Smartphones, streaming services, and fast food. What do they all have in common? These are just a few of the many sectors that are nearing saturation. These insights from a recent fireside chat will help you leverage customer insights to gain a foothold in these saturated markets.
How Customer Insights Drive Growth in Saturated Markets
Smartphones, streaming services, and fast food. What do they all have in common? These are just a few of the many sectors that are nearing saturation. The stats speak for themselves:
- 95% of US households have a streaming service, indicating a near-total saturation in the American market.
- The global smartphone market is showing signs of saturation, with only a 5% increase in shipments in Q3 2024, mainly from upgrades rather than consumers purchasing new phones.
- In some areas of England, the density of fast food outlets ranges from 24 to 199 outlets per 100,000 population, indicating market saturation in certain regions.
This begs the question: How do businesses grow when the competition is so fierce?
That’s where the twin pillars of customer insights, customer discovery and customer feedback, come into play. We’ll uncover practical steps to leverage these strategies for sustained growth.
Customer discovery and feedback
Researching your customer's needs and gathering feedback are interrelated efforts that should form the foundation of any business strategy.
- Customer Discovery: This first phase is about identifying your potential and existing customers, understanding their needs, and segmenting them for deeper, more effective engagement.
- Customer Feedback: Once initial assumptions are made during the customer discovery phase, real-time customer feedback will confirm or challenge these ideas. This input is pivotal for fine-tuning products and services to meet customer expectations accurately and continuously.
Identifying your target audience
With the right customer discovery process, businesses can clearly understand their market by categorizing potential customers. Here are some examples of insights you might gather.
|
Category |
Data points |
Description |
|
Demographic information |
Age, gender, income level, education, marital status, etc. |
Insights into your customer’s lifestyle help to create more detailed consumer profiles. |
|
Consumer behavior |
Purchase frequency, shopping times, frequently bought items. |
This involves tracking your customer’s purchasing patterns to better understand when and what they buy. |
|
Shopping preferences |
Price sensitivity, quality, brand loyalty, shopping mode (online or in-store). |
Shopping preferences refer to the factors that influence purchasing decisions, including pricing, product quality, brand affinity, shopping methods, and so on. |
|
Communication preferences |
Preferred channels for interaction, such as email, social media, phone calls or in-person meetings. |
Reveals whether customers prefer digital engagement, like quick social media responses or detailed emails, or more personal touchpoints, like phone calls or face-to-face interactions. |
How do you gather this kind of data?
Start by setting up a customer relationship management (CRM) system to consolidate and monitor all customer interactions and transactions. This works wonders for providing a comprehensive view of purchasing patterns that are paramount for understanding customer behavior.
In tandem with this, use tools like Google Analytics or social media platforms to track and analyze how customers interact with your website or app so that you can accurately identify their demographics and shopping habits.
With that in mind, let's look at an example to better understand what these action steps might look like in real life.
Consider a boutique clothing store implementing a CRM system to track everything from in-store purchases to online activities. They also use Google Analytics and social media tools to monitor website visits and engagement. The table below gives a rough indication of what they managed to unearth.
|
Tool |
Metric monitored |
Customer discovery insight |
|
CRM system |
Sales data: Tracks in-store and online sales trends. |
Identifies popular product categories, such as eco-friendly clothing, and highlights peak purchasing periods. |
|
Customer interactions: Monitors queries and feedback. |
Reveals common customer concerns, preferences or unmet needs. |
|
|
Transaction details: Tracks which products are bought together. |
Shows complementary product opportunities, like pairing eco-friendly apparel with accessories. |
|
|
Google Analytics |
Page views and bounce rates |
Identifies which product pages or blog posts attract the most attention, helping you focus marketing on your audience’s key interests. |
|
Traffic sources: Analyzes visitor origins (social, search, etc.). |
Highlights which marketing channels resonate most, such as social media ads promoting sustainable products. |
|
|
Conversion rates: Tracks visitor-to-customer transitions. |
Shows whether product listings and promotions align with customer expectations. |
|
|
Social Media Tools |
Engagement rates: Analyzes likes, shares, and comments. |
Gauges interest in specific campaigns to help you refine future content. |
|
Follower growth: Measures brand visibility. |
Indicates rising interest in the brand |
|
|
Campaign performance: Evaluate the reach of a specific ad. |
Confirms which promotions drive traffic and sales effectively. |
Once you’ve identified customer insights such as the above, the next step is verifying whether your product or service aligns with your customer’s needs.
Why verifying market fit matters
Even with robust customer discovery, assumptions about what customers want can still miss the mark. Verifying market fit makes sure that your product resonates with its intended audience.
Steps to verify market fit
- Refine your hypotheses. Use insights from your CRM systems and analytics platforms to create testable assumptions about your customer’s needs and preferences. For instance, if CRM data shows a preference for eco-friendly products, your hypothesis might be: “Adding a new sustainable product line will increase repeat purchases by 20%.”
- Engage directly with customers. Surveys, interviews, or focus groups are essential for validating assumptions. Ask targeted questions to identify pain points and determine how your product or service meets their needs.
- Measure key metrics. Use data to evaluate customer response. Metrics such as customer satisfaction scores and engagement prove whether your product solves the intended problem.
- Test in small markets. Before a wide-scale rollout, introduce your product or service to a controlled audience segment. For example, test a new product feature with a subset of users identified through your CRM or social media campaigns.
This is what your testing process might look like.
|
Phase |
Description |
Why it matters |
|
Prototype testing |
Engage a small user group to test early versions of your product or service. |
This helps identify glaring issues or areas for improvement before investing in a full-scale launch. |
|
Iteration |
Use feedback to make adjustments and improve the product. |
This ensures the product evolves to align with customer expectations, increasing its chances of success. |
|
Beta testing |
Expand testing to a broader, more diverse audience. |
Allows you to validate that the refined product works across a range of user types. This is a good indicator of scalability and usability. |
Customer feedback is a continuous loop
Customer feedback doesn’t stop being valuable once your product hits the market — it’s a continuous process that enables businesses to evolve alongside their customer’s needs, reducing churn. By consistently collecting and analyzing feedback, businesses can pinpoint why customers leave—whether it’s dissatisfaction with service quality, product shortcomings, pricing concerns, etc. Acting on this feedback helps retain customers and strengthens their loyalty and trust in your brand.
This highlights why customer feedback is an indispensable tool for long-term success. It goes beyond solving immediate problems; it equips businesses with the insights to anticipate challenges and adapt proactively.
Turning customer insights into your competitive edge
Thriving in saturated markets starts with a deep understanding of your customers. By pinpointing your audience, validating market fit, and keeping feedback channels open, you're better able to make smarter decisions that exceed customer expectations.
For more practical insights and strategies, check back often to stay ahead in your journey toward innovation and success.
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