you could read your customers’ minds? Imagine knowing exactly what makes them click the Buy button. While crystal balls and telepathy are still out of reach, the next best option—customer insights—is well within reach.
With customer insights, you can predict customer needs and shape experiences before customers even know what they want. Here’s what customer insights are, their benefits, and seven valuable customer insights to better understand your customers.
What are customer insights?
Customer insights result from leveraging customer data and analytics to uncover customer needs, preferences, and motivations. These insights inform business decisions like product development, pricing strategies, and marketing campaigns to improve the customer experience.
You can get these insights from various data sources, including surveys, customer relationship management (CRM) systems, sales data, and website analytics.
Customer insights vs. market research
While “customer insights” and “market research” are often used interchangeably, they are different:
Market research
Market research is one of many ways to gather customer insights. It helps you understand current market trends and economic challenges within your industry. Businesses use market research to support strategic decisions like new features, product launches, or regional expansions.
Customer insights
Customer insights are the result of various information-gathering activities. They’re the interpretations and understandings garnered from your research. These insights help refine your offerings and better align them with customer expectations.
Benefits of gathering and analyzing customer insights
- Improve the buying journey
- Enhance the customer experience
- Make data-informed decisions
- Support product experimentation
- Increase revenue
When you understand your customers and apply your insights, you can create personalized customer experiences that increase engagement and align with business goals. Here are five benefits of leveraging customer insights:
1. Improve the buying journey
With website analytics, purchase history, customer interactions, and other valuable data, you can create a customer journey that addresses pain points at the right time. For example, you might use customer insights to provide timely resources for common questions or tailor product recommendations, creating a smoother buying journey that can help increase conversion rates.
2. Enhance the customer experience
The customer experience encompasses every brand interaction, from pre-purchase through post-purchase and beyond. For example, if you learn customers value eco-friendly products, you can design an unboxing experience using sustainable materials. Or if customers frequently ask about specific product features, you can create targeted video tutorials to streamline support.
The online fashion brand Lulus enhanced customer retention by understanding customer needs and aligning operations more closely with those needs. CEO Crystal Landsem highlights the importance of efficient warehouse operations in the customer experience, saying on an episode of Shopify Masters, “If you get somebody their product on time and in a good quality condition every time, that is what’s going to fuel your growth.”
3. Make data-informed decisions
Instead of relying on intuition, data analysis provides factual support for decision-making. This benefits all levels of your business, from product to marketing. It can also help you allocate financial and personnel resources to have the greatest impact.
For example, customer insights might reveal that most of your potential customers are highly active on Instagram and prefer video content. With these insights, you could tailor your marketing campaigns to feature short videos that are more likely to convert.
4. Support product experimentation
Customer insights can uncover unmet customer needs, helping you innovate to address these gaps. This can involve low-risk, efficient experiments to determine what works best for your customers.
For example, Lulus launches pop-up shops in places where customers request them. The brand then collects customer feedback during these events to assess the potential for further investment in brick-and-mortar retail stores.
5. Increase revenue
Using customer insights data, you can increase average order values (AOV) by identifying opportunities for upsells and cross-sells.
For example, you might recommend or customize suggestions based on individual interests or browsing history. Insights-driven strategies can also improve customer retention and loyalty, increasing revenue and lifetime value (LTV). By increasing customer retention by just 5%, you can see profits increase by 25% to 95%.
6 types of customer insights
- Demographic insights
- Psychographic insights
- Behavioral insights
- Customer feedback insights
- Customer journey insights
- Purchasing decision insights
The more varied your customer data, the deeper your insights. Here are six types of customer data to collect:
1. Demographic insights
Demographic insights include basic information like age, gender, and income, and more detailed information like geographic location, occupation, education, and other aspects that characterize your target audience.
With this demographic data, create customer segments to analyze differences between demographic groups and trends within subsets, or create buyer personas. This approach can help you make tailored product recommendations based on location and interests.
2. Psychographic insights
Psychographics refer to your customers’ psychological attributes, which help you align your messaging and storytelling with their values to make more meaningful connections. Psychographic insights to gather include:
- Beliefs and values, like sustainability and health and wellness
- Lifestyle preferences, hobbies, and activities, like fitness, music, and travel
- Buying motivations, like quality, convenience, and price
3. Behavioral insights
Behavioral data can help you create connected customer journeys and barrier-free experiences. This data includes:
- Purchase history
- Browsing history on your website
- Engagement on social media
- Engagement on online business platforms or apps
Analyzing behavioral data can inform actionable strategies to predict future customer behavior and tailor experiences accordingly. For example, when you know how often customers reorder, you can send timely order reminder emails to increase customer lifetime value (CLV).
The sustainable period care company August used years of community feedback to launch the company. Founder Nadya Okamoto emphasizes the importance of prioritizing talking and understanding her community, saying on an episode of Shopify Masters, “We could be flexible on timing if it was in service of better understanding and being thoughtful about our growth.”
4. Customer feedback insights
Customer feedback can uncover qualitative insights like customer comments, and quantitative data like Net Promoter Scores (NPS).
You can gather customer feedback insights through:
- Social media listening
- Surveys
- Focus groups
- Online reviews and ratings
- Customer support interactions
Your customers’ thoughts of your brand and its offerings can help you spot trends and generate actionable consumer insights. For example, do customers feel your recent product launch doesn’t align with your brand promise? Do they love your recent collaboration with a specific influencer?
August collects feedback insights by engaging with their audience on the online chat platform, Geneva. Okamoto says the platform enables two-way conversations, providing clear insights into customer needs.
5. Customer journey insights
By analyzing a customer’s path with your brand, from initial contact to post-purchase engagement, you can generate customer journey insights. This can help you identify your pain points at each stage, trends in product use, and gaps in offerings and services.
For example, by creating audience segments based on the consideration stage, you might find that customers visit your comparison pages but drop off before checking out. Segmenting by new customers would give you insight into what products they tend to buy first so you can tailor introductory offers.
6. Purchasing decision insights
Purchasing decision insights uncover the decision-making factors that influence a purchase. These help you understand why customers choose you over competitors or specific events that trigger a purchase. For example, you might find that a top purchase driver is your free 60-day returns or that younger customers are more likely to buy when they see a famous influencer promoting your product.
Consider the following:
- How often do people purchase (or make repeat purchases)?
- What or who influences their buying decisions?
- Are your customers’ buying decisions influenced by pricing, features, or bonus offers?
- What barriers prevent them from buying?
- Who are your loyal customers and why?
Customer insights FAQ
How do you gather customer insights?
You can gather customer insight data through surveys, customer interviews, social media comments, or online tools like Google Analytics. The more channels you include in your data collection, the better and more detailed your customer profiles will be.
What makes a good customer insight?
Good customer insights are data-based and come directly from your actual customers. Conjectures about your customers’ needs or feedback from people who aren’t actual customers may not provide accurate results.
What is an example of a consumer insight?
An example of a consumer insight (also known as customer insight) starts with collecting and analyzing chat transcripts from customer support calls in which agents asked customers to rate their customer service experience. Using this data, you determine your customer service agents are most effective at processing returns but could use a fresh training session on upselling.
