Forecasting the Unforecastable: Less Data, More Knowledge

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Forecasting the Unforecastable: Less Data, More Knowledge

How do you forecast something after a year like 2020?

Traditional forecasting and planning – using previous years’ data to forecast the next 12 months – is well established. But in 2020 it was difficult. Even impossible. If the effects of COVID-19 were not enough, the uncertainty of Brexit heightened doubts.

For many, the 2020 data is too skewed to be of much use in 2021. If you’ve had a bad year this maybe better, especially if you’re in the hospitality industry because at least you could open it up. With a good year behind you, things can change as the pandemic subsides and relatively normal patterns of business return emerge. Or maybe not. It’s hard to argue with numbers. But if they’re wrong, the consequences are dire.

There’s a great ad for Adobe’s Marketing Cloud where a dying encyclopedia publisher suddenly receives thousands of new orders. “The clicks,” whispers a stunned manager. “You’re off the charts.”

The publisher orders thousands of books. Trees are felled, paper is ground, printing machines are churned out. The final scene shows a toddler with an iPad tapping the Buy Now button repeatedly to get a series of encyclopedias. When 2020 is that toddler, we need to be careful not to become the editor of the encyclopedia blinded by the data – good or bad. This year forecasting and planning must go beyond the quantitative.

Check out pedestrian forecasts from retailers, which are usually so accurate that it is possible to accurately predict the number of visitors on a given day. The 2020 data is useless. Can the 2019 data predict visitor numbers for 2021? It seems unlikely. Instead, let’s think about new ways to approach 2021. Or even beyond. Less computer says no (or yes), more do our experience and intuition tell us? And how can we use these skills along with the data to take advantage of the situation?

The answer is less data and more knowledge.

Retailers know they need to find new reasons to keep people loyal to them. Retail isn’t just about spending money: you can buy things anywhere and more easily than going to a store. Now is the time to use that knowledge of what people want to rethink the homogeneity of the main drag and the mid-of-the-road offerings of so many retailers.

Instead of out-of-town locations and zoned streets, mixed use could help bring retail back to life. Use the space of your business to organize events for your customers and make them part of your community. Stop selling and create something new to complement rather than compete with the digital experience.

“Never let a good crisis end,” someone once said, recognizing the opportunities that difficult times can bring. Procter and Gamble knew this. After the Great Depression, while others cut marketing and advertising spending, it did the opposite.

A new daily radio play called Ma Perkins was sponsored with the soap brand Oxydol, which was based on the idea that people want to be entertained while doing housework. The brand-show connection was so strong that it became known as “Oxydol’s Own Ma Perkins”, ran for 26 years, and gave birth to the term “soap opera”.

This was P & G’s later investment in radio advertising and sponsorship. It has been said that the company effectively created daily radio in the United States. It was a good idea, born of knowledge, not data. However, in large companies that rely solely on data, it can be difficult to come up with ideas because data doesn’t tell us if something is a good idea.

Companies start with an idea. 2021 will be how businesses survive and thrive.

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