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Good products solve consumers’ real problems. 80% of the product’s success is determined by how well it solves a given problem. To solve a given problem well the first thing we need to do is understand it, and at the heart of the problem definition is the end consumer whose life the product levels up.
Before the early 2000s, product development focused on consumer surveys and focus groups, a primitive form of data-driven market research. Products were then marketed to the masses via mass media, then certain people who it appealed to would buy them.
This means that for the longest time, products were designed for mass appeal. Products that solved 20% of the problem for 80% of the masses were more likely to succeed than ones that solved 80% of the problem for 20% of the people.
This changed a little post the 2000s when brands began targeting fewer people with life-altering products. Imagine devices like the Blackberry that initially targeted only 20% of the population, but offered a solution that managed 80% of their work struggles. Like everything else in the world around us, the launch of the iPhone and Android phones changed all that.
User Data empowers Brands to re-engineer, automate, and fuel rapid product development which has the power to make a significant impact on our everyday lives. Historically, businesses only gathered information from customers at the time of service or when something ended up breaking.
Consumer research would be conducted once or twice a year, or perhaps while the product was being developed, but consumers were unaware of the product until its release.
However, smartphones altered this landscape through instantaneous feedback, real-time access, and the ability to keep customers in the loop. Home appliances and consumer durables and other sectors have lagged.
Major Brands in the home appliance industry have made incremental innovations over the years toward a digital future. Largely because of a huge gap that exists between the brand, its manufacturers, and its customers.
In 2023, designing and building great products can only happen by integrating user data right from the start. In fact, according to Harvard Business Review, a data-driven transformation can result in a 62% increase in customer satisfaction.
With the integration of smartphones, social media, and mobile apps in the consumer journey, the relationship with them has been irrevocably changed. For example, accessible and immediate responses are the benchmark for a great consumer experience.
In addition to mobile phones, this functionality is now being extended to other connected devices, including those found throughout the home. Beyond quick problem resolution, consumer data is being used for predictive maintenance, to develop new features, and to roll out updates that enhance and ease user experience.
How is Consumer Data used in Market Capitalisation and Product Development?
Similar to beta and alpha testing, which was formerly reserved for software as a service (SaaS) applications, consumers now expect the same of hardware products. Developers are creating features, functions, and minimum viable products based on feedback from potential customers.
They use the device extensively, breaking features and in some cases, even recipes until a solution can be discovered. This presents an opportunity for the company to develop products that are well-suited to the needs of its target audience. Sometimes these solutions are sourced from the customers themselves, like how Starbucks did with the “My Starbucks Idea” platform.
Connected devices provide access to every component, every movement, and every change, essentially providing a heat map of everything that is operating properly.
Instead of spending months perfecting a feature that the average user won’t ever use, you can put that time and energy into creating features that will truly make people happy, similar to how North Face used AI and machine learning to curate a customized experiences for their customers.
In order to gain an advantage over more established competitors, businesses should conduct extensive market research to ensure their products are well-suited to their target audience.
This is accomplished by incorporating a feedback loop into the device, which reveals usage statistics in real-time. The information gathered can be put to use in the never-ending quest to enhance products while simultaneously decreasing the time required to develop them.
The proof of the pudding is quite obvious – most companies have a market cap of 4X of their revenue, and most tech-led companies have a market cap of 20X their revenue.
The Future of Consumer Data
In the past, businesses either waited years to release new products or released multiple versions of existing products with only minor differentiators.
However, with today’s technology businesses can have an omnichannel presence to communicate with their customers and a direct understanding of what those customers want. Your product’s success depends on your customers’ continued devotion to you and your brand, as well as on their positive experiences with the products you’ve developed for them.
Therefore, it is essential to effectively use consumer data to offer the best possible experience.
As seen by the companies that are already using big data like Amazon and Google, the adoption of these technologies will have far-reaching effects on business operations and consumer experiences. Just think of all how you can now be presented with content or recommendations that are tailored to you and your specific needs based on data as basic as your preference for very spicy food.
The use of consumer data has helped young and growing brands with:
● Building new features
● Rolling out better recommendations
● Offering instantaneous customer support
● Pre-emptive bug resolution
● Validating product roadmap
● Enabling Product Market Fit
Even sample sizes as small as 300 can have a massive impact on learning and product development in growth-stage startups. With small sample sizes, the benefits include a direct connection with your audience, building, and testing with the consumer in the loop, and immediate feedback for what’s going well and what’s not so.
At scale, user data has changed the direction of tech companies, it has built and brought down the fortunes of many. With tech taking center stage in customer lives, it would be almost foolish to ignore the opportunities it allows for even traditional sectors to ignore them. Maybe 2023 will be the year that we see even behemoth brands dip their toes in the water.