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What the changing fortunes of customer insight projects mean for CX pros

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In our recent survey of CX leaders about roles, responsibilities and investments, customer insight made many noteworthy appearances... some positive, some negative. So what was revealed, and what does it mean for CX professionals?

21st Apr 2022
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MyCustomer recently conducted a survey of customer experience leaders to examine how the roles, responsibilities and resources of senior CX professionals had changed since our last study in 2020. 

The results were enlightening - and you can read the entire report here. But one fascinating thread that ran throughout the report concerned that of customer insight. As an area of under-investment, as a responsibility of the CX leader, or as a future priority, time and again customer insight made a noteworthy appearance. 

So let’s take a deeper dive into what we found, and shed some light on why there is such a dramatic narrative surrounding customer insight over the past two years. 

Lower investment

One of the key findings of our research was that while customer experience budgets haven’t been cut in the main, there are fewer customer experience leaders seeing their budgets increasing compared with our study in 2020. While half (51%) of CX leaders told us that their budgets had increased during their tenure, that was nearly a quarter lower than the number that said their budgets had increased when we asked them in 2020 (65%). 

And this cautious financial picture had, perhaps unsurprisingly, translated into fewer technology investments in the interim. In fact, our respondents reported considerably lower investment by their CX teams in 2022 than in 2020 - and in particular in the areas related to customer insight. 

Some of the biggest drops in investment were experienced in web analytics (19% telling us that they had invested compared with 28% in 2020),  text analytics (19% vs 38%), customer journey analytics (28% vs 69%) and social media monitoring (19% vs 31%).

And this is all the more confusing because when we asked customer experience leaders about the initiatives they had ownership of, customer insight emerged as the most common project - quoted by over three-quarters of respondents (76%), and slightly higher than in 2020 (73%). So what’s going on?

Paul Laughlin, a customer insight trainer, mentor and writer, and MD of Laughlin Consultancy, believes that there are two scenarios that could explain the downturn in spending - both of which were exacerbated by both the pandemic and uncertainty about future financial position.

“Firstly, insight/analytics teams at the more leading edge have already made the major infrastructure investments needed and could now benefit from the ability to readily flex their cloud-based pay-as-you-use spending,” he explains. 

“At the other end of the spectrum, a number of businesses who were still piloting data science or greater use of analytics to provide customer insights had challenged their teams to prove ROI before they received further investments. Most had seen some interesting pilots or niche use cases, but now needed reassurance on relevant outputs that could scale to improve the wider business. 

“I’ve seen those teams now focused more on simpler use cases being delivered in partnership with internal stakeholders within the constraints of current data and CX infrastructures.”

Vincent Tachet, group chief information officer at Webhelp adds: “There is no doubt that for many CX leaders, the priority over the last two years has been operational and service stability. Investments in technology have tended to focus on areas that have directly supported this – for example, security, collaboration tools, or scaling existing automation programmes to help manage demand. It may also be a strategic decision reflecting the difficulty it can be to see an immediate ROI on some analytics and insight tools, particularly when considering the implementation, running costs and ongoing resourcing from internal teams.” 

Insight back on the agenda

But the good news is that whatever the reason for insight’s stuttering start to the 20s, customer experience leaders are far more optimistic about their budgets for the future - and insight is likely to be a key target. 

60% of respondents told us that they anticipate that their CX budget will rise in the next 18 months, and customer insight is one of the biggest priorities during that time. In fact, customer insight has become dramatically more important - nearly half (49%) told us that it is a priority for the next 18 months, compared with only 16% that said it was a priority in 2020. There has been a similar spike in interest in data and analytics, which was cited by 45% this year, compared with 20% in 2020. 

A reaction to the drop in investment in analytics tools over the past two years? Paul Laughlin certainly thinks this is a plausible explanation. 

“My guess is that it is due to the pause in investment that many (but not all) firms have made,” he notes. “Many leadership teams have received data literacy education or become more aware of AI and automation use cases that are relevant for their business. Despite recent lean times and the priority challenge to keep the show on the road whilst transitioning to hybrid working, leaders of these businesses are also fearful of being disrupted. They see the general upturn in future investment and recognise that others may be ahead of them on that curve. 

“So I share the view of your survey respondents. From what I have heard the investment will flow back.”

Tachet adds: “Digital adoption has accelerated even further over the last 24 months, which has highlighted the gaps between expectation and performance for many organisations. Our own research with Frost & Sullivan tells us that 92% of CX leaders are planning on transforming their customer operations over the next 12 months. As brands look to the future once again, using data and insights to inform this level of transformation and measure its impact is crucial.”  

Genefa Murphy, chief marketing officer at Five9, is in agreement. “The importance of companies providing exceptional CX has never been greater. Because the pandemic moved a great deal of customer engagement online, consumers are making more of their buying decisions based on their interactions with a company experience interacting with a company over the phone or digital / online channels. With this increased focus on CX as a differentiator, companies need to leverage customer insights and technology now more than ever. Key metrics such as Voice of Customer surveys and other methods of analysing customer engagement metrics are critical to ensuring the experience they deliver online is meeting expectations and driving customer loyalty.

“Companies are beginning to understand that collecting data and properly analysing it produces insights for areas of a business that are performing well, and which are not. Making contextualised actions based on these insights allows businesses to streamline their operations and focus on what sets them apart from the competition. Realising the value in this approach, businesses are beginning to invest in customer insight programmes and proactive outreach with a renewed focus with the appreciation that the value of data is not in simply collecting it but putting it into action.”

Spending wisely

Supporting CX leaders’ belief that customer insight projects should be a priority for the foreseeable future, Forrester recently predicted that in 2022 insights-driven firms will be three times more likely to outperform their competitors in key financial and customer metrics.

As an example of the impact of focusing on customer insight, Forrester highlights US organisation Navy Federal Credit Union, a six-time repeat leader in Forrester’s Customer Experience Index, whose success has been attributed to the credit union’s member research and intelligence team. This team uses an agile development process to work with the digital team, aligning with them on incorporating insights from customers into designs and wireframes.

So if CX leaders do indeed prioritise customer insight projects over the coming 18 months, and have the budget to support them, how can they ensure that their investments are well targeted? After all, there are so many insight sources and technologies - from web analytics to market research to Voice of the Customer and behavioural analytics. 

As Murphy notes: “Focusing on the customer experience and ultimately customer success in this turbulent market is key, and for businesses, being able to identify how they can improve theirs is a massive advantage. Without investments that are spent well, businesses will fall by the wayside and be left with a whole lot of data and no measurable impact on the business for all of their efforts.”

So how can CX leaders ensure that insight investments are spent well?

“Organisations should be guided by where they have gaps,” advises Laughlin. “Ideally a customer-centric business has access to both timely well designed research (including behavioural experiments) as well as analytics and the data infrastructure to act on what they discover. Some will need to invest more in their neglected customer insight team & tools, but I suspect more will see their under-developed analytics capability or joined-up data infrastructure as the priority for improvement. 

“However, I would caution against rushing to any technology solution. Too many businesses think that buying the right tech and hiring the right people will just magically deliver insights & improvements. To coin the old adage, “it’s what you do with it that counts”. Many more organisations may get a better return by closing the skills gap of their people. Too few analysts have ever been trained in the softer skills they need to make a difference, including how to generate consumer insight from data, analytics and research. I’d start there if it was my money (and use a competency framework to understand and manage such knowledge assets).”

Echoing these sentiments, Tachet adds: “There are an infinite number of tools and technologies to invest in to gather data. Most organisations already have significant volumes of data from various sources, but what is often missing is the ability to triangulate it, create actionable insights, and build feedback loops to create genuine organisational improvement. The good news is that the investment needed to implement these is typically in time and effort to develop the capability to manage these projects, rather than additional tools or data sources.”

 

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