While you can’t predict the future, predictive analytics is a great tool to help you make data-driven decisions. This analysis process uses historical data and statistical modeling to predict customer behaviors. Whether you want to improve your marketing performance, incorporate precision targeting, or forecast future sales, predictive analytics can provide the information you need to make the best decisions for your company and optimize your marketing.
Predictive analytics examines your target audience, leverages what you know about your current customer base, and highlights the best targets for you to pursue.
Benefits
Improved Targeting
When data scientists analyze your customer list, they are looking for similar data points across your customers. This involves looking at their demographics and geography, but it also identifies common lifestyle and behavioral characteristics. The goal is to understand who is most and least likely to buy from you. Once you know how likely someone is to make a purchase, you can improve your targeting by focusing on the highest scoring households.
Increased Revenue
If you are trying to increase revenue, it’s really important to get your message in front of the right people. Predictive analytics identifies new prospects who look just like your current customers which means they are most likely to be interested in what you have to offer and make a purchase. When you incorporate precision targeting in your marketing strategy, you will see an increase in revenue because you are reaching the right audience.
Reduced Costs
Another great benefit of using predictive analytics is reducing costs. Predictive analytics identifies the records on your marketing list that are least likely to respond. You can save time and resources by removing unlikely responders from your list. Many of our clients have been able to trim 30-70% of their marketing list, increasing their savings and ROI.
Customer Segmentation
Predictive analytics dives deep into who your customers are and provides you with detailed information. You can see clear distinctions between your customer segments, divide up your list, and create marketing materials that address the needs and wants of each segment. This enables your marketing team to create relevant offers and tailor ads for your customers.
Churn Prediction
Every business faces customer churn, and it’s always good to know which customers are most at risk. Predictive analytics examines customer behavior and their interaction with your products and services to see who is most likely to leave. You can take this information and create a special marketing campaign for the at-risk group. By addressing concerns or possible issues they may have, you are letting them know they matter, you want to find a solution that works for them, and you can win over their loyalty.
Demand Forecasting
Trying to plan out what resources you need for next year? Predictive analytics can be used to predict customer buying behavior and the demand for certain products. We had a client who was planning out their marketing budget and needed to get an idea of the expected revenue for the upcoming year. With predictive analysis, our team was able to forecast anticipated revenue within a 0.05% accuracy. The client used our findings to create their marketing strategy and reach all of their sales goals.
Wrap Up
If you are trying to make smarter marketing strategy plans, use predictive analytics to make informed decisions. Note that your analysis will only be as good as the quality of your data, so purchase high quality data and go through rigorous data hygiene and suppression steps prior to analysis.
Predictive modeling also works best when it is continuously monitored and updated. Use the predictions to aid your plans, collect responses, and feed results back into the modeling. This will let you continue to refine and increase your results over time.
If you have questions you want answered, reach out to our team. We would love to make sure you have all the information you need to make data-driven decisions.