Traditional models of homo economicus view human beings as rational and self-interested decision makers maximizing their own utility. These models work nicely as linear extrapolations that support decision-making of companies by giving rough estimates of the target market. The problem with these models is that they over-simplify consumer behavior, thus not serving as good strategic tools in providing true value to the consumer which is crucial in today's competitive markets. In order to understand what is valuable for people it is insufficient to view them as merely rational decision-making individuals. Companies have realized this and the need to get closer to the everyday lives of their customers, to understand how they live and think.
Consumer insight has become a buzzword in business because it holds the promise of providing a magical microscope into the head of the currently unpredictable consumer. Promises this lucrative will inevitably flood the market with even more related buzzwords creating a hairy mess. Market researchers, ad agencies, design firms, and pretty much any strategic partners of consumer companies promise they will help these companies become customer-centric by offering better consumer insights and solutions based on these insights.
The demand for insights arises as companies are facing new types of changes that make it more difficult to succeed in the marketplace. Business decisions have become more complex as consumers have become hard to predict and their reactions are more often seemingly irrational from the companies’ point of view.
Consumer behaviour is harder to predict because of these changes;
- There's more competition for consumers’ attention.
The amount of products, services and stories is overwhelming. We used to have national markets with one or two chains selling products advertised in one of a few TV channels. Now we have infinitely more always-open online stores as new forms of advertisement are constantly trying to push targeted messages onto our radars. To succeed in this environment you need to provide something truly meaningful in the right place and at the right time.
- Consumers have a multiplicity of rationalities.
Consumers have heaps of information and knowledge within reach so they are not easy to fool. In a more globalised and digitised world, different cultures and subcultures mesh together and entangle in a variety of ways. This creates different sets of information and different ways of making sense of that information. There are plenty of value and opinion bubbles in online and offline networks. These, along with different aims people have, translate into diverse rationalities instead of one commonly shared uniform rational model.
- Consumers make more decisions on autopilot mode.
At the same time as we have more information available than ever, we seem to have less time to make judgments based on reviewing this information. Decision fatigue hits us and during our days in the overwhelming consumer environments we often operate on an autopilot mode and just go with the flow of a habit or routine instead of engaging in considered decision-making. This often translates into seemingly irrational and contradictory actions. We do things we have said we wouldn’t do and forget to do the ones we were supposed to.
Because of the increasing amount of consumer options and the increasing amount of ways of making sense of them by consumers, making business decisions about what to offer, where to offer it, and with what kind of messages has become increasingly difficult.
Insights try to ease these decisions by having explanations for why consumers behave the way they do. Promise of these explanations is the catalyst of the insight industry. The rise of the consumer insight can either be a true turn towards a better world in which companies create more meaningful and more valuable products and services for their customers or a fad that will fade away.
In order for the buzz to become a true turn, we who operate in the field of insights, should work hard towards having clarity and sense emerge from all the noise around insights. We should define what our beloved insights are, why they are needed, and what are they supposed to change and how. In the end the insights’ success will be defined by how well they arm companies in their quest to meet consumers’ needs and desires.