Editor’s note: Tim Glowa is founder at marketing analytics company Bug Insights, The Woodlands, Texas.
According to Gartner and Forrester analysts as well as companies such as MaritzCX, there is a battle raging across the categories – a battle for the hearts and minds of the consumer through customer experience. Of course, customer experience has always been an important aspect of the B2C relationship. Companies that provide that sweet spot – a balance of cost and outstanding customer experience – have always had the advantage over the competition. And, while it’s true that business is booming in the customer experience arena (particularly in the U.S.) much of the technology and methodologies that are used to measure experience are based on understanding existing interactions with a product or brand through big data analysis. Before we charge blindly toward harnessing big data driven by technological innovation, we should pause and consider some of the more traditional methodologies that allow companies to optimize satisfaction on existing or new products with accuracy, speed and cost efficiencies, even providing the Holy Grail in ROI.
While big data measures what happened in the past, conjoint analysis and trade-off methodologies help companies build an accurate understanding of the future commercial appeal of a new product or package. New dashboard technologies can be a fast and easy way for marketers to judge satisfaction vs. investment before execution – research that gives foresight and not big data-based hindsight. These methods can also provide insights into how to adjust packages and communications to maximize the uplift for specific demographics.
To demonstrate this, Bug Insights recently ran a survey on electricity providers and packages in the U.S. The study was conducted in February 2016 with a national representative sample of 1,000. In both regulated and deregulated markets, the product delivered was basically the same, with only the packages offered by suppliers open to change. We used conjoint analysis to explore which elements of those packages would optimize customer satisfaction.
Price trumps all other package elements for purchase propensity. The study showed that across all demographics, 81 percent of respondents found price to be the single most important feature, followed by contract length (11 percent). We found this information using a conjoint analysis dashboard. Conjoint discovered that overall, if a supplier could offer a cheaper price for power, it could provide longer contract lengths, less comprehensive customer service and no free or bonus services and still see an increase in customer satisfaction.
Having found that price is the key driver across respondents, we then decided to dig deeper into demographic segments using another well-established technique: preference-driven segmentation (latent class analysis). By using this approach, we were able to segment consumers into four distinct categories based on preferred contract features in their energy provider.
Distracted middle-agers: price (24 percent of respondents)
These consumers are only interested in price and are generally middle-aged, with a large percentage of Generation X and Baby Boomers. They are more likely to be female and in the lowest income group. This segment has the highest percentage of African-American customers and is the least interested in technology.
Affluent pragmatists: price, contract length and free services (16 percent of respondents)
These consumers are still heavily driven by price but also consider contract length and free services to be important factors in energy contracts. This segment has the highest percentage of Gen X consumers, the highest income group and are likely to be early adopters and discount shoppers. This segment also has the highest percentage of Latino consumers.
Tech-averse traditionalists: price, contract length, free services and sign-up incentives (42 percent of respondents)
This is the largest of the four segments. Price is still important but other features are under consideration. Contract length is important, as are free services. The availability of sign-up incentives is the second most important factor for this group. Tech-averse traditionalists account for a high percentage of Baby Boomers, making this the oldest segment. This segment has the highest percentage of Caucasian consumers and its members are the least likely to be early adopters, discount shoppers and environmentally-conscious consumers.
Ambitious influential: contract length, free services, sign-up incentives and more (18 percent of respondents)
This is the youngest segment, with the highest percentage of Millennials, and the only segment to not see price as the most important factor in the energy contract. The most important factor for this group is contract length followed by sign-up incentives and free services. This segment has the highest percentage of early adopters. Ambitious influentials are also likely to be chronic switchers, environmentally-conscious and willing to take risks.
Research beyond big data
It can be easy to look to big data-driven, tech-based innovations as a panacea for a brand’s customer experience woes. By using a more traditional methodology, such as a conjoint analysis, marketing researchers can learn more about the customer, even before a purchase. While big data shouldn’t be overlooked as a tool for collecting real-time data for satisfaction levels, customer experience really begins before the purchase is made. By relying completely on big data, brands can’t dig into how a new product will appeal or perform prior to launching. It’s through well-tested and reliable traditional methodology that businesses and marketers will gain the foresight needed to make the right decisions on how to optimize customer satisfaction.