**Consumer Insights 101: What They Are, Where to Find Them, and More**

Businesses live and die by how well they understand their customers. Think of it this way: a business is ultimately the sum of its decisions, and the commercial success of a business depends on as many of those decisions as possible being good ones.

However, making strong business decisions is rarely easy. They normally involve trade-offs – you need to figure out the pros and cons, consider the decision from all angles, and come to the right conclusion about what to prioritise.

Arguably the most important angle is your customers: what would be the best decision for them? Not many businesses survive making decisions that don’t align with their customers’ wants and needs. This is where consumer insight comes in.

What is consumer insight?

Let’s dive into the basic principles of consumer insights, starting with simple definitions:

Consumer (noun) – Someone who buys goods or uses services.

Insight (noun) – An understanding of what something is like.

So consumer insight is essentially an understanding of the people who buy goods and services. Specifically, it relates to the people who buy (or you hope will buy) your goods and services – people we might call your target audience.

Types of consumers

This target audience of consumers includes subsets such as:

Your most valuable / highest spending customers
Your newest / most recently acquired customers
Your customers in a particular region or location
Your customers who have acquired a particular product or feature
Etc.

Or they might be potential customers, the people you’d like to convert:

People currently using one of your competitors
People who are in the market but haven’t purchased yet
People in an adjacent or related market to yours
People in a new geography you’re considering expanding into
Etc.

Types of insights

As for the ‘insight’ portion of consumer insights, this could be almost anything! It might relate to who these people are, what they think, or how they act. In other words, consumer insights shed light on the who, what, where, why, and how of consumer behaviour.

Examples of specific consumer insights might be:

Your customers are typically young and live in urban locations.
Your customers generally have higher satisfaction when they buy online.
Your customers are more likely to upgrade if they use a certain feature.
The people who consider you, but then buy from a competitor, are often swayed by discounts or promotions.

The people who use your competitor are frustrated with the reliability of their service.

You get the idea: consumer insights are anything a business can learn about the people in its market to help inform what that business does.

Why is consumer insight important?

People don’t wake up in the morning wondering how they can give away all their money.

When they part with their cash, it’s usually because they want something in return. And most of the time, the thing they want is not the same as the thing they ultimately purchase.

There’s an old adage that people don’t want to buy a quarter-inch drill. Rather, they want the quarter-inch hole it can make. The drill is the means to an end – not the end in and of itself.

The same is true in almost any category:

People don’t want lawnmowers, they want neatly cut grass.
People don’t want toothpaste, they want clean teeth.
People don’t want cars, they want to be able to get around.

And so on. While these are vast oversimplifications, you get the idea: people don’t want things, they want outcomes. They buy things to get the outcomes they want – because they think that a certain product or service will enable them to do something or achieve something.

Consumer insight is a means of piecing together this puzzle from a business perspective: understanding who these people are, where they’re coming from, what problem they’re trying to solve, and how they evaluate potential solutions.

It’s this understanding that needs to underpin all those decisions across a business, big and small, day in and day out. Otherwise, your business has no chance of surviving.

How do you generate consumer insights?

Let’s go back to our initial definition: understanding people who buy goods and services.

Defined like that, consumer insight is all around you. Whether you’re observing people in a shop, eavesdropping on a train, or simply talking to your friends, you’ll gain consumer insights about what people want and how they go about getting it.

But these types of consumer insights are anecdotal and fairly unstructured. That’s not to say you can’t learn from them – but there’s a limit to how much random observation can tell you about your own customers.

In order to make truly smart, strategic business decisions, you will need to do research. Research helps generate consumer insights to answer specific questions, such as:

Should we prioritise building feature A or B?
What would increase our sales conversion?
Is our customer service good enough?
How can we improve our customer retention?
How should we price our plans?

There are many ways to go about this research; the best approach depends on what you need to learn about your customers. Let’s break down the various flavours of research.

Primary research

Primary research is anything where you have generated the information or data points yourself. For example:

Interviews – speak with customers, potential customers, the people who influence them, and known domain experts.
Focus groups – get some people in a room, ask a few questions, watch the sparks fly and moderate the discussion.
Surveys – ask the same questions of different groups of people, to more reliably understand the commonalities across particular groups and audiences.
Direct observation (in relevant settings) – attempt to blend into the background and watch your consumers of interest and what they do.
Ethnography – deeply immerse yourself in people’s environment and lives to understand what makes them tick.

Secondary research

By contrast, secondary research involves leveraging information or data points that already exist. For example:

Government data – how many people are actually in this market?
Academic research – what do we know about the psychology of their habits?
Web analytics – what are people searching for on Google, and what online paths do they follow to find you and your competitors?
Customer reviews – what do people think about you and your competitors?
Behavioral data – what do people do on your website?

Think of primary and secondary research like one big combined toolkit: there are so many different tools you can use, and each tool is suitable for a different use. The trick is figuring out which one is right for what you’re trying to understand.

For example, if you’re looking to get feedback on a new product and you’re interested in how people’s opinions influence each other, you might consider a focus group. But if you’re more interested in uncensored feedback that hasn’t been influenced by anything or anyone else, you’d be better off looking at unprompted customer reviews.

Looking for more actionable tips on consumer insights? Check out our comprehensive guide to How to Get and Use Consumer Insights.

What makes for good consumer insight?

Good consumer insights need to meet two basic criteria: relevance and reliability.

1. Relevance

Lots of things are interesting. People are interesting! What they do is interesting! Why they do it is especially interesting! If you do enough research, you’ll find plenty of interesting stuff.

But to be useful, consumer insights need to be relevant to the questions facing your business. How should your products and services evolve? How should you position them? How should you communicate with customers in order to sell them?

Try this simple process to ensure your research will generate relevant consumer insight:

Write down one of the business objectives you’re working towards.
List out the decisions you need to make to get there.
Map the information you’ll need to make each of those decisions.
Design a research approach that will generate that information.

This will ensure that your research ladders back up to the decisions you need to make, ultimately helping you reach your business objective(s).

2. Reliability

In addition to being relevant, your consumer insights also need to be reliable – after all, totally inaccurate data is of no use to you.

There is a long list of things to consider here, depending on your methodology. Here are a few questions to check your research against:

On the most basic level – is your data correct? Have you double-checked your calculations?
Are your sample sizes sufficiently robust to draw conclusions? Is your sample representative of the audience you’re extrapolating out to?
How pure is your methodology? Have you avoided leading the witness?
Could there be a disconnect between what people say and what they actually do?
Are these the sort of questions people can meaningfully answer anyway?

Of course, the pressures of operating in a commercial environment (i.e. one without infinite time and resources) means that some of these questions can be hard or even impossible to answer.

That’s okay – perfect, unsullied reliability is more of an aspiration than a reality. You simply have to ensure your insights are reliable enough to make solid decisions.

The consumer insight workstream

On that note, let’s circle back to where we started. What is the point of all this? How can consumer insight help you in practical, actionable ways?

As a matter of fact, consumer insights can support you at every stage of the business lifecycle. Whatever decisions you need to make, understanding your customers (and potential customers) provides invaluable context for your options.

Let’s break it down across a typical product or service workstream:

1. Discovery

When you’re first starting out, consumer insights can help you make better decisions about how to discover business opportunities and which ones to pursue. For example:

Use exploratory qual research and ethnography to identify underserved or unmet consumer needs to fulfill.
Use market sizing research to understand the size and composition of the market and make an informed choice about which segment(s) to go after.
Use cultural and trend research to better understand the underlying shifts happening in a market and identify emerging opportunities.

2. Define

Once you’ve identified a given opportunity, consumer insight can also help you define and hone your proposition for that opportunity. For example:

Use co-creation – incorporating consumer insights from the very start of the ideation process – to ensure that your idea will resonate with your target audience.
Use proposition testing to bring consumer insight into the refinement process and ensure your proposition is optimal.
Use demand testing to check there is sufficient interest in your proposition before you start building or taking it to market.

3. Launch

Having defined a proposition, consumer insight can help you make better decisions about how to take it to market. For example:

Use pricing research to understand sensitivity in the market and ensure you’re pricing your product or service optimally for consumers.
Use brand and comms research to understand how you’re perceived in the market and what messages you need to communicate.
Use customer journey research to see how potential customers decide between different options to inform your sales strategy.

4. Scale

Finally, once you’ve launched, consumer insight can help you make better decisions about how to grow and scale your new business line. For example:

Use customer acquisition research to understand what drives decision-making and how to further optimise your positioning.
Use customer satisfaction research to understand the changes your customers want and prioritise your roadmap.
Use customer loyalty research to understand what fosters retention, particularly for high-value customers, and shape your strategy accordingly.

To sum up: every business must make decisions which ultimately determine the success of those businesses. Consumer insights are critical input into this decision-making, because they ensure decisions are actually aligned to customers.

Beyond that, though, there’s a nearly endless list of ways to generate and use consumer insights! While this post is a good primer, there’s no substitute for an expert who will evaluate your business and advise on consumer insights based on their extensive market experience.