Customer Observation: The Golden Trend for Market Research

Customer observation is a solid trend in market research that’s gaining popularity for good reason. Why? By observing your customers using your product or service, you can see firsthand how they interact with it. This information can be used to improve the customer experience and make your business more profitable.

Let’s find out a little more about customer observation and why it matters.

What is Customer Observation?

Customer observation is a qualitative research technique that allows you to observe customers in their natural environment. It’s a valuable way to learn about customer behaviour, needs and expectations, and it can also be used to test new products or services.

Therefore, you are expanding your understanding of the customer experience by observing them interact with your product or service in different environments. This insight may well reveal opportunities for improvement or highlight unanticipated problems.

Customer observation is a key part of market research, and there is no shortcut – as useful as that would be.  

It is a systematic approach to observing customers in the marketplace, which helps you gather data on:

• Customer needs, wants and behaviours
• Attitudes and opinions
• Product preferences
• Adoption rates for new products or services
• Competition within the marketplace
• How they use your product
• What problems they encounter

One of the reasons this form of research is becoming more popular is because what humans say they do and what they actually do, can be startlingly different. The slightly iffy recall, gaps in their memory, or the undeniable issue of varying perspectives all play a role in skewing the data. 

The Process 

It’s fairly simple to conduct customer observation for physical products that are available at a retail outlet. Watching footage of how consumers interact with your product versus a competitor, taking careful note of returns, refunds, and complaints, and conducting surveys and interviews all work well. 

However, when delving into the digital realm, things get a little more technical. 

Customer observation now morphs into behavioural data, which measures crucial metrics based on direct user interactions. 

One article on this topic notes, “The “observer” takes one of three forms: human, software, or mechanical device. Human observation may be as simple as walking into a brick-and-mortar store and watching consumers pick up your product and your competitor’s product and compare them. Online observation includes tracking devices and web metrics to map user and consumer behavior; Google Analytics and heatmaps fall into this category. Mechanical observation entails the use of devices—such as cameras or footfall counters—that track consumer behavior in the non-virtual world.”

Business leaders who are in the trenches with their analytics teams no doubt reap the benefits of this golden data. 

However, digital behavioural analytics are unable to capture the whole picture, which includes human elements such as motives or attitudes. These lie firmly within the one-on-one realm, which needs face-to-face interaction. 

Customer observation is the act of observing customers in their natural environment. You want to see how they use your product or service, why they use it, and what they think about it.

You also want to understand how they feel about the experience they have with your brand. This requires you to observe them in their natural setting, not on a stage or in a studio where you might have asked them questions that influence their answers.

When Should You Observe Your Customers?

Now that you know what customer observation is, how do you decide when to conduct it? There are several timing factors that can help you determine the best time for your observation.

• Pre-launch. Before you launch a new product or service, get out and talk to people about their needs. Whether it’s in person or online (through focus groups), learn as much as possible about what customers want and need from your company before rolling out something new.
• Post-launch. Go back out into the field after launching your product or service and observe if customers are using it as intended—and if there are any unmet needs being fulfilled by competitors’ products or services that could be addressed by yours instead of theirs!
• Brainstorming. There’s a possibility that your product or service can be used in ways that you didn’t anticipate. This offers a range of new ideas for improving, streamlining, or adding to your original concept.
• Finding a niche. You may find your customers are trying to use your product in an unintended way, which can identify unmet needs.
• Reducing customer attrition. The first-hand knowledge of your customers’ wants, needs, and problems allows you the opportunity to fix them before they go elsewhere. 

A Few Tips to Maximize the Impact of Customer Observation

• Observe in the field.
• Observe multiple customers.
• Observe customers in different situations.
• Observe customers using different products or services.
• Observe customers using your product or service as intended, but also when they use it in unexpected ways.

The Best Way to Understand How and Why Customers Use Your Product or Service Is to Watch Them Do It

Customer observation is a powerful way to understand how and why customers use your product or service, because it offers the opportunity to see how they use it in their daily lives. 

The process allows you to observe what your customers do with your product or service in order to understand better why they choose them over other options. It also gives you valuable information about their frustrations, which helps guide your design process and future iterations of the product or service. 

The information you gather from customer observation can then be used to improve not just one aspect of your business but also all aspects of it as a whole.