Generating long term profitable growth through insights

July 8, 2020 3:47 pm

“There is no innovation without insight”

A few days ago, my friend Ravi was in a nostalgic mood. He remembered the beautiful Japanese motorcycle his uncle bought in 1982.

Ravi’s uncle loved the bike. And he loved being a pillion rider. But both had one major complaint each. For his uncle, the mileage was terrible.

For Ravi, the rear shock absorbers were as hard as rocks! He could still feel the sores of those rides. For Ravi’s complaint, the mechanic offered a solution to replace the shock absorbers. But that was an expensive solution. Ravi’s uncle eventually added a padded seat cover. Voila! It was such a relief. Apparently, many owners had done the same thing.

This is a classic example of compensating behaviour – when customers do something to make a product fit for their use or to overcome an issue they face while using it. It indicates that the product or service either doesn’t meet all their needs or presents friction points.

We see instances of compensating behaviour everywhere. People keep pushing their spectacle frames up as they slip down their noses, use covers to protect their mobile phones, or double stack coffee cups so they don’t burn their hands.

Studying Compensating Behaviour can help generate powerful insights to innovate on existing products as well as develop new products.
Understanding compensating behaviours of your customers can lead to very powerful insights, which when addressed, would be loved by the customers. When this process is repeated over time, customers start perceiving your company as innovative and thoughtful. Such companies reap benefits in the form of higher customer retention, reduced customer acquisition costs through referrals and increased margins on account of the premium customers would be willing to pay. These benefits help make your company an enduring one.

What are companies missing?
Despite significant tangible benefits, why do companies not observe and address compensating behaviours? Here are three key reasons:

• Ineffective Market Research: Most companies capture the “voice” of the customer through surveys, interviews and focus groups. If something is not voiced out, it is likely to get missed. Some companies carry out observations as well but limit their focus to the core product /service consumption and hence miss out several opportunities in the end to end Job Process. While the insights would still be valid, these are not powerful enough to create differentiation in a competitive market landscape.
• Follower Mindset: At times when companies are not focused internally on optimizing operations, they are studying and working on responding to every move of the competition. With this approach, they start developing a follower mindset instead of becoming the torch bearer in their industry. So, they are always behind the curve.
• “More Features” Strategy: To respond to competition, companies try to differentiate their offerings by adding more features, a lot of which don’t get used by customers. New and additional features must be based on powerful insights or they can become a wasted effort. Moreover, they can be counter-productive if the user experience turns confusing and products become more expensive. Then the customers start gravitating towards other simpler, better value for money solutions.

Intel’s customers, by contrast, were spread far and wide across the world, including in the remote villages of India. So, they hired anthropologists, or ethnographers, who made Intel see the world through their customers’ eyes.

These ethnographers informed Intel’s engineers that many Indian villages suffered from a lack of electricity. This led to Intel designing laptops with longer battery lives and dustresistant cases.

The ethnographers also shared that Indians loved watching photos and videos together but found it tedious to connect the laptop to a larger television screen. So, Intel created Intel Wireless Display technology that wirelessly relays laptop information to a television screen.

Generating Powerful and Actionable Insights
This brings us to the question – how can your company reap the benefits while avoiding the above mistakes? BMGI India has partnered with several clients using a structured methodology, backed by highly advanced AI powered technology infrastructure, to capture powerful insights and turn them into action. Here is a summary of the four stages. For the purpose of this article, we will focus broadly on the four stages

Plan
Understanding and defining the business problem, identifying the associated customer segments, the scope of the study and building a Plan to capture the insights. This plan covers various aspects of qualitative and quantitative data collection, the associated means to be used and the resources required to collect the data.

Observe
In this stage, we execute the plan and capture the data and observations. The observation study period would typically depend on the means of capturing the data e.g., mobile ethnography, face to face interviews, focus groups, etc and the sample size to be collected.

Process and Prioritize
Here we process the observations gathered using various tools and techniques to generate the insights. This would include creating an Empathy Map to have a holistic view of what the customer experiences and identifying a list of Jobs-to-be-done – both functional and emotional that the customer is trying to carry out. These identified insights are then prioritized for further processing.

Solution Development and Testing
Once the opportunities are prioritized, various solution options are generated. These options are then processed further using appropriate techniques to select the ones to be developed and tested with the customers. Based on the data collected during the testing, the solutions are finalized and launched into the market.

Industry Example
Where Payments Banks have been struggling after the initial euphoria, Fino Payments Bank is a bright spot with an excellent growth story. While talking to Meehiir Desai, Dy. Vice President Marketing and Communications, he shared an example of addressing compelling need behaviour, which yielded significant benefits.

“Our phygital strategy has allowed us to marry our technology with our army of merchants in our markets, to serve our customers who are daily wage earners and generally hard pressed on time to walk long distances to withdraw money for their daily needs”.

“We developed merchants as Banking Points, and introduced a feature in our app – Cash Bazaar, which allows customers to search such merchants in their vicinity, book their cash transactions, visit and withdraw/deposit/transfer cash in minutes, that too in the exact denomination,” said Meehiir.”

He continued, “Thanks to this feature, our app usage rose significantly, but more importantly, our customers are happy to avail cash facility nearby, invest less time in searching for an ATM, thereby saving their valuable time & daily wage. It created a win-win situation.” He further adds, “The cash in these Micro ATMs at merchant points comes from our partners like NBFCs collecting loan instalments in cash, logistics companies, amongst others. Thus, local cash remains in the local ecosystem and is made available to our customers with utmost ease.”

Next Steps
Innovation is not a one-time activity. It’s a continuous cycle as depicted in the Infinity Loop above; one that both established companies and start-ups must consistently engage in, else prepare to get disrupted eventually.

There is no innovation without insight. Here are a few points for you to think about:

• What insights do you have around compensating behaviours for your products and services?
• How well are you addressing them? How are customers responding to the same?
• Do you have a continuous loop process to keep identifying newer behaviours that might get inadvertently introduced?

BMGI would like to partner with industry players to generate powerful and actionable insights, leveraging the world-class technological infrastructure and support in conducting mobile ethnography studies, as well as building internal capability at your end to do so.

About BMGI: Breakthrough Management Group International (BMGI), a global consulting firm, partners organisations transform their business performance with a strong focus on delivering results. BMGI enables businesses to solve strategic, organisational and process problems. BMGI has partnered with organisations in various stages of their business life cycles and has delivered cumulative benefits to its clients worth several billion dollars with an engagement ROI of 5:1 to 20:1.

In India, BMGI is located in Mumbai. BMGI’s clients include leading Fortune 1000 Global companies and other Indian companies from diverse industries such as financial services, IT/ITES, airlines, chemicals, FMCG, discrete manufacturing, telecommunications, petrochemical, textiles, healthcare & energy.

BMGI is recognised as a thought leader in the space of Innovation and operational excellence. BMGI has also gained worldwide attention through its international bestselling books such as ‘The Innovators Toolkit’, ‘Insourcing Innovation’, ‘Design for Lean Six Sigma’, “The Complete Idiot’s Guide to Lean Six Sigma” and many more.

For more details, visit:
www.bmgindia.com
info@bmgindia.com

Authored by:
Naresh Shahani, Managing Director and Amandeep Munial, Sr Principal Consultant & Business Head, BMGI