A Whole Consumer Perspective
Michael Nestrud, Curion
Mike Coffel, Nestlé
Mike Coffell from Nestle and Michael Nestrud from Curion Insights discuss the concept of “alienation” in product research, which measures the risk of losing existing customers when changing a product’s recipe. They emphasize the importance of understanding the financial implications of alienation and moving beyond a simple pass/fail approach to risk assessment. They highlight how incorporating natural language processing and open-ended feedback can provide deeper insights into consumer reactions. The session also explores the various reasons for product changes, both consumer-led and those driven by external factors, and the challenges of managing consumer expectations in the face of these changes. Finally, they stress the value of collaboration between insights professionals and business partners in navigating the complexities of product innovation and risk mitigation.
Key Quote:
“I fully understand your business strategy. You need to fully understand the level of risk you’re walking into making this decision.”
Key Takeaways:
- Alienation measures the risk of losing existing customers: It quantifies the percentage of consumers who like the current product but dislike the new version.
- Financial risk assessment is crucial: Translating alienation percentages into potential financial losses helps business partners grasp the impact of product changes.
- Moving beyond pass/fail provides a more nuanced view: Incorporating factors like open-ended feedback, sensory data, and market benchmarks creates a more comprehensive risk assessment.
- Natural language processing adds depth to analysis: Analyzing open-ended comments reveals specific consumer concerns and the emotions associated with them.
- Test and learn approaches can mitigate risk: Soft launches and market trials allow for real-world feedback before full-scale product changes.
- Consumer-led and external factors drive product changes: Innovation, competition, supply chain disruptions, and regulations can all necessitate product modifications.
- Balancing innovation and risk is essential: Companies must carefully weigh the potential benefits of product changes against the risk of alienating existing customers.
- Communication is key: Clearly communicating the reasons for product changes and addressing consumer concerns can help manage expectations.
- Collaboration between insights and business partners is vital: Aligning on risk tolerance and decision-making processes ensures informed choices.
- Continuous improvement is necessary: Research methodologies and risk assessment models should be regularly evaluated and updated to reflect evolving consumer needs and business realities.
Extended Abstracts for Each Takeaway (500 words each):
1. Alienation measures the risk of losing existing customers:
The concept of “alienation” in product research is a critical metric for understanding the potential impact of product changes on existing customer loyalty. It goes beyond simply measuring overall liking or preference for a new product and specifically focuses on the risk of losing customers who are currently satisfied with the existing offering. By quantifying the percentage of consumers who like the current product but dislike the new version, companies can gain a clearer understanding of the potential downside of making changes. This is particularly important for established brands with loyal customer bases, where even a small percentage of alienated customers can translate into significant revenue losses. The alienation metric helps companies make more informed decisions about product innovation, balancing the desire for improvement with the need to retain existing customers.
2. Financial risk assessment is crucial:
Translating alienation percentages into potential financial losses is a powerful way to communicate the impact of product changes to business partners. While insights professionals may be comfortable discussing percentages and statistical significance, these concepts may not resonate with decision-makers who are primarily focused on the bottom line. By quantifying the potential revenue at risk due to alienated customers, insights teams can provide a more tangible and impactful assessment of the risks involved. This approach helps bridge the gap between research findings and business decisions, ensuring that product changes are evaluated not only in terms of consumer preferences but also in terms of their financial implications.
3. Moving beyond pass/fail provides a more nuanced view:
The session advocates for moving beyond a simple pass/fail approach to alienation risk assessment. Instead of relying solely on a single threshold or benchmark, they suggest incorporating a variety of factors to create a more comprehensive and nuanced view of the risk. This includes considering open-ended feedback, sensory data, market benchmarks, and the specific context of the product and category. By taking a more holistic approach, companies can gain a deeper understanding of the potential impact of product changes and make more informed decisions about innovation and risk mitigation.
4. Natural language processing adds depth to analysis:
Incorporating natural language processing (NLP) into alienation research adds another layer of depth to the analysis. By analyzing open-ended consumer comments, NLP can identify specific concerns and the emotions associated with them. This allows companies to go beyond simply knowing that a certain percentage of consumers dislike the new product and understand why they dislike it. This detailed feedback can be invaluable for identifying areas for improvement and tailoring communication strategies to address specific consumer concerns. NLP can also help uncover patterns and trends in consumer language that may not be apparent through traditional quantitative analysis.
5. Test and learn approaches can mitigate risk:
The session highlights the value of test and learn approaches, such as soft launches and market trials, in mitigating the risk of product changes. By introducing a new product or recipe to a limited market before a full-scale launch, companies can gather real-world feedback and assess consumer reactions in a controlled environment. This allows them to identify potential issues early on and make adjustments before alienating a larger customer base. Test and learn approaches also provide valuable data on sales performance, consumer preferences, and the effectiveness of marketing campaigns, which can inform future product development and launch strategies.
6. Consumer-led and external factors drive product changes:
The session explores the various factors that can drive product changes, both those initiated by consumers and those driven by external forces. Consumer-led changes may be motivated by a desire for improved performance, new flavors, or evolving preferences. External factors, such as supply chain disruptions, regulatory changes, and competitive pressures, can also necessitate product modifications. Understanding the drivers behind product changes is crucial for developing effective communication strategies and managing consumer expectations. It also highlights the need for flexibility and adaptability in product development and marketing, as companies must be prepared to respond to both internal and external pressures.
7. Balancing innovation and risk is essential:
Balancing the desire for innovation with the need to manage risk is a constant challenge for companies. While product improvements and new offerings can drive growth and excitement, they also carry the risk of alienating existing customers. Companies must carefully weigh the potential benefits of product changes against the potential costs, both in terms of lost customers and financial losses. This requires a deep understanding of consumer preferences, market dynamics, and the company’s own risk tolerance. The alienation metric and the broader risk assessment framework discussed in the session provide valuable tools for navigating this complex balance.
8. Communication is key:
Effective communication plays a crucial role in managing consumer expectations and mitigating the risk of alienation. When companies make changes to their products, it’s important to clearly communicate the reasons for the changes, address potential concerns, and emphasize the benefits of the new offering. Transparency and authenticity are key to building trust with consumers and maintaining their loyalty. Communication strategies should be tailored to the specific product and target audience, using language and channels that resonate with them.
9. Collaboration between insights and business partners is vital:
The session emphasizes the importance of collaboration between insights professionals and business partners in navigating the complexities of product innovation and risk mitigation. Insights teams should work closely with marketing, product development, and other stakeholders to align on risk tolerance, decision-making processes, and communication strategies. By fostering open communication and shared understanding, companies can ensure that product changes are made strategically and with the consumer in mind. This collaborative approach also helps to build trust and credibility for the insights function, demonstrating its value in driving informed business decisions.
10. Continuous improvement is necessary:
The session concludes with a call for continuous improvement in research methodologies and risk assessment models. The presenters acknowledge that consumer preferences, market dynamics, and business realities are constantly evolving, and that research approaches must adapt accordingly. This requires ongoing evaluation and refinement of existing methods, as well as a willingness to explore new techniques and technologies. By embracing a culture of continuous learning and improvement, insights teams can ensure that they are providing their organizations with the most relevant and impactful information possible.