Missing out: The business case for customer diversity

In a consumer-driven marketplace, understanding the needs, preferences and desires of customers is essential to the success of any organisation.

Recent shifts towards “customer centricity” have changed the way organisations think about the design of products and services, branding and marketing.

But is there more to understanding an increasingly diverse customer base and improving their experience? How can emerging insights about employee diversity apply to the world of customers?

‘Minority’ consumer groups that have been historically ignored by big business are gaining power with the rise of disposable incomes, social media and access to information (Mashegoane 2015; Trading Economics 2016).

Leading organisations are starting to recognise the diversity of their customers and are creating new products and marketing campaigns to grow market share. L’Oreal has developed 23 skin tone shades of foundation; Levis Curve ID jeans are made for women of all shapes and sizes; and Apple Emoticons come in six skin tones.

But is there more to understanding and meeting the needs of diverse customers?   The Australian Human Rights Commission, supported by Qantas, QBE, SBS and Westpac, commissioned Deloitte to investigate the business case for customer diversity.

Based on a survey of 1,200 Australians, as well as interviews and focus groups, the research report “Missing out: The business case for customer diversity”, identifies three ways customer diversity can be used to:

  1. Protect existing customer bases
  2. Differentiate the organisation’s brand
  3. Grow new customer segments and business opportunities.

The report revealed a number of insights about the high proportion of customers from diversity groups that reported they were not treated respectfully; that their needs were not met; and that they ceased or avoided a transaction.

On the other hand, the research also discovered diverse customers groups are more positively influenced by an organisation’s support for gender or marriage equality; older people or those with disabilities; and cultural diversity.

Aim

This research analysed the perceptions and experiences of customers in the Australian marketplace through the lens of diversity of inclusion.

The key question to be answered was: could emerging insights about diverse employees apply to the world of customers, and help organisations protect, retain and grow their customer base?

Method

Research methods included:

  • A sample of more than 1,200 Australians surveyed
  • Face to face interviews and focus groups
  • A literature review

Findings

The research identified five key themes:

  1. A threshold issue: Customers believe organisations are failing to prioritise respectful and fair treatment.
  2. Different experiences (and not in a good way): Some customers reported negative experiences based on an irrelevant personal characteristic.
  3. Misunderstood and underserviced: Diverse customer groups are more likely to feel that their needs were unmet and often don’t let businesses know how they could improve.
  4. Abandon, avoid and detract: Diverse customer groups are more likely to walk away from a transaction and actively dissuade others from engaging with that organisation.
  5. Extra selling power: Organisations that support diverse customer groups have stronger reputations and are more likely to be recommended by others.

 

  1. A threshold issue

Only 1 in 2 customers felt that organisations make it a priority to treat all customers respectfully.

In addition, only 41% of respondents believe that organisations treat all customers respectfully regardless of personal characteristics.

  1. Different experiences (and not in a good way)

Survey respondents from non-Anglo-Celtic backgrounds, living with a disability or LGBT were more likely to say they were treated less favourably based on a personal characteristic.

  1. Misunderstood and underserviced

Over 1 in 4 customers feel under-serviced by organisations, with 50% of LGBT customers and those practicing a noticeable faith feeling their needs were unmet by products or services offered.

  1. Abandon, avoid and detract

One third of all customers from an Indigenous background, LGBT, living with a disability or who practice a noticeable faith ceased a transaction in the last 12 months because they were not treated respectfully or fairly.

Moreover, these customers were significantly more likely to actively dissuade others from using an organisation that was not supportive of diversity.

  1. Extra selling power

Customers are positively influenced by an organisation’s support for diversity. For example, 1 in 2 LGBTI customers or customers practicing a noticeable faith are likely to advocate for an inclusive organisation.

And surveyed customers who identify as lesbian, gay or bisexual, or who practice a noticeable faith were twice as likely as comparator groups to recommend an organisation to others based on its reputation as supportive of gender quality, people with a disability, older people or cultural diversity.

 

Implications

There are a number of opportunities that organisations have to improve diversity and inclusion of customers including:

  • Creating a compelling vision and clear strategy for customer D&I
  • Developing leaders that are committed to and accountable for customer D&I
  • Ensuring employees reflect the desired customer diversity mix and are equipped with the skills to service a diverse customer base
  • Designing products and services around the needs of diverse customer groups
  • Communicating the company’s branding and positioning on D&I

A list of leading practice examples (such model Reserve Bank of Australia’s issues of a $5 bank note which has tactile features to assist those who are vision impaired), together with a maturity model, can help organisations benchmark their current practices (refer Figure 1).

Figure 1: Customer diversity and inclusion maturity model

While organisations may espouse their belief in the value of customer centricity, this research highlights the relative neglect of diverse customers.

There is much unmet need and significant brand value in supporting diversity – two factors which represent a market opportunity. Deloitte’s data provides compelling evidence for businesses to expand their thinking and ask their current and potential customers how they can better serve them.

It’s not only the right thing to do, but it makes perfect business sense.

For more information, contact Juliet Bourke (julietbourke@deloitte.com.au) or Olivia Tsen (otsen@deloitte.com.au)

To read the full article, click here.

 

Mashegoane, P (2015), It’s the Greatest Power Shift in History, Huffington Post, 6 Jan, viewed 16 Jan 2017 http://www.huffingtonpost.com/paul-mashegoane/its-the-greatest-power-sh_b_6113120.html

The Land (2016), New Lamb Campaign Celebrates Diversity, 6 Sept, viewed 16 January 2017, http://www.theland.com.au/story/4143702/new-lamb-campaign-celebrates-diversity-video/

Trading Economics (2016), Australia Disposable Personal Income, viewed 16 Jan 2017 http://www.tradingeconomics.com/australia/disposable-personal-income


Want to stay up-to-date?

Stay on trend and in the know when you sign up for our latest content

Subscribe