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customer taste

The Ultimate Competitive Advantage: Adapting to evolving customer tastes

Customer taste is hard to define and even harder to predict. Just when you think you’ve got a handle on it, everything changes. 

As much as people are creatures of habit, we also get excited about things that are shiny and new. In addition to our own personal preferences, we’re influenced by the ever-changing cultures we live in—local, regional, and global. This means that customer taste comes down to a complicated, ever-shifting set of factors. Some of those factors work to change taste gradually, sometimes over years, while others have a more immediate impact. 

Factors that drive tastes over the long term include cultural phenomena like movies and music, and even emerging scientific research. For example, starting in the early 1960s, experts declared that high-fat diets were the number one cause of high cholesterol and heart disease. But in the early 2000s, they shifted the blame to sugar. As the new research was gradually disseminated, health-conscious food shoppers started to put down their low-fat foods and study up on sugar content. 

Companies responded to this change in consumer tastes by shifting their product offerings. In 2019, the Mintel Global New Products Database reported that the number of new reduced-, low- and no-sugar foods rose by nearly 20% from 2015 to 2017, while the number of new reduced-, low- and no-fat products fell by nearly 8.5% in the same period. 

We’ve all lived through a recent example of an external force that changed consumer tastes almost overnight. When the COVID-19 pandemic closed brick-and-mortar stores and restaurants in March 2020, many started offering alternatives to in-person shopping experiences and transactions. Between early 2020 and early 2021, the percentage of the Top 1,000 chains offering curbside pick increased from 6.6% to 50.7%, according to a report from Digital Commerce 360. This proved to be more than a temporary forced behavior change for customers. It’s become a preference. Even as stores and restaurants have reopened for in-person service, many customers still want curbside pickup as an option.

As a company, it’s in your best interest to keep track of changing and evolving customer tastes and adapt to meet them. But if you fail to recognize changes in taste, or recognize them but fail to adapt, you can get left behind.

Take the American camera company Kodak. Kodak’s first camera, released in 1888, introduced a photographic innovation that made taking photographs easier and cheaper. The company sold the cameras relatively inexpensively, instead making money on expensive film. They dominated the film industry until the ‘60s and ‘70s when Fujifilm started to compete. 

It was in the mid-’70s that two Kodak engineers separately invented the fundamentals of digital photography. Contrary to popular belief, Kodak didn’t dismiss these inventions out of hand. They spent millions developing digital cameras and were frontrunners when the technology went mainstream in the early ‘00s. 

But Kodak misunderstood how digital photography would change consumer tastes. Film had always been their moneymaker, so Kodak designed cameras around the belief that people would take a photo on a digital camera, and then print it. When people started sharing photos online, film sales plummeted. Kodak declared bankruptcy in 2012.

Here’s how to keep track of what your existing and potential customers want, and three examples of developments in consumer tastes companies, particularly D2C businesses, should be keeping an eye on.

How to find out what customers want

In order to determine your customers’ tastes, how they’re changing, how to serve them, and how to use this information to attract new customers, you need data

Determining customer tastes isn’t an exact science. If you’ve ever spent an hour scrolling through a streaming service or weighing up your dinner options, you already know that working out what people want is hard, even when it’s just for yourself. Maybe you were set on pizza, but then you saw a commercial for burgers, and it swayed your decision. These issues only get more challenging as you scale the inquiry up to thousands of people.

It’s very hard, if not impossible, to record this kind of opinion- and emotion-based data numerically. In this instance, you’ll get more value out of qualitative research, which records opinions, experiences, feelings, beliefs, and concepts, rather than exact numbers.

Collecting qualitative data doesn’t have to be complicated. You can do it through something as simple as an open-ended survey. When someone buys one of your products, include a link to a survey in the order confirmation email. Ask why they chose your website and that product, as well as data that can help you build a customer profile. For example, what’s their favorite music genre? Do they watch movies? What social media do they use? What news stories do they follow? 

Questions like these can help you understand how your company fits into the context of broader consumer tastes. It can also reveal whether your customers believe your company has its finger on the cultural pulse, or if it’s out of touch.

For depth of insights, look to conduct focus group studies. A selection of existing and potential customers will answer questions about your product and brand, and trends generally. If possible, set up a longitudinal study where you collect insights from the same people over a set time period, e.g. every six months, or annually. This is especially helpful when you’re trying to track changing tastes, as it makes it easy to see how people’s personal tastes change and develop over time. With a diverse sample set, you can extrapolate this data out to the wider population.

Your main resource when collecting qualitative research is your customers. Companies already know the importance of collecting customer feedback for improving customer experience and satisfaction. But it can also help you get a sense of trends in customer tastes. Adjust the methods you already use to collect, track, and analyze customer feedback to incorporate data about their tastes. Both in terms of your industry, and culture generally.

Don’t fall into the trap of forcing your data to be overly clinical. If you could measure taste in a lab, everyone would be able to track and act on it. Taste exists and evolves in the real world, in people’s interactions with culture, current events, and their society. Spending too much time in your company’s bubble can isolate you from what people really care about. 

Get outside to get insights.

3 Emerging consumer taste changes

Since customer tastes are always in a state of flux, there are some shifts that are happening right now. Thinking about these examples might help you recognize others in the future.

1. Purpose-driven purchasing

A high percentage of customers now look for brands with a clear and stated social purpose when making purchases. A 2020 report by the Zeno Group that evaluated 75 brands found that 94% of the 8,000 consumers surveyed wanted the companies they engaged with to have a strong purpose. In 2021, Porter Novelli found that of 1,200 consumers interviewed, 71% said they would choose to buy from a purpose-driven company over a competitor if cost and quality were equal.

Take note of the last part of that sentence, however. A shift in consumer tastes may be pushing people to choose purpose-driven brands. But to convert them from one-time purchasers to loyal customers, you still need to understand their general habits—how often they buy and how much they spend. You need to deliver the fundamentals—high-quality product, great customer experience—and add loyalty drivers, such as loyalty programs and subscription options. 

2. Convenience

The COVID-19 pandemic forced two behavioral changes that ultimately shifted consumer preference. In March 2020, many workers switched to working from home: 35% of all employed people in the U.S, according to the National Council on Compensation Insurance, and many others worldwide. At the same time, people were told to avoid going to grocery stores if possible and started to order grocery deliveries in high numbers. During 2020 and 2021, according to McKinsey, preference for instant delivery orders increased by 41%, and click-and-collect orders and scheduled deliveries both increased by 42%. 

Although the threat of COVID-19 has decreased on a population level in the US, the McKinsey report showed that most people expect to use these methods the same amount or more often in 2022 than they did at the height of the pandemic. This is just one example of how conveniences that were introduced in response to COVID-19 two years ago have shifted consumer tastes, becoming preferences rather than temporary changes.  

3. Virtual goods

One of the most significant new consumer tastes to emerge in the last couple of years is for non-fungible tokens (NFTs): Virtual products that are traded on the blockchain. 

As niche as that might sound, NFTs are fast-moving from the preserve of independent artists to being adopted by big brands. In April 2022, Nike launched a collection of virtual sneakers, named CryptoKicks, on the NFT marketplace OpenSea. Pairs cost between the equivalent of $4,000 and $9,500 in cryptocurrency—although some were valued at over $100,000.

More consumers are starting to buy into NFTs too. According to CNBC, NFT trading increased 21,000% from 2020 to 2021, hitting a total of $17.6 billion by the end of 2021.

Sure, consumer tastes can be fickle, and NFTs are by no means mainstream yet. But it’s still important to understand what consumers gravitate toward and see as the future.

Companies must be open to changing consumer tastes

The only certainty about consumer taste is that it changes. Sometimes it wants a new flavor of the month—and sometimes it wants a completely new food. 

Companies need to find ways to keep track of how customers’ tastes and preferences are changing and to use this information to innovate. Customers aren’t rigid, so you can’t be either. 

Think and act Bayesian. Seek out data and work towards developing rich hypotheses around trendlines and consumption pattern shifts. Assess data to connect evidence of a trend to a segment. Insist on pilots and A/B tests. Allow the outcomes to inform your product and consumer strategy, and the decisions you make to tweak that strategy later on.

This is the only way to demonstrate you are open to what customers are telling you. Take that data in its true context: outside of the framework of your organization, in the real world. Taking direction is hard, but sticking stubbornly to your guns leaves you vulnerable. Don’t make it a Kodak moment. Make it an entire journey.

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