Warren Buffett on The Key to Happiness and Consumer Understanding

With another of Warren Buffett’s Berkshire Hathaway annual shareholder meetings on the books, businesses everywhere are combing over insight from the “Oracle of Omaha” to guide investment decisions. But that’s not all this prolific business leader offers – his entire outlook on life is a roadmap for businesses to follow – and you can bet that top enterprises are.

Why Shareholders Love Him

Berkshire Hathaway shareholder meetings are wildly popular due to “[Buffett’s] track record of picking winning investments” and because when he and “his right-hand man Charlie Munger, vice chairman of Berkshire comment on the near-term, [they] have been known to move markets. Their insights on the long-term have earned fortunes for investors.”

Results at the close of the market on Friday, one day before the event, reflects the anticipation:

During this year’s meeting and their traditional six-hour Q&A session, Buffett and Munger shared “their unscripted views on their company, the financial markets, the economy, politics, corporate governance, and investing.”

There were quite a few takeaways – but his comments about Wayfair and other online retailers deserves a closer look!

Understanding Consumer Behavior

One important component of his advice, revolved around the importance of understanding consumer behavior – and how it sets businesses apart, long-term:

Is Wayfair’s business model unsustainable?

Berkshire Hathaway has four retail furniture businesses, and Buffett acknowledges that online competitors such as Wayfair have hurt sales — at least in the short term. Wayfair and companies like it have been willing to operate at a loss in order to undercut brick-and-mortar furniture stores.

Buffett isn’t convinced that they have a sustainable model but added that the companies could certainly be successful. However, he still feels that the customer-facing nature of store-based furniture businesses gives Berkshire an advantage, as it allows the company to learn about customer behavior.

The edge – the advantage – Buffett feels businesses can/must have hinges on understanding customer behavior. And with an estimated 81% of the developed world online, ignoring the mounds of consumer data available about your customers would be decidedly unwise. Unless, of course, you think Buffett is calling this one wrong!

There are also numerous studies that speak to the importance of understanding the underlying psychology driving consumer purchases, as capturing the hearts and minds of consumers is really the (only) best way to convince and convert:

Marketing psychology attempts to understand the way that consumers think, feel, reason, and make decisions. . . .Regardless of what you sell, there is a high likelihood that the marketplace is overcrowded. The purpose of marketing psychology is to gain an edge over the competition. It’s always important to remember that you’re dealing with people. People are emotional.

And with sentiment analysis, businesses are taking this intuitively correct advice to heart, exploring precisely what’s described above – the many ways that consumers think, feel, reason and make decisions. More specifically, with the help of Next Generation Artificial Intelligence, they’re uncovering what audiences feel about their brand – and the emotion, behaviors, attributes, objects, hashtags and people behind it.

Further, they’re able to analyze the Voice of the Customer by aggregating information from social media, forums and review sites, along with private data sources, like CRMs and surveys, and combine every bit of structured and unstructured data to produce organized, actionable insight. And to view it all in context too.

But that still sounds like a lot of information to take in, and it is – so NetBase moves the needle beyond understanding the big picture to providing targeted analyses, capable of being examined to a granular level. And using Natural Language Processing (NLP) brands understand whether these targeted social conversations are positive or negative, and are able to measure the strength of those emotions. This helps them triage responses so they don’t waste time and energy on posts that don’t matter, while ignoring posts that do. – And this last bit brings us to the most important (and often overlooked) advice that Buffett offers brands . . .

Business as Usual, Buffett-style

There’s more to this man (and his advice) than market predictions – more reasons why he has an almost cult-like following in the business world. Not only is his investment expertise stunning, but his outlook on life has attracted its fair share of attention as well.

As he shares in this interview with Bill Gates and Charlie Rose, “I can buy anything I want, but I can’t buy time.” As a result, he doesn’t schedule many things each day, nor each week. He’s highly selective in his approach – and brands should be too.

When examining social analytics, many brands make the mistake of focusing on the likes or the overall reach that a campaign experienced, and are left feeling befuddled when those numbers aren’t converting.

The mistake can be chalked up to excited social listening – taking an approach that’s quick to highlight snazzy big picture returns that look amazing from afar, but mean little when examined closely. These results are based on campaigns spread thin, that aren’t truly resonating with the people who matter to your brand. Your brand is amazing, no doubt, but your potential consumer base is certainly a subset of “everyone.”

It’s a quantity over quality dilemma – and Buffett is definitely preaching the opposite. (Based on the interview above, that’s an understatement!)

So how can brands take his advice and refocus efforts on quality? And does it really work? Hulu provides a compelling case study on just that.

As Carrie Stern, Social Analytics Manager at Hulu shares, she uses social listening to determine which shows fit best with Hulu subscribers – not which shows are resonating online overall, but understanding the needs and wants of their audience. In the process, she uncovers feel alike and look alike segments and options that make sense for those groups well. And this process is the backbone of her show recommendations – and its offering exceptional results:

Taking your time in your social analytics tool – being able to dig deeply into the insight it offers and trusting the results – is crucial to capturing that targeted, quality audience. That is an audience you can expect to convert; the rest is just wasted effort.

Buffett’s life is a vacation every day – and (he says) it has nothing to do with money. He focuses on the long-game, making connections that matter and ignoring the noise from the rest. You could probably use a vacation day or two yourself, so maybe considering the multi-billionaire’s business advice makes sense? We think it does!

Reach out for a demo so we can help you on the path to living like Buffett, or at least your best business life. Connecting with your target audience in a way that resonates is the first step!

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