Of the many technologies, strategies and solutions available to the marketing department today, one of the most exciting is predictive analytics. It's a method that, used in the right way, will improve your ability to make accurate forecasts and come up with informed assessments of campaign results and ROI.
As far as marketing is concerned, it's safe to say any organization that takes too long to introduce predictive analytics into this area of business runs the risk of falling behind competitors, and missing out on some valuable benefits.
Keeping up with change
Predictive analytics is a concept that’s becoming increasingly common in the marketing industry and influencing the operations of a large proportion of businesses.
The February 2019 CMO Survey, which questioned hundreds of top marketers at US companies, found that the majority (57%) of respondents who adopted some form of AI were using it for predictive analytics to deliver customer insights.
More than two-thirds (68%) of B2C services firms, along with almost eight in ten (78%) corporations with revenues in the $500-$999 million range, were utilizing AI for this purpose.
So what is it about predictive analytics that’s attracting so much attention and investment from the marketing departments of private businesses?
Qualifying leads is one of the most valuable uses of predictive analytics. When your lead qualification is functioning well, sales conversions and revenue generation go up, and the risk of your people wasting their time, money and energy on prospects who never had any real intention of buying falls significantly.
Predictive analytics can play an instrumental role in successful lead qualification because it improves your ability to identify the strongest and most promising leads. Modern technology gives you the power to make these projections through techniques such as comparing prospective buyer profiles with those of existing customers.
As well as singling out the strongest leads for new business, you can use predictive analytics to determine which customers are likely to be the most profitable.
More conversions through personalization
Many marketers today view personalization as a critical part of their jobs, for the simple reason that personalized marketing, when executed correctly, helps you connect with customers and improve their perception of your brand, making them more likely to buy from you.
Predictive analytics has evolved to the point that it can help you deliver a personalized experience in real time, gathering data as a potential customer is browsing your website in order to make dynamic, relevant recommendations.
This can provide the fuel to drive conversions, with research showing that web browsing sessions influenced by predictive intelligence typically have a 22.6% higher conversion rate.
Upselling and cross-selling opportunities
Successful upselling and cross-selling can really supercharge your revenue generation and help you gain maximum value out of every customer. However, it only works if you have the right data at your disposal and the capacity to leverage that information to predict customer behavior and preferences.
Predictive analytics can tell you how frequently a buyer of a particular product or service goes on to purchase something else from you within a particular timeframe. This allows you to identify good opportunities for upselling and cross-selling, bringing in more revenue and delivering a richer, more rewarding customer experience in the process.
However, it's vital you have confidence in the quality of your data and predictive analytics, since making irrelevant or inappropriate product recommendations could sour valuable customer relationships.
Bringing in new business is vital, of course, but many marketers would argue it's just as (if not more) important to keep your existing customers onboard by delivering a high-quality, satisfying experience that rewards their loyalty.
The reason behind the huge importance of customer retention is very simple: it's less expensive than customer acquisition. With predictive analytics, you can become better at maintaining your existing client base by evaluating past data on customer churn and why people leave.
This will inform future efforts to keep your audience happy and anticipate problems before they start to have a real impact on your income and profitability.