Big Data Should Never be a Replacement for Listening to Customers

Overview

Enabled by the internet, mobile devices, and powerful company Enterprise Resource Management Systems (ERP)

Enabled by the internet, mobile devices, and powerful company Enterprise Resource Management Systems (ERP), data is collected and analyzed for every aspect of our lives: what we view, what we talk about, what we buy, and where we go – all in an attempt to try to understand and predict our behavior. Big Data has captured the interest of market researchers around the world and is considered the holy grail by many. It has gotten to the point where many companies believe that Big Data allows them to understand their customers better than the customers themselves.  However, like many other solutions that are “too good to be true,” Big Data has its limitations.  Big Data is beneficial in uncovering market direction and trends, allowing us to see something is happening or changing. Still, it is unable to answer the all-important question of “why.” 

A recent Wall Street Journal article explained how focusing on Big Data alone and not talking directly with customers can be fatal.  https://www.wsj.com/articles/focus-groups-big-data-companies-11621604085

“Back in the early 2000s, Lego Group was in trouble. Videogames were ascendant, making the Danish toymaker’s trademark plastic interlocking bricks seem passé. Relying on data analytics, company executives concluded that a digital generation demanded instant gratification, so they pivoted toward Lego sets with larger components that could be completed more quickly. Big mistake. Sales tanked further.

Hurtling toward bankruptcy, company executives rededicated themselves to listening to their potential customers rather than treating them as data points. And so it was that an 11-year-old boy in Germany mentioned to a team of Lego researchers that the worn-down and pocked soles on his sneakers were evidence of his prowess on a skateboard. “They are my trophy,” the boy said.

It was this eureka moment that helped change the company’s fortunes. This revelation and others obtained through qualitative research (home visits, in-depth interviews, focus groups, etc.) led Lego to smaller bricks and, in fact, increase the intricacy of its sets.  Now the company is the largest toy by sales in the world.

The moral of the story: quantitative data is only part of the equation, but qualitative data allows companies to complete the entire picture. Big Data did point out the downward trend in sales, but it could not assess why.  So company management attempted to address the why internally, and they were wrong.  They attributed the downturn in sales to their products being too intricate and not providing instant gratification.  However, the exact opposite was revealed through interactions with actual customers.

The whole notion of customer input may seem obvious or overly simplistic. Still, you would be surprised by the number of companies today making major strategic marketing decisions with limited or no qualitative customer input.  Understanding the customer has been a hallmark of successful companies for decades, and it will never change. The availability and analysis of customer data can be a great advantage to companies in understanding customer behavior and trends. However, it will never be a substitute for the authentic voice of the customer.

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