How IKEA generates customer insights

An Interview with Justyna Baber, Insights Specialist and Nils Kromhout, Competence Specialist at IKEA.

At the time of being interview, Justyna Baber was an Insights Specialist at IKEA. In this capacity, she helped to lead research and extract insights that can lead to actionable business decisions and shape the overall strategic direction of IKEA. Nils Kromhout was an IKEA Competence Specialist. He helped to train other IKEA team members in how they can extract and act upon meaningful insights from customers.

In this interview, Justyna and Nils discuss how to collect quantitative and qualitative data and then make sense of it in ways that can offer value to your business.

What is your role at IKEA and how long have you been doing this work?

JUSTYNA: I work as an Insight Specialist. I’ve been working with IKEA for five years. Before this, I worked for other companies in similar capacities. I work on a team called IKEA Consumer and Market Insight where I focus on foresight. We think about what the world will or can look like in the future.

NILS: I am an Insight Competence Specialist and I’ve been in this role for a little over a year. I provide learning solutions that enable IKEA people to make better use of insight to make better decisions. I’ve worked with IKEA since 1994. Before working with Competence Development, I was in finance and business navigation roles.

What are your day-to-day responsibilities?

JUSTYNA: Every day is very different! I lead research studies and work with different research agencies to collect data. I also work to analyse the outcomes of these studies to translate and communicate them to the business. There’s also a huge amount of desk research involved in my job.

NILS: I create workshops for teams within IKEA. If a group has a specific question they need to look into using research, we put together an interactive workshop that can help them answer that question. I work together with a specialist and we combine different areas of research and package them into a structure that can help people answer their questions more quickly. We offer user guides, toolkits and templates that can be used to guide insight generation and research.

How does IKEA collect consumer insights?

JUSTYNA: Our founder always had the customer’s perspective in mind in a natural way. We work to keep those perspectives alive in the head office. There’s a real danger of becoming detached from your customers and assuming a lot of things about consumers. We're all inadvertently biased towards our own beliefs. At the same time, we need to make products that will meet the needs of people in China and the needs of people in the US and South America.

We organise our team into sub- teams. One team focuses on improving the performance of our products. They look in hindsight at how performance could be improved. Then we have people who work on the future perspective, or foresight. In between, there’s a team that focuses on the short to medium term. They explore and test solutions. These different teams have completely different approaches to research. They deliver different outcomes to the organisation.

How do you actually go about collecting consumer insights? Is there a typical way that is done?

JUSTYNA: We don’t collect insights; we collect data. An insight is something that is created as we work to understand the data in combination with our business. We have tons of data that comes in from different directions. Some of its data that already exists, like sales data. Some of its quantitative data we collect with surveys. Some of its qualitative data that we get from talking to people and visiting their homes and observing them.

And then, a lot of my work is desk research. It’s scanning the world and organising the data that is relevant to our business questions, making sense of it, and bringing it back for the business to use. There's no singular process because there's such a richness. There are many different levels of how we work with consumer insights and so many topics that call for different methods.

How IKEA generates customer insights - 2

Does the business come to you with a specific question or topic and then you’re tasked with finding consumer insights to back that up? How does it work?

JUSTYNA: It's not so straightforward. In many companies, research is perceived as support for marketing. However, at IKEA, it's a separate business unit where we proactively set our research agenda based on our stakeholders’ needs. This is the fantastic advantage of working at IKEA. By talking to stakeholders within the business, we find out about their needs or the biggest questions that the business need answered. Based on that, we decide what should be on our agenda for the coming year. We look for the most strategic global topics. In this way, it's driven by the business, but not really by their specific requests.

What is the first step you usually do? Are you conducting internet research? Are you calling people on the phone? Are you going out and observing? What is your typical research process?

JUSTYNA: There are many types of research methods so there's no one specific research process. Let’s give the example of our brand study, we call it Brand Capital. This is a quantitative study that measures the strength of our brand in over 50 countries, where IKEA has a presence. It’s an online survey and we work with a partner agency that helps us gather data. They send an invitation to take part in the survey to many thousands of people. Then, they process the data, bring it together in a large dataset and send it to us.

NILS: We used to do a similar study every year on customer satisfaction. It used to be done once or twice a year on a similarly large scale. However, we realised the data became outdated by the time you got the report so now we've implemented a new approach where our teams created a live dashboard with lots of data sources.

There's a smaller survey that is done continuously and there's also scanning of social media and listening to other sources like the app that customers can download when they’re in the store and chat or give feedback. All this data is drawn into a dashboard updated in real time. This gives us access to immediate reactions of customers in the store so that we can very quickly see the effects of large and small changes. There's a proper research method behind it, so it's trustworthy.

JUSTYNA: We've also done ethnographic studies. Two years ago, we started to study how people live in different locations. We first focused on six cities and conducted research with support from an agency. We wanted to explore how people’s everyday life looked in their homes.

We visited 15 homes in each location. We spent the whole day with people and followed them as they conducted their daily tasks. We went to swimming pools with children on a Saturday afternoon. We ate dinners. We took part in cleaning and other small, everyday sorts of tasks. All of that was filmed. At the beginning I thought that people might not act naturally in front of a camera, but I realised they quickly forget the camera exists.

It becomes a completely different way of understanding the consumer in comparison to conducting a survey. We tried to ask as few questions as possible and just let people speak and show us how their life looks. We ended up with a wealth of different experiences so then it was easy to compare how lives differ between Jakarta and London, for example. We could also identify the areas where they might struggle with the same problems at home. So that’s yet another approach to how we do research.

That’s fascinating. Once you have all of this qualitative and quantitative data, what types of insights about potential customers are particularly useful to look for and how do you do that? How do you take data and extract an insight from it?

NILS: That’s the million-dollar question. I’ve been working on distilling the steps for how a researcher goes from data to insights to action or the ability to make better decisions. Typically, you start with a lot of data, and you clean it up and structure it. Then you analyse it to find patterns, common things or differences. You draw conclusions.

There are different names for this. You could call it analysing or synthesising. You can also combine different studies and different pieces of information to lead to an actionable insight.

It’s not sufficient for an insight just to be interesting. You also need to be able to improve your business based on the insights. It's often consumer market insight combined with business or performance data that can lead to an insight which drives business.

JUSTYNA: One big challenge is to integrate different types of data in a way that makes sense to stakeholders. Research findings have to be effectively communicated. For example, we might need to present to the team that designs kitchens. Or we could explain how people like our kitchens or why they reject our kitchens. We could explain general trends in kitchen and cooking in different countries.

The trick lies in combining these different aspects and angles in a good way for our stakeholders to enable them and support them in drawing meaningful and actionable conclusions. It’s a bit of a creative process. It’s not that you can put A and B together and get C. The process relies on the knowledge of stakeholders as well.

We need to bring it all together to yield those aha moments. Sometimes those aha moments happen when pieces of the puzzle simply come together and someone suddenly sees the full picture. But in many cases, coming up with new, meaningful and actionable conclusions is hard work.

Life at home report

Living situations

Living conditions

Space and money

Needs and dreams

Lifestyles and preferences

Life at home

Creating a better life for the many people starts with a better life at home.

That is why we continually explore how life at home is changing. Our annual Life at Home Report gets into every corner of people’s homes, all over the world, making it one of our most valuable assets.

Living situations

Living situations refer to people’s living arrangements with whom they live. Understanding how different living situations impact life at home is an important part of everything we do at IKEA. For example, the home furnishing needs of someone who lives alone are very different from someone living with children or in a multi-generational home.

It’s also important to keep track of how people’s needs are affected when their living situation changes. For example, when a couple divorce or when children move out. Offering solutions for different living situations and for when these change creates busniess opportunities for IKEA retailers.

Living conditions

When we look at living conditions, we take into account things like living space, income, geographical climate and architectural features. Understanding how all of these factors impact home furnishing needs is a cornerstone of our business. When we present and communicate functional, beautiful and affordable home furnishing solutions that reflect this knowledge we make the IKEA offer relevant to more of the many local people.

Space and money

These are the top influencing factors. The living space available and the amount of money people are willing, and able, to spend on home furnishing are the two main influencing factors of living conditions.

Space and money are not always related. People who live in big cities and have higher incomes do not necessarily have large living spaces. In rural areas houses can be relatively large, even though incomes are generally lowerSpace and money

These are the top influencing factors. The living space available and the amount of money people are willing, and able, to spend on home furnishing are the two main influencing factors of living conditions.

Space and money are not always related. People who live in big cities and have higher incomes do not necessarily have large living spaces. In rural areas houses can be relatively large, even though incomes are generally lower.

1. Living space

Living space is a matter of the total space—floor space and room height— available to live in. This impacts (but should not limit) people’s home furnishing choices. Both the type of products they buy, and which solutions they choose.

Increasing population density influences people’s living space. More people are moving to cities, which are growing and getting more dense. Homes are getting more and more expensive, so people need to find smaller spaces to live in or share spaces with others. This creates a need for space-saving solutions.

Space-saving solutions are generally high in demand in all homes, regardless of the size of the home. People living in large homes also require smart solutions to save available space, depending on the activities that go on in a home.

2. Money available for home furnishing

Money available for home furnishing is affected by income, cost of living,
as well as interest in home furnishing. This impacts what kind of home furnishing people buy, how much, at what price and how often they can make changes at home.

3. Geographical climate

The geographical climate people are living in is another decisive aspect of living conditions. For example, people living in a cold climate need storage solutions for winter clothes and other winter-related items. Those living in warm climates may need solutions for outdoor living and dining. Humid climates need furnishing that stands up to humidity.

4. Architectural features

Homes have different architectural features, depending on building styles and the market. Think of the following architectural elements:

Windows (sizes and placing), fireplaces, stairs attic rooms with slanted ceilings, balconies basement, outdoor storage (such as garages and or sheds).

People use architectural features in different ways. For instance, balconies are sometimes built in and used for storage. Or they can be furnished for outdoor living, socialising and relaxing.

Needs and dreams

All over the world people have a constant need and desire to improve their homes or just make them more beautiful and more enjoyable to live in. To provide people in your local market with relevant home furnishing solutions, you not only need to understand how they live, but also how they dream of living.

The key to local relevance lies in gathering knowledge about people’s needs, dreams, challenges and frustrations analyse these findings and turn them into insights act on the insights gained.

Lifestyles and preferences

Various cultural and personal factors impact the way people live their lives at home and what home furnishing choices they make. Gaining insight into these factors create new business opportunities. The more we know about local lifestyles and preferences, the more relevant can we become, simply by showing different ways to solve the same home furnishing needs.

Do you have a story or an example of one of those aha moments?

JUSTYNA: A few years ago, we started examining the mega trends that affect IKEA’s business, like urbanisation and population change. Things are changing slowly so sometimes we forget to notice them, but we have to pay attention. We began to show how IKEA is positioned in the context of those larger trends.

We found that people are increasingly living in cities in apartments or houses. This trend could be at odds with the traditional IKEA model where stores are typically on the outskirts of cities. We began looking for those types of tensions and, based on these insights, we helped to update the high-level strategic direction of IKEA two years ago. For me, this was perhaps the best example of how my work actually influenced the company.

What advice do you have for how social entrepreneurs should go about trying to gain insights about their consumer?

JUSTYNA: My advice would be to always put yourself in the shoes of the consumer. Get to understand them, how they live, what they love, what they struggle with, especially in relation to your product. That’s crucial. Say, you’d like to sell coffee to someone, you need to understand the life of the person who is going to drink that coffee including their behaviour and their needs.

Why do they drink coffee? When? What are their rituals related to coffee? What are their pain points? What brings them joy? What do they miss? It could be done by observing people, talking to them. You don’t need big research budgets to do that.

NILS: One of the reasons to gather customer insights or market intelligence is to prevent wrong assumptions or to base decisions solely on your view of the world or how things work. If you are a small business and you can’t invest millions of dollars in market research, keep it simple. Just talk to the people you know you want to help.

This interview was done as of IKEA as part of the IKEA Social Entrepreneurship and Acumen East Africa Accelerator in 2020.

All use, reproduction and distribution of this work is subject to a CC-BY-NC-ND license.

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