All marketers want to know how successful their campaigns are going to be before they launch them, for obvious reasons. Everyone wants to know the outcome of their actions before they embark on them as it stops them making bad decisions.
For many, predictive analytics is enabling this. A new survey of 308 CMOs and business unit directors by Forbes Insights, ‘The Predictive Journey: 2015 Survey on Predictive Marketing Strategies’ found that 86% of executives with experience in predictive analytics believe the technology has delivered a positive return on investment for their business. Almost half of the organizations that were deemed ‘highly advanced’ in their use of predictive analytics credit it with increasing ROI by more than 25%.
Why it’s useful
Predictive analytics is primarily useful to marketers in that it enables them to predict what it would take to encourage a desired customer behavior. It enables them to effectively target their promotional material at particular groups that are the most likely to engage with it, and provides the knowledge of where to put the material so that it best finds its way into that group’s hands. This cuts down on the costs incurred by wasted efforts on marketing campaigns that may have previously gone unseen, or gone to groups that either hated the campaign, or the product or service that it was trying to promote.
It also enables both personalization and automation, with algorithms and software making marketing decisions on what to do with material based on patterns it discovers in the data. Many firms’ websites promote products to its users individually using recommendations which run on predictive analytics. Amazon, for example, will push products in this way, and its recommendation engine accounts for 30% of its total revenue.
What do companies need to do?
According to Nipul Chokshi, Senior Director of Product Marketing at Lattice - the company that sponsored the Forbes research - predictive analytics needs to be integrated across the company if it’s to be a success. Chokshi noted that: ‘One of the things we've found in working with customers over a number of years is that there's a distinction between being a marketing organization that uses predictive analytics technology and being a predictive analytics organization. You can make gains in one functional area, but if you go outside of your silo and bring in data from other areas of the organization, those gains multiply exponentially.’
It is up to leadership to ensure that such a holistic approach is embraced, and much of this is having staff in place with an understanding of how to interpret the data that is collected. Executives reported to the Forbes survey that there is an intense need for the skills that can deliver predictive marketing capabilities, with analytics/predictive analytics skills sought by 68% of organizations. A further 61% said the most valuable skill in recruits was basic operations skills. This either requires training for current staff, or a recruitment process that prioritizes such knowledge. The question is whether to hire people with the operational skills and train them in marketing, or whether to train marketers in the operational skills.
Will they do it?
According to the Forbes survey, currently just 28% of executives say that the majority of their enterprise information is readily available to them in a single integrated format. Analysis by Technavio forecast that the global predictive analytics market will grow at a Compound Annual Growth Rate (CAGR) of 25.31% during the period 2014-2019, and marketing is expected to see a big part of this. Over 80% of respondents to the Forbes survey said that they intend to increase spending on marketing technologies and initiatives over the next year, and predictive analytics is likely to be central to this, with 68% saying they are seeking talent with expertise in predictive or analytics.