The Role and Limitations of Consumer Data

There’s no doubt that the more insights a business can get into its different customer segments – the more targeted and effective its marketing can be. Data points collected from customer behavior, clicks and browsing patterns, surveys, and polls can be very helpful in creating a customer profile – and predicting how a particular segment of people will react to different things with a fair degree of accuracy.

But data cannot always tell you everything you need to know. Consumer data can often highlight patterns and correlations in human behavior and bring forward startling discoveries. But it does little to explain why those behaviors occur and what motivates people to act the way they do. According to a report in the Harvard Business Review, “It reveals what people do, but not why they do it.”

Businesses must know how far to be led by their data and when to make decisions based on their own instincts and common sense. Knowing about your customer is different from knowing them.

Using customer data can strengthen your marketing and appeal to your customers, but there are some instances where data alone cannot help you.

Here’s what data can tell you about your customers and what it can’t.

What Data CAN Tell You: How Someone Will Behave or React to Something

Data points can illuminate human behavior and indicate what a person from a particular consumer segment or demographic category is likely to do when faced with a choice. For instance, information collected from surveys or consumer online behavior can tell you whether people in their 20s prefer shower gel or bar soap, or if they are more or less likely to purchase products marketed as ‘sustainable.’ But it cannot tell you why they make those choices – and in some instances, not knowing the ‘why’ behind a choice can be a huge blind spot.

What Data CANNOT Tell You: Why They Do What They Do

Data often cannot explain why people do what they do. According to the Harvard Business Review, a firm tasked with designing new technology products for low-income households in Brazil many years ago decided to undertake some field research on what products these households liked and used. They discovered that almost every household in that area owned a television.

But what the data didn’t tell them was that these televisions weren’t a status symbol or a luxury. They were safeguards. Owing to the street violence in these neighborhoods, parents, and caregivers would buy televisions to encourage their children to stay indoors and not venture out into the streets at night, which would have been dangerous.

The data showed them the what but not the why. Marketing efforts that stop short of understanding what motivates individual decisions will not paint the whole picture.

What Data CAN Tell You: What Customers Think They Want or Need

Focus groups, questionnaires, and polls can give a business broad insights into customers’ preferences and basic beliefs. For instance, a questionnaire is a quick and easy way to determine whether your customers prefer product A over product B, the maximum price they’d be willing to pay for a high-quality razor, or whether they prefer to patronize brands with a commitment to diversity and inclusion.

What Data CANNOT Tell You: What Customers Really Want or Need

The issue with questionnaires, surveys, and polls, however, is that they only tell you what the customer wants to tell you. Survey respondents don’t always tell the truth, and the reasons for lying can include:

• Wanting to appear morally, financially, or socially superior.
• Trying to influence the outcome of the research (for instance, a customer who is thrilled with your product may overstate how often they use it, to ensure it stays on the market)
• Wanting to conceal or misstate sensitive data. Research indicates that respondents are more likely to lie about sensitive information such as drugs, sexual preferences, religion, or money.

Often, measuring actual customer behavior is a better indicator than asking customers what they’d do.

Using Data Effectively

Data can strengthen your marketing and illuminate the way forward, but it doesn’t always provide all the information you need. A combination of data and human insights is the best way to appeal to your diverse consumers.