This article discusses all things predictive analytics - what it is, why its important and how you can use it in a marketing strategy
What are predictive analytics and why are they important?
Predictive analytics is the process of using current and previous data to allow marketers to understand customer and consumer behaviour and the upcoming trends to help plan their future campaigns. These analytics are important to review regularly as they can be used to help make better decisions regarding how much money to use in adverts or the scale of the campaigns. Not only this, but using predictive analytics in marketing strategies also allows marketers to see which campaigns are working and which aren’t and what kind of advertising is needed to lead to an increase of sales in the future.
There are many examples of predictive analytics in marketing strategies including:
- Cluster modelling - this model can be used if you are not sure whether to segment your audience based on behaviour, demographics, interest or any other potential variable. You can experiment with different clusters using analytics based on past engagement, past purchases and demographics to find the results that will make the most sense for your business.
- Propensity modelling - this type of model is one of the top three models used in predictive marketing analytics. This model evaluates a consumer’s likelihood to do something - whether they will act on an offer, convert or disengage.
- Recommendations filtering - this model looks at the customer's past purchase history which can help marketers look for potential additional sales opportunities such as upselling.
Before you begin to take advantage of predictive analytics, you need to ensure you have the advanced marketing tools and measurement capabilities set up. This is due to the massive amounts of data that is usually involved in businesses and this needs to be distilled into easy to understand information so that insights can be drawn. Not only do you need these advanced tools, but you also need to make sure you have a vast amount of historical data that is not only tracked, but is organised and correlated to help develop consumer identities. Another feature to allow you to use predictive analytics in your marketing strategy is to use artificial intelligence (AI) and machine learning. These are essential as they help marketers to act on insights in real-time and provide automated sales forecasts and content creation.