The holy grail of marketing is customer insight. New and exclusive information about your customer that delivers a genuine competitive advantage, enabling you to enhance your offer in ways that feed straight through to increased sales.

But recognizing the importance of insights is the easy part, actually finding them can be tricky. Many businesses put significant time and effort into looking for customer insights, only for their search to end in frustration and failure, much like the quest for the actual holy grail.

But don’t despair, there is a reason to be cheerful. Unlike the fictional holy grail, customer insights, while quite rare, are very much real and attainable. You just need to take the right approach to find them, which is what this article is about.

We should start with an obvious yet fundamental question; what exactly is an insight? Well, I’m glad you asked.

Customer insights defined

Formally, ‘insight’ is defined as “gaining a new, accurate and deep understanding of someone or something”, which, though precise, is insufficient. We need a more refined and specific definition.

I prefer the one proposed by Paul Laughlin, in the Institute of Direct and Digital Marketing’s Journal; “Insight is a non-obvious understanding about your customer, which, if acted upon, has the potential to change their behaviour for mutual benefit”.

Laughlin’s definition gives any prospective insight four hurdles to jump over before it can gallop across the finish line.

Hurdle 1 – Non-obvious (the “no shit” hurdle)

An insight must clearly be something new, but novelty alone isn’t sufficient. It also needs to be fairly surprising and unexpected. Counterintuitive, even. An ‘insight’ that is easily discoverable or clearly predictable or widely anticipated, isn’t really an insight at all.

Hurdle 2 – Actionable (the “so what?” hurdle)

An insight must be capable of generating a testable hypothesis. Discovering that Kevin is the most common name among men who buy socks online on Thursdays might be sufficiently non-obvious to jump over the first hurdle but that’s about all. If you can’t find the ‘why’ behind a non-obvious data point, you can’t design a ‘what if’ type of experiment.

Hurdle 3 – Behaviour changing (the “lead, don’t follow” hurdle)

An insight must be capable of changing a customer’s behaviour. Finding out that customers are already behaving in a certain way and then adapting your offer to follow them isn’t an insight, it’s playing catch-up.

Hurdle 4 – Mutually beneficial (the “win-win” hurdle)

An insight must create an opportunity for you to enhance your customer’s experience in a way that increases (or at least maintains) your long term profitability.

This can be a challenge, especially for those insights that come disguised as threats. A bit of creativity and effort is often needed to get over this last hurdle and on to the finish line.

The standards required for an insight to clear these four hurdles are strict and demanding. Which explains why those that make it to the end are quite rare and exceptionally powerful. And why it is worth putting the effort in to find them.

Assuming the strictness of the definition, and its attendant high failure rate hasn’t put you off, now would be a good time to focus on how we go about finding insights.

Discovering customer insights

First, a caveat. The use of the verb ‘discover’ has the potential to mislead. It paints a picture of insights being hidden somewhere, fully formed and complete, just waiting to be found. Which is rarely the case.

When I use ‘discover’ I mean it in the sense of Charles Darwin discovering evolution, not in the sense of Captain Cook discovering Australia. If that helps.

Insights are the product of combining and synthesizing facts and observations. They are a construct of thoughtful analysis, evidence gathering, intuition, and experimentation. You develop them more than you find them.

Insight hunting is as much art as science. Consequently, no single formal process or methodology exists that works for all businesses.

But that doesn’t mean we can’t put a little structure around the idea.

The what, the why and the wow

Think of insights as sitting on the end of a three-step progression of data, knowledge and insight. Linked together by what, why and wow.

This is not to suggest this is a formal three-step process you have to follow. Some of the biggest insights have revealed themselves in a serendipitous eureka moment without any formal process, but it will help to categorize things as we develop the idea.

We have already defined insight, so let’s briefly turn to data and knowledge.

Data

Data are facts, statistics and disparate pieces of information. They could take the form of published market data or proprietary market research. They could be intelligence from your internal information systems. They could be something you’ve heard. They could be something you’ve seen. They could be something you’ve read.

Data, in whatever form, are simply the raw materials. If an insight is a cake then data are the eggs, butter, sugar and flour. They have the potential to become something desirable but require some mixing and a degree of knowledge and skill to realize their potential.

Knowledge

Knowledge is gained by analysing data to obtain a deeper grasp of the subject you are studying or an answer to the question you are asking.

Knowledge is not, in itself, an insight. This is arguable (at least judging by the number of arguments I have had about it) but my rationale is this; Knowledge often answers the question ‘what?’ While insights often answer the question ‘why?’. Not always, not universally, but frequently enough.

“Why?’ is the key that unlocks knowledge and turns it into insight.

Taking the next step

Understanding what constitutes an insight is only part of the challenge. Discovering these insights in the first place is often the larger part. You could, of course, rely on serendipity and good fortune but the best customer insight hunters follow a process. You can download our powerful five-step guide to discovering customer insights here.