Customer insight has been defined as “a deep truth about the customer, based on their behaviour, experiences, beliefs, needs or desires that is relevant to the tasks or issue and rings bells with target people” (Government Communications Network’s Engage Programme).
Customer insight is more than just raw data or research. It’s a multi-dimensional view of customers derived from a strategic analysis of a variety of qualitative and quantitative data and information that Local Authorities collect about their customers, including: demographic data, surveys and consultation, actual operational data, front line staff feedback, formal and informal correspondence and customer feedback.
There are three key elements to customer insight that help to show which customers use services and which customers don’t, as well as what their expectations are:
- Segmentation – using commercial or internal segmentation tools to predict which customers are likely to need a service or services
- Utilisation – analysing existing customer databases to identify which customers take up services, and by which channels (whether they prefer contact by post, face to face, online etc). This can be compared to the expected take up identified with segmentation
- Engagement – analysing data from consultation, customer journey mapping, customer satisfaction measurement etc to identify customer’s needs, wants, behaviour and expectations.
Customer insight can be used to inform strategy and policy, to allocate resources, to manage performance, to market services, to change behaviours and to inform service design.
The key outcomes of successful customer insight are:
- Increased customer satisfaction of customers, whose needs are met first time, therefore reducing avoidable contact, efforts and costs
- A more efficient match between need and provision, including a customers’ channel preference
Segmentation is about recognizing that all people are not the same or need the same services. It is the process of "subdividing the population into homogenous groups based on shared needs and characteristics", (Cabinet Office, Primer) – based on who they are (also known as socio demographics), what they do (behaviours) and how they think and feel (attitudes). Segmentation should maximise between-group variance and minimise within-group variance (LGA, Customer Segmentation guide).
The aim of segmentation is to understand the differences between communities to enable more effective targeting and tailoring of local service delivery and ultimately, greater customer satisfaction.
There is a difference between customer based segmentation (subdivision of existing customers) and a market based segmentation (subdivision of the whole population – which may require a commercial geodemographic tool such as Mosaic.)
What does Government expect from Local Authorities?
The cross government Service Transformation Agreement as part of the Comprehensive Spending Review 2007, placed a requirement on Local Government to demonstrate that they are improving customer’s experiences of their services – changing services around the needs of customers and bringing the "true voice of the customer into service design and delivery" (Cabinet Office, Service Design Guide). The emphasis is on a deep understanding of customers – not just relating to one service but across all services. The Service Transformation Agreement also included a progress measure requiring Local Authorities to reduce avoidable contact with customers – National Indicator 14. This entails a comprehensive understanding of how customers access services, to enable councils to effectively answer queries or complaints and get it right first time.
This Customer Insight Hub looks to provide you with some tools and techniques to help you use Segmentation within your work.