A few words about predicting customer behavior
A couple of weeks ago I gave an interview for Business Club magazine in which I spoke about how Gemseek was born, the state of marketing and market research, and the benefits for companies from predicting customer behavior. Check out the full text (in Bulgarian) here: https://business-club.bg/gemseek-marketing-data-science-i-nyakolko-dumi-za-uspeh/.
The full interview text in English follows below.
How was the idea for GemSeek born?
GemSeek's current vision and strategy result from a constant evolution since the company's inception 10 years ago. The world in which we started in 2010 differed greatly from the world we are living in now. Things that are obvious to us today were not such back then.
Take marketing research as an example. In 2020, most of such research around the world is conducted online; 10 years ago this practice was only in its infancy. In Bulgaria, online research is also gaining in popularity, and although there are still many projects that are carried out using traditional methods such as face-to-face interviews, I believe that the future definitely belongs to online research.
Another excellent example is the practice of analyzing users' opinions by analyzing their online publications (so-called user-generated content). This includes two main groups of publications - text and images/photos. Of the two, text analysis is much more popular, largely due to the fact that automatic image/photo analysis has not reached the required high level of accuracy. Text analysis, on the other hand, is extremely popular, and an increasing number of companies realize that their customers share opinions about them online.
Take, for example, the ratings and opinions shared on Amazon. These opinions show how consumers feel about using a company's products and also influence the choices of other consumers. In a world where much of the demand for information about products and services and their purchases take place online, companies cannot afford to ignore what their customers share online. All this was actually not known 10 years ago, not least simply because online platforms for opinion sharing were not so popular.
Third, but not least, is the tremendous growth in the amount of data available to companies. The development of technology has made it much easier for companies to collect, store and use a vast amount of data about their customers. Think of companies offering telecommunications services. Due to the fact that you use their network, they know at any time how much internet you use, whether you are talking on the phone, how long, etc. If you combine these data with information about how often you call their customer service center and how often you visit their website, you will get a data set that allows you to analyze user behavior in previously unknown details. This analysis, in turn, makes it possible to predict consumer behavior.
Take Amazon for example. What are they doing? They analyze what their users view and buy, and the next time a person with a certain profile views a product, they recommend something that another user with a similar profile has bought.
All these trends were just emerging at the time we created GemSeek. We wanted to build a company that would provide consumer understanding of the next, innovative level and world-class quality. We decided that this is a completely achievable goal, in view of the people who worked in the company at that time and could be attracted to the team - in Bulgaria there is a wealth of specialists who are not inferior to their European counterparts. In the beginning, we worked on large international research projects and applied many data analysis techniques which were (and some still are) a novelty in our industry. We advanced these skills and added new ones, such as automatic data analysis. Over time, we have developed our own online platform for measuring and managing customer satisfaction. Thus, 10 years after the start, we continue to follow our vision: using data to help companies predict consumer behavior.
You work with some of the largest European companies. How are they different from their Bulgarian counterparts?
The big difference, in my opinion, comes from the scale of the companies and the markets in which they operate. Our clients are mainly international companies operating in many countries in Europe and around the world, which gives them access to different markets and information on the sometimes very different ways in which consumers decide. A marketing director at a company like Philips, for example, makes decisions affecting the Philips brand in dozens of markets, and this requires knowledge of the situation in each of them.
Companies in Europe tend to have much more complex organizational structures, which makes working with them more challenging. Internal coordination in such large-scale organizations can be quite long and colored by the very different interests and motivations that people in them have. It is not uncommon, for example, a decision affecting a particular market to be taken in a discussion between several teams at the company's headquarters and several teams operating in the relevant market. Navigating this network of relationships requires a lot of attention and patience.
Of course, the culture of such companies is also different. In quite many of them the employees are foreigners, which creates a more open culture and environment for the exchange of views. The downside of this is that such organizations also require a lot of attention to the cultural differences between people. British companies, for example, are known for their widespread use of euphemisms and a less direct approach. Conversely, in the Netherlands, the direct approach is preferred in discussions, and from our perspective it sometimes even sounds aggressive and rude. The truth is that it is not - it's just that Dutch culture values directness and relies on it in conversations and decision-making.
Where is the Bulgarian marketing market in relation to world development?
In many respects the Bulgarian market is fully in line with world development. We already have many of the products which English, French and German consumers buy. The commercials they watch are also similar to the ones we see in Bulgaria. Bulgarian marketing directors use many techniques that are also used by their Western European peers. In today's open world, where we have free access to knowledge and ideas, the differences between markets are largely blurred. Another factor for the above uniformity is that many Bulgarian companies are part of international entities in which there is an enhanced exchange of experience and knowledge.
It is important to note that the innovations created in other parts of the world, especially in the digital sphere, are employed in Bulgaria very quickly. For example Spotify, Netflix, Revolut. These are all companies that are extremely popular in Europe and are gaining ground in our country with increasing speed, especially among the younger people.
In many sectors, such as telecommunications, for example, there is virtually no difference between Bulgaria and the rest of Europe, not to mention that the products offered here are in many ways better. The banking market is also striving and succeeding in keeping up with global trends - see, for example, the rise of the use of bank cards, or online and mobile banking. It is true that these products are more popular in Western Europe, which is however the result of consumer habits rather than the availability of such products provided by the companies.
There is a big difference, however, in terms of customer service. It strikes me that many Bulgarian companies have not yet reached maturity in this aspect and are still not offering the required level of communication with clients. In many places there is still too much bureaucracy, rude attitude towards the client, inability to deal with situations in which clients are not satisfied. All this is at a much higher level in European companies.
COVID 19 has brought inevitable changes. How has consumer behavior changed as a result of the pandemic?
Covid 19 has brought many changes, but more time must pass before we can judge whether they will be lasting trends.
The obvious, and perhaps the biggest change is related to the rise of online shopping. As a matter of fact, Bulgaria is still far behind other European countries in this respect, but is currently making rapid strides; and here the change is largely driven by younger consumers who are used to doing practically everything online. Companies in Bulgaria adapt quickly and an increasing number of them are offering such opportunities; actually, the question here is when consumers will go online.
There is also a change in the consumer basket, of course. In the middle of the period of social isolation, the demand for essential products, e.g. food and household products, was on the rise. Conversely, purchases of consumer electronics, travel and vehicles remained low. However, China's experience shows they are recovering rapidly after the decline, so I do not think we will see a long-term trend in this respect. It all depends on how quickly consumer behavior will recover - how quickly people will regain a sense of security in their future lives, which will allow them to make longer-term plans and purchases.
In many sectors, the change resulting from Covid 19 has affected quantities to a much lesser extent than people's expectations. Take telecommunications as an example. They suddenly became absolutely key factors for each person and the requirements became higher. While, in the past home Internet was used to watch movies, now there are often one or two persons in the household who work from home and one or two children who listen to lessons online. This implies a much stronger emphasis on the speed and reliability of the online connection.
What is the future of marketing and consumer behavior research?
One of the major trends in marketing today is what I would call 'mass personalization' or person-focused marketing. While, in the past, products and services created for a specific customer were expensive and time-consuming to produce, now this is increasingly becoming a widespread practice. Take Nike, for example - they now give you the opportunity to create your own model of sports shoes. The same is also largely true for airlines – in the past, a flight ticket included everything: checked baggage, food on board, etc. Now all this is paid separately, so that the customer can choose what he/she needs. The same also applies to advertising communication, and I'm not just talking about the fact that, in the emails you receive from companies, they address you by your name instead of some impersonal address. Companies can now target very precisely what message to send to which person and at what time.
This is closely related to the ability to predict consumer behavior. Humans are very complex creatures, and it is almost impossible to predict exactly what a consumer will do tomorrow. However, the fact is that a prediction with 80% accuracy is extremely useful for companies. In our practice, we have won several awards for data analysis predicting which customers are dissatisfied with the services provided to them. This allowed the company for which we developed this service to proactively communicate with such customers and increase their satisfaction. As a result, they retained one-third more customers than a year earlier, and this is a huge success in this saturated market.
The third important trend that I have already mentioned is the use of many more tools for understanding consumer behavior than before. Marketing research used to be the main source of information for consumers ten to fifteen years ago. It is still important, but is now increasingly complemented by an analysis of the information that consumers themselves share online and their behavior. All this is made possible with the development of technology and the rise of online consumption.
And last but not least, the consumers’ path from the moment of emergence of interest in the product or service to the moment of its purchase is becoming increasingly complex. Now consumers are using many more channels to receive information than before and companies often do not have complete control over them. Take blogs for example - many consumers use them to get information about different brands, and the brands themselves cannot have influence on what a blogger publishes. The challenge for companies is to have consistent performance in such different channels so that consumers can get a clear idea of them.
In short, the future belongs to the companies that predict their customers’ behavior at the individual user’s level and to implement appropriate actions for them.
What are the benefits for small and medium-sized businesses from marketing and audience research?
Audience research is a kind of feedback to businesses, and there is nothing more valuable than feedback. By virtually every survey or analysis of data or text we help consumers share their views with businesses. This feedback, this consumer knowledge, is the basis of everything else in a business - from marketing campaigns to products or services to be offered in the market. There is no successful business that does not know its customers.
The analysis of consumers’ behavior really helps in each of the phases of the business: from the creation of successful products, through their marketing and distribution, to maximizing customer satisfaction. In this way, our customers test whether their ads will be well received by the audience before they are broadcast or posted. In this way, our customers can see what they need to improve in their products. In this way, our customers prepare their strategies for the development of their brands. In this way, our customers optimize their price lists. There is no area in which consumer knowledge is not useful.
Do Bulgarian managers and owners of businesses appreciate the role of marketing and where do they place it in their list of corporate priorities?
Yes, I think so - Bulgarian managers understand and appreciate the role of marketing in the success of his companies. Of course, this does not apply to everyone, but it is notable that even very small companies with 1-2 employees rely a lot and invest in marketing, according to their financial resources, of course. However, I do not think that there is an attitude that marketing is an unproductive activity that does not directly contribute to the success of the business. Especially in larger companies, this is definitely not the case. The client occupies an increasingly central place in the thinking of companies, including in Bulgaria, and I think this is a development in the right direction.
If you had to give advice to Bulgarian business, what would it be?
It all starts and ends with the customers of a business. I would advise companies to keep their customers in focus and constantly try to understand them better. The ideas and companies that succeed are those that best meet the needs of their customers. The necessary basis for this is to know our customers - how they live, what they need, how they use the different products and services, what they would like to be successful in. We work with data and believe it is a great way to understand and predict consumer behavior, although it's not the only way. Each of us can do a lot to better understand our customers every day. Too often, a simple, informal conversation with our client can bring tremendous benefit and valuable information about what we can do better. We must, I believe, be very open to receiving this feedback and be able to accept it as constructive criticism. This is my second piece of advice to business: be very open to receiving feedback and actively listen to your customers.
Some practices I've seen working well for companies around the world:
Talk directly to users, no matter what level you are in the organization.
Spend an hour a month with people who are most closely related to your users. Spend time with your colleagues at the customer service center. Spend time with your colleagues at the point of sale.
Collect information about users at all levels in the organization.
Automate the process of collecting feedback from users as much as possible.
Share user feedback with as many people as possible within the company.
Seek your customers' opinions wherever they are shared.
Accept feedback from your customers, but think carefully before applying it. As Henry Ford said, "If I had asked people what they wanted, they would have said faster horses."
Use modern data analysis techniques to prioritize your actions.
Strive to personalize your users' experiences.
What is your added value for your customers?
In one word: information. We enrich our clients' perspective on their own products and enable them to act with much more confidence. The results of the projects we work on help our clients to much better understand what their users want and what they expect from them. We help them make better products, more successful advertising campaigns, provide better service, and better position their brands.
Information about what consumers plan or want to do tomorrow is invaluable to companies because it allows them to make timely decisions about what to invest in. Questions like “How to keep more customers?”, “How to attract new ones?”, “What price to put on this product?”, “Which of these two ideas would be more successful in the market?” are issues we work on, on a daily basis. And the answers to these questions help companies set their priorities correctly.
How are you better than your competitors outside Bulgaria and why are you a preferred partner?
We have several advantages over our competitors. On one hand, it is the skills we have. Many companies provide excellent marketing research, but they often do not have the skills and technology to carry out automatic analysis of text or data in general. At the same time, companies that are very good at data analysis are more likely to lack the skills needed to carry out marketing research. This unique combination of skills makes us very different from our competitors and is appreciated by our customers. Many companies prefer to work with one contractor on such projects and we are well positioned to be the desired partner.
The experience we have in certain sectors, e.g. telecommunications, construction, medical technology, insurance, consumer electronics, is another one of our strengths. Our customers prefer to work with partners who know their sector in detail, and we have that knowledge.
People are the most important part of any business and this is particularly true for us. All the successes we achieve and the awards we win are the result of the work and desire of my colleagues to provide excellent quality every day and to develop constantly. The GemSeek team is what makes us successful and, in my opinion, this is a big difference between us and our competitors.
My best wishes for a great day ahead!