Modernization has created more complex patterns in how we do business and the way we interact. The world is increasingly competitive and for companies to stay on their game, they have to think outside the box. That’s why predictive analytics is changing everything. There is immense pressure on sales and marketing teams to continue to deliver. This is due to factors like: data flooded markets, decreases in funding, and overall discretion on where corporations are placing their dollars. Sales tactics have always been based on past consumer conduct. The same goes for Marketing. Multiple platforms of communication within our society, along with the sheer volume of big data, have caused a need for this solution.
Predictive analytics describes the process of mining data, deciphering it and using it to make forward-looking predictions about what is likely to happen in specific scenarios and circumstances. Marketing and sales teams, regardless of company size, can use these predictions to detect different trends and patterns of behavior among their customer base, allowing them to facilitate more focused and efficient campaigns.
“What may come as a surprise to some business owners is how using predictive analytics can dramatically change the landscape, in terms of outlook and operations for any company, regardless of their size and marketing data sophistication,” says Brandon Guunderson, account manager at Iconic Mind, a Maryland IT consulting company that offers business IT services such as managed IT, network support and software development solutions. “In fact, predictive analytics has the power to even the playing field for SMB’s, allowing them to leverage the data they get to create new business and drive increased sales.”
Below are just several aspects of marketing and sales that predictive analytics can help with.
Perhaps one of the most important functions for a successful sales and marketing team is to find, retain, and examine the lifetime value of customers. Predictive analytics can assist in all cases. It can allow for reporting that will identify the customers that are most likely to defect, when that may occur, and the reasons why. Sales can then take proactive steps to improving customer loyalty and satisfaction with various targeted offers and promotions. Predictive analytics also serves to identify the customers who are likely to discontinue their business, so that sales doesn’t waste their efforts on high risk clients that are likely to defect which in turn leads to a higher ROI for campaigns.
It is less cost effective to acquire a new customer, than to retain an existing one. The ability to properly target prospects can be greatly increased with predictive analytics. It can determine patterns in the market and allow sales to assemble a campaign accordingly. They will be able to predict the who, what and when’s. Which prospects are most likely to respond to a campaign, what services and products interest them, even what promotions they will respond to. Naturally, this process will not only increase the new customers coming in, but decrease any wasted efforts made on people simply not interested.
A customer’s lifetime value is an important feature of a predictive analytics program, as it promises the most enduring relationship. With detailed reporting, a skilled marketing team can determine a customer’s contribution margin. They do this by studying data such as: current profitability, risk, loyalty, and then utilizing that information to give an accurate estimate of future revenue. The company can then focus their efforts in a more refined manor. Some may even align future products around their most valued customers.
There is a shift towards a more engaging customer relationship, as platforms like social media and mobility enable more points of contact, and produce big data. Predictive analytics has made impressive leaps for customer retention by leveraging multi layered CLV data and reporting.
Social media has opened a new door for sales and marketing. It has brought vendor and client relations closer than ever. Time after time, social consumers have proven more profitable. Various channels provide a forum for opinions, instant feedback, and a means for customers to socialize. This is a vital window for marketing as they can engage with customers on a real time basis, and steer campaigns accordingly. This kind of segmentation allows them to target specific groups. The more involved the client is, the more exposed they are to advertising. Social media is a goldmine for predictive analytics as it is a mass producer of big data on a constant basis.
Aside from just engaging customers, social channels can also highlight trends or products that are popular, and thus profitable. Data scientists are now able to predict what topics will be trending on Twitter, hours before they are appear. This kind of data is priceless to an astute marketing team. They can use the real time interaction and the forecasted data, to run highly efficient campaigns.
The use of social media with predictive analytics can also be used in improving location based marketing. With social networks adding more location-aware features and with consumers voluntariliy posting information about their likes and dislikes, business can build behavioral profiles, allowing location based advertisements to be matched to a consumer’s interests. Offers can be sent based on where a customer is like to be at any given moment, allowing these advertisements to be sent prior to a purchasing decision being made as is the case with TEOCO’s INrange location-based predictive analytics solution.
One of the key points for any sales and marketing team is to know your market and pricing accordingly. The economy is not what it once was. Overpricing can kill a campaign, where underpricing will hurt the overall ROI on one. Based on a client’s propensity to purchase, sales can test different price points and scenarios to predict the overall outcome of the campaign. Several different criteria can be studied like: location, product, and market shifts. This allows the company to make smarter and more informed decisions on their pricing which inevitably leads to higher profit and revenue.
The ability to cross and upsell is the bread and butter of any great team. Predictive analytics can help a sales team understand it’s customer from a research based approach. Studying reports on customer behavior can help determine what additional products or services to offer. This is important as it allows for more focus on those interested and less wasted time on unqualified/uninterested customers.
Human behavior is being assigned numeric value much like binary code, and people are literally drowning in data. By studying various environmental factors, analyzing the big data and using it to focus and drive efforts, companies are seeing massive increases in revenue. Predictive analytics serves as an additional intuitive platform and is a tool that is changing the face of the way we do business. It is the smartest approach any sales and marketing team can take.
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Lisa Radwick is a marketing analyist with experience in client relationship management as well as consumer product planning.