Insights-driven firms will emerge leaner, fitter and stronger from the Covid pandemic and far more likely to outperform their competitors with chief data officers, data scientists and “zero-party data” driving the recovery, whether that be to the “new normal” or simply business as usual.
That is according to the first of two reports published by Forrester Analytics, which reveals that firms which increased the use of data insights for decision-making during the pandemic have prioritised revenue growth, customer experience improvement, and employee development at nearly three times the rate of firms that decreased the use of data insights.
In 2022, Forrester expects these firms to be three times more likely to beat their competitors’ key financial and customer metrics.
The consultancy claims companies that wish to enjoy similar returns should look no further than the US organisation Navy Federal Credit Union, the six-time repeat leader in Forrester’s Customer Experience Index, in its firmwide member (customer) focus on investing in insights-driven practices.
This success has been put down to the credit union’s member research and intelligence team, who use an agile development process to work with the digital team, aligning with them on incorporating insights from customers into designs and wireframes.
Elsewhere, the report also predicts that the chief data officer will become the new “chief information officer” for the chief marketing officer. And, although that might sound like too many chiefs, the move is being driven by the fact that CMOs currently feel woefully unsupported by their CIO colleagues.
Indeed, global B2C marketing decision-makers cite data quality and access as two of their biggest challenges for the next two years, according to Forrester’s 2021 Global Marketing Survey.
Marketing’s attempts to fill these gaps on its own has led to technology sprawl, making the rift with CIOs even wider. In 2022, CDOs will step in to bridge this chasm and help to establish a business strategy that governs data and analytics capabilities more holistically.
Nearly two-thirds of global data and analytics decision-makers said that their organisations already had CDOs in 2020. Forward-looking firms must leverage their CDOs to both satisfy marketing’s data requirements and enable the entire organisation to tap into marketing’s treasure trove of customer insights.
Meanwhile, data scientists and design researchers will become essential – or as Forrester puts it “business best friends forever” (BFF). When the pandemic hit and countries went into lockdown, predictive model performance deteriorated, illuminating the limitations of relying solely on quantitative analysis.
Despite ubiquitous claims of the “new normal”, it is still unclear which new behaviours will settle and which will revert back. To understand the new normal as it coalesces, companies will emphasise a richer consumer understanding by augmenting quantitative data science with qualitative research methods like ethnography.
Forrester reckons brands should follow the example of companies like Spotify and combine data science and design research teams for customer understanding initiatives.
The report also predicts a fifth (20%) of businesses will rely on explainable artificial intelligence for transformational insights, explaining that while most organisations are no strangers to AI, many still struggle to get the full value out their investments due to the opacity of some AI techniques.
Explainable AI (XAI) opens the black box and offers transparency into how AI decisions are made. In 2022, 20% of companies will rely on XAI’s ability to identify nonintuitive insights to make transformational strategic decisions based on them.
For example, banks have historically used limited variables, such as income, as a credit risk predictor that ends up treating protected classes unfairly. Now they can use XAI to debias their models and ultimately extend their total addressable markets.
Customer insight professionals should consider adopting explainable AI to increase the trust and therefore adoption of models as well as to identify opportunities for strategic innovation, the report states.
Finally, the number of brands collecting “zero-party data” – information that consumers volunteer about their preferences and interests – will double in light of data deprecation.
Forrester believes data deprecation is limiting the breadth and richness of data that companies can collect across the web, so companies will use web analytics to identify appropriate moments to ask for zero-party data (ZPD) to collect customers’ explicitly stated intents and needs.
For example, baby buggy brand Mockingbird asks pregnant customers what trimester they are in to determine if they are in the early product research stage or nearing a purchase decision.
However, the report warns that brands must deliver clear value to customers in exchange for zero-party data; otherwise, customers will be reluctant to share it.
The report concludes: “If 2020 proved to companies that customer behaviour could change at the drop of a hat, 2021 proved that change is constant, and the new normal is continually evolving. With current and future challenges, such as cookie deprecation and the proliferation of opaque AI systems, companies that wish to excel at customer insights will need to invest in new data sources, emerging analytical techniques, and more agile operational models.”
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