The biggest winners in the era of the New Customer Majority will be companies that can break away from the mind-set that there is a technology-associated solution for every customer-related challenge. One CEO of a global company with a balanced perspective of customers and technology said, "We don’t want to let IT take over this company. We are not a systems company. We use technology to create better products so we can serve our customers better; we do not let technology lead us. We use technology as a tool, not as a strategic target. We want people talking about people and products and how we can develop and achieve strategies to serve our customers best." That was Nestlé CEO Peter Brabeck in a Harvard Business Review interview.
The big winners in today’s marketplace see their customers as people first, numbers second. This is not novel. Some great brands have come about by companies treating their customers as people, not as data sets. Nike CEO and cofounder Phil Knight had a nonstatistical view of customers from the founding days of his vast sportswear enterprise. That may seem a bit ironic, given his BBA in accounting from the University of Oregon and MBA from Stanford. However, Knight was a serious runner (a 4:10 miler) who understands the mind of the athlete. Athletes were Knight’s core customers from the time he hawked shoes at games and meets from the trunk of his car. His intuitive grasp of human nature enabled Nike to spawn a revolution in sports apparel. Many credit Knight with doing more than any one else to bring the exercise and fitness movement in the United States to life.
The lion’s share of Nike’s research dollars goes into product design and development rather than into consumer research. In fact, before he interviewed for the top marketing job at Nike in 1987, brandmeister Scott Bedbury was advised to not use the word research when speaking to Knight. Nike’s founding father has undisguised disdain for statistically driven marketing. In its then 16-year-old history, Nike had become a powerhouse with annual sales of $800 million without relying on traditional consumer research.
While holding Nike out as a successful example of a company that eschews a numbers-defined consciousness, I am aware that the company has struggled in achieving annual growth rates in recent years strong enough to keep Wall Street happy. However, a big problem Nike has is that the younger markets it uncannily connected with in the past have slowed in growth. Nike has been unable to transfer its magic to the New Customer Majority. Perhaps by the time this book is out, Nike will have learned that it must make changes in its brand husbandry, as The Gap finally learned after two years of dismal sales growth resulting from overemphasis on teen fashions. Within several months of launching its "Gap: For every generation" campaign, the retailer reversed its long downhill slide that was marked by 23 months of consecutive losses.
Starbucks, which Bedbury later joined, followed much the same route to global stardom. Starbucks founder Howard Schultz has the same intuitive understanding of coffee drinkers that Phil Knight had of athletes. He didn’t feel it necessary to endlessly grill coffee drinkers in large-scale research projects.
Bedbury says, "The greatest problem with relying on traditional methodologies used by most outside market-research firms, I’ve found, is that they provide management with reams of statistical data, which may tempt those lacking in confidence to go against their common sense and gut intuition." What an indictment from one of the best minds in brand husbandry today!
Southwest’s Herb Kelleher says, "I’m always willing to look at [market research], but I never want to get bogged down in it." He adds, "We get a lot of employee feedback on what they hear as to our customers’ likes and dislikes. I’d rather we be out there doing things for the customers and gauging their responses on the front line." No slave of numbers, he built one of the most cost-control-minded airlines around.
A Parenthetical Note
We don’t usually warm to others who attack us. With that in mind, perhaps it’s timely to say that despite criticisms leveled at customer research at various points in this book, it is not done without an appreciation for the fact that consumer research can be a valuable decision-making tool. However, traditional research is broken and it needs fixing. Consider the following three statements made by two highly respected researchers, Kevin Clancy and Robert Shulman, formerly chairman and CEO, respectively, of Yankelovich Clancy Shuman:
- "Because consumers don’t choose rationally, any research that forces rational answers has to be flawed."
- "[Brand] positioning cannot be developed from what people say they want."
- "While it is possible to divide the American public into different segments psychographically, it’s often of no practical use."
What could be a stronger indictment against traditional, numbers-obsessed consumer research than that made by these two highly regarded pros in consumer research?
Phil Knight, Howard Shultz, and Herb Kelleher are keenly aware that much of what they want to know about customers cannot be reduced to numbers. They realize that numbers often distort rather than clarify pictures of customers, or, in line with Einstein’s cautionary words, often don’t refer to reality. Jon Steele, the advertising account planner who played a lead role in developing the "Got Milk?" campaign, comically addressed obsessions with statistics when he said in Truth, Lies and Advertising, "Statistically speaking, Americans have one testicle and one breast."
Why Customer Research Often Points Companies Down the Wrong Path
Statistics can prove the false as persuasively as they can prove the truth. In survey research, people often tell researchers things that are untrue without either respondent or researcher realizing it. These falsehoods are then statistically analyzed and presented in a final report as truth revealed. One area particularly prone to such falsity is motivations. Read what renowned neurologist Richard Restak, whose work was the basis for PBS’s award-winning series The Brain and The Mind, says about our awareness of our motivations:
"We have reason to doubt that full awareness of our motives and other mental activities may be possible."
Bernard J. Baars, a leading researcher in the study of what goes on behind the curtains of consciousness to shape our behavior, makes the same point more directly:
"Our inability to accurately report intentions and expectations may simply reflect the fact that they are qualitatively not conscious."
The views on motivations held by Restak and Baars represent consensus in contemporary brain science. Marketing researchers and practitioners need to join that consensus. Brain researchers have made it quite clear that to understand people’s needs, motivations, and behavior, it is necessary to go behind the curtains of consciousness. The roots of needs and motivations lie deep in the brain, beyond the direct reach of research subjects’ conscious minds. How to get to those roots is a major focus of this book, but to give you a peek into the topic in personal terms, let’s look at how a particular need and motivation might arise below the levels of your conscious mind.
It’s midafternoon and your energy level is sagging. Suddenly, a craving for chocolate sweeps over you. The craving sprouted outside your conscious mind in a tiny organ above your kidneys when it sensed a sugar shortage. The sugar supply sentinel responded by setting off a gush of neuropeptide Y to carry a message your brain. "Send in some carbs—and hurry!" Your brain takes notice and alerts your conscious mind by generating the craving. You now know that you desire chocolate, but you don’t really know where the desire came from.
The conscious mind plays the chief executive officer to the brain’s subordinate role as data gatherer, researcher, analyst, and communications center for all points in the body that need to get information to the CEO for a decision. The brain gets the conscious mind’s attention by whipping up cravings or desires. That’s how motivations (or temptations!) are born.
Beside the fact that the origins of motivations lie outside consciousness there is another reason why research subjects often mislead researchers by telling them things that later events in the marketplace contradict. Damasio discovered that when people think about something that is hypothetical, they use different brain sites and processes than they use in a real-life scenario. Thus, the person in the focus group or one who is being surveyed is not quite the same person that goes shopping later that day.
Influence by such new insights into the workings of the brain is changing how a growing number of companies get information about customers. More research is moving into cyberspace all the time. Mark Schar, Procter & Gamble’s vice president for iVentures and consumer knowledge, says, "I would say it’s pretty clear to all folks involved that the Internet is going to be the future backbone of our consumer-research activity." P&G along with an expanding list of other companies are using the Internet as a testing ground for new products. Shoppers go to specific sites to get product samples, which they try out before coming back to the site to give feedback to the company. The company then reviews the feedback before it invests large sums in a major launch. In other words, more and more companies are evaluating customers in reallife shopping scenarios as opposed to surveying, interviewing, and focus group testing—grilling them in artificial environments.
Some researchers are getting even more personal with customers by employing ethnographic research methods. In ethnographic research, the researcher becomes part of the scene studied. This is a radical change from consumer research of the past because in classical science, whose protocols have strongly influenced consumer research, the researcher must stand apart from what is being studied.
Anthony Edwards, an account planner at Bernstein-Rein in Kansas City, makes extensive use of ethnographic research. He recruits people to organize barbeques and dinner parties that he attends as one of the guests. He gives his hosts guidelines for invitees to ensure that participants represent the market being studied. Edwards will stand around a barbeque grill, beer in one hand, hamburger in the other, not only questioning guests directly, but also encouraging them to examine each other’s ideas and attitudes. According to Edwards, the nice thing about these informal groups, is that "unlike in focus groups, you don’t have to wonder whether what someone says is true or just making an effort to position himself." Edwards says he gets truths from such gatherings that would not be revealed in focus groups and that cannot be uncovered in survey research because of the subtle nature of many crucial truths about customer behavior.
An ethnographer visiting a research subject in her home may ask the subject for documentary evidence like grocery receipts, notes on refrigerators, magazines she gets, or other sources of information that might shed light on her views and behavior. Ethnographic research does not follow a tightly structured preconceived plan. There is no moderator’s guide like the ones used in focus groups. Instead, the ethnographer lets the research follow a trail determined by incremental results of the research process. Rather than trying to control the direction of the research, the ethnographer takes a heuristic approach. Each new revealing insight lays the groundwork for the segment of the research project.
The final ethnographic report is not the usual sterile treatise. The research client gets a narrative—a story extracted from a real-life setting in which people act out their lives in a natural daily manner. An ethnographic report even can be fun to read!