Building a Better Consumer and Customer Insight Capability Nicola Pianon Senior Partner e Managing Director
Unprecedented & accelerating pace of change Years to achieve one billion users (from launch) Mobile cellular subscription 5 Facebook users 8 Mobile broadband subscription 11 Google users 13 Fixed lines 125 0 20 0 60 80 100 120 10 Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 1
Business environment is becoming unpredictable 2. average five years standard deviation of EBIT margin Source: BCG Analysis, Panel of Listed Companies Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 2
Customer and growth are top priorities for most senior executives' In respondents' own words, top 5 priorities overall for their company Learning more about our customers Restaurant & Retail President Acquisition of new customers Consumer Financial Services COO. Note: Only included top 50 used words, grouped customer and customers; grow and growth Source: BCG Consumer Insights CEO Survey 2015 Transform the customer experience Restaurant & Retail President New customer base CPG President To provide exceptional customer service - CPG President Value proposition to our customers - Non-CPG COO Grow customer base Consumer Financial Services CEO Understanding changing customer insights CPG President Reactivation of the customer base Consumer Financial Services CEO Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 3
Consumer Insight capability considered critical to accelerate growth % responses Top 5 capabilities development for the company 60 0 20 0 13 11 11 Consumer Insight 33 7 7 11 Business develop. 27 11 2 11 2 Talent develop. 27 27 2 22 9 20 9 2 7 13 13 11 9 2 2 2 Pricing analytics Brand develop. Big data / customer analytics Strategic planning Perform. mgmt. & measurement 18 2 2 9 CRM Ranked 1st Ranked 2nd Ranked 3rd Ranked th Ranked 5th Mixed Note. Only top 10 out of 30 possible capabilities shown. Source: BCG Consumer Insights CEO Survey 2015 Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx
Surprisingly many Consumer Insight still with long way to go to become strategic partners for the business Role of consumer /customer insight ("CI") function 2015: 80% of companies 2015: 20% of companies 1 Traditional market research provider 2 Business contributor 3 Strategic insight partner Source of competitive advantage Tactical focus Service provider Marketing scope Insufficient or inconsistent budget More strategic focus Business collaborator Commercial scope Budget input but no control Strategic, prescriptive Trusted advisor Cross-functional Some budget control Foresight, predictive Ceo-suite partner Enterprise perspective Significant budget and control Source: BCG Consumer Insights CEO Survey 2015 Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 5
Despite executive interest, outcomes shows a slow speed of transformation % of companies 100 15% 5% 100% 75 33% 50 25 8% ~20% of 2015 participating companies determined to be stage 3 & versus ~10% in 2008-09 0 1 Traditional research Provider Business contributors Strategic insight partners 2 3 Source of competitive advantage Total 1. Insights executive, non-cpg consumer company Source: BCG, Building Yale a Better CCI, and Customer Cambiar Insight 2015 Capability Consumer ASSIRM Insights vnp Benchmarking 26Ott16.pptx Study 6
What is important for building an effective Consumer Insight capability Budget Strategic thinking Seat-at-the-table Leadership & talent Source: BCG Consumer Insights CEO Survey 2015 Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 7
Budget Budget is relevant, but is not the most determinant of functional performance and operating model Company total CI spend by stage CI budget as of revenue (median) (%) 0. 0.3 0.2 0.38 0.2 0. 0.3 0. 0.1 0.0 Overall Traditional Research Provider Business Contributor Strategic insight partners 1 2 3 Source of competitive advantage Source: BCG Consumer Insights CEO Survey 2015 Source: BCG, 2016 Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 8
Budget Spending more on consumer insights will not automatically make companies more customer centric Company centricity vs. CI spending 1Note: Data is from benchmarking of 90+ companies, 30 of which were assessed in depth, conducted in second half of 2015 1. square root of % of business decision influenced by customer insights 2. square root of customer insights budget as a % of sales Source: BCG Henderson Institute Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 9
Budgeting It is more important how and on whom budget is spent Companies feel they are currently wasting about half of their Consumer Insight spend Over half of CI research is reactive to decisions Line has already made... Which means each year average company in Panel could waste.. % responses (CI only) Auto CPG $35M $60 M 10% % Restaurant & Retail Fashion & apparel $15M $25M Consumer durables $2M Strongly Agree Agree 0 20 0 60 80 Note: "CI" defined as practitioners. "Line" defined as senior executives and business partners Source: BCG, Yale CCI and Cambiar 2015 Consumer Insights Benchmarking Study Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 10
The more advanced CI organizations report ROI measurement % of all respondents Who measures ROI on Consumer Insight Investments? 100 Measure ROI Do not measure ROI 50 3 2 50 67 0-35 -8-26 -11-50 Source: BCG, Yale CCI, and Cambiar 2015 Consumer Insights Benchmarking Study Stage 1 TraditionalResearch Provider Stage 2 Business Contributor Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 11 Stage 3 Strategic Insight Partner Stage Source of competitive advantage
Strategic thinking Business wants insights that translate into recommendations that are relevant for the strategy of the company Insights groups strive to be strategic partners "Big thing is obviously thinking strategic. We have to think above the tactical and above the technical, broader and wider" Director, Strategy & Insights, CPG "Consumer Insights is now sought after to be a part of those key strategic meetings and decisions and that's not the role the organization has played in the past. It was more providing the reports and providing the data" - Marketing executive, Consumer Durables "I'm really encouraging the team to really break out of traditional research methods and really start experimenting with all of the methods that technology has enabled us to do." - Marketing executive, CPG "We ve made a lot of headway in showing strategic value of Consumer Insight...People used to say, Just go do this,...and we would run off and do it...[now,] people have seen the value beyond the tactical to more strategic" - Head of Insights, Restaurant Source: BCG, Yale CCI a nd Cambiar 2015 Consumer Insights Benchmarking Study Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 12
Consumer insight projects: often tactical, and not a priority for more than 50% of Companies (%) 60 (%) 60 30 0-30 21 22 36 38 13 12 Disagree Agree Strongly Agree 30 0-30 3 38 Yes No -60 Short-term ROI timeframe? Too much focus on tactical studies? -60 Innovation is a priority in the Budget? Source: BCG, Yale CCI a nd Cambiar 2015 Consumer Insights Benchmarking Study Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 13
Strategic thinking More effective and satisfied consumer insights organizations spend more in innovation and forward-looking purposes Satisfaction with effectiveness of CI on business decisions 100 19 Innovation All other Companies Satisfied Companies Very satisfied Companies 50 0 3 Strategic 8 Tactical % of CI budget, by objective 13% 21% 30% % CI budget invested in innovation 100 50 0 31 35 3 % of CI budget devoted to research that is... Forward looking, predictive Real-time Historical 20% 30% 36% % CI budget invested in forward-looking studies Source: BCG, Yale CCI a nd Cambiar 2015 Consumer Insights Benchmarking Study Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 1
Seat-at-the-table High performing Consumer Insight organizations more likely to have CEO-suite champions... Consumer Insight is actively championed in the CEO -suite by... 80 % respondents answering CMO or CEO 67 0 37 8 0 Most frequent champion Traditional Busines Contributors Strategic Insight Partners 1 2 3 CMO CMO CMO Source: BCG, Yale CCI a nd Cambiar 2015 Consumer Insights Benchmarking Study Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 15
High performing Consumer Insight organizations more likely to be much more integrated into Exec. Committee Seat-at-the-table How do senior leaders engage with CI teams / leaders? 25% 50% Stages 1 & 2 Stages 3 & Board has visibility into CI findings +18% CI act as full member of Exec Comm CI acts as advisor to Exec Comm CI acts as presenter at Exec Comm Senior leaders pose strategic questions to CI team CI work shared broadly +27% +18% +18% +9% +17% "Our mantra is to ensure that the voice of the Consumer is heard in every decision... we really do get invited to have a seat at the table and have these conversations" 2 1. "How do senior leaders engage with CI team / leaders" able to select as many that apply. 2. Head of Insights, Non-CPG consumer company Source: Building BCG, a Better 2016 Customer Insight Capability ASSIRM vnp 26Ott16.pptx 16
Least frequent topics Most frequent topics Seat-at-the-table Across industries Consumer insights is used only in 0-55% of business decisions Automotive Restaurants Non-CPG consumer CPG Retail Consumer durables Brand positioning Ad campaigns Consumer branding Strategic planning New product development Customer experience Innovation and R&D Innovation and R&D M&A M&A Capital investments Risk management Demand planning Employee engagement Employee engagement Category management Employer branding Portfolio strategy % of decisions using CI 0% 51% 2% Most common Note. For "Other", top 3topics are "Strategic planning", "Customer experience", and "Product enhancements", whereas bottom three are "M&A", "Store real estate", and "Category management". Source: BCG, Yale CCI, and Building Cambiar a Better 2015 Customer Consumer Insight Insights Capability Benchmarking ASSIRM vnp Study 26Ott16.pptx 17 56% Least common 2% 56%
Leadership & talent Best-in-class CI leaders are data-driven, insightful, flexible visionaries, with a strong strategic and business orientation "There s an insatiable curiosity which I think is absolutely vital for this role: Curiosity of the technology and changes to the industry and trends, not just consumer trends, but ways we can do things better." CMO, CPG Leading Company Source: BCG, Yale CCI a nd Cambiar 2015 Consumer Insights Benchmarking Study Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 18
Leadership & talent CI value is in looking ahead vs. backwards, being strategic vs. tactical, proactive vs. reactive, and driving insight vs. reports Leverage data and research, to understand trends in the market and to provide insight In respondents' words, best Consumer Insight teams... 1 size indicates frequency thickness indicates cooccurrence Are action-oriented, generating actionable and dynamic insight that can actually drive business results. 3 Are proactive and focused, but also flexible as they adapt to the needs of the business, and to external volatility / change Are innovative and forward-thinking. They are strategic thinkers leveraging an analytical approach, not just order takers or number crunchers Source: BCG, Yale CCI a nd Cambiar 2015 Consumer Insights Benchmarking Study Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 19 2
How do companies can get to Consumer Insight excellence? Start with a strategic plan Reach out for executive championship HR as a strategic, transformation partner Earn greater control of your budget Measure return on Consumer Insight investment Build a Proprietary learning agenda At least Two years, to focus on priorities Upfront alignment and transparency Go beyond the CMO reach for CEO/CSO/CFO Match top talent needs to ideal Consumer Insight profile Recruit, develop/train, and retain differently Ring-fence strategic research and innovation budget And market it internally And market it externally Building a Better Customer Insight Capability ASSIRM vnp 26Ott16.pptx 20
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