Predictive analytics is the process of identifying patterns, revealing hidden anomalies and unearthing critical insights in data so businesses can make effective forward-looking decisions – effectively finding that proverbial needle before it even has a chance to get lost in a ‘data’ haystack. This means that businesses and marketers can proactively uncover new opportunities and answer critical questions before they’re even asked.
Also known as proactive analytics or augmented analytics, predictive analytics enables accurate forecasting so businesses aren’t just looking back at what has gone before, but are looking ahead and predicting what will happen next.
While technically predictive analytics could be done manually by data analysts, the rise of artificial intelligence and machine learning has meant that computers can now take on the heavy lifting of large-scale data evaluation. This means that marketers can get access to incredibly sophisticated predictive insights that would be extremely costly and time-consuming – if not impossible – to find using human analysts.
What is it used for?
Predictive analytics help marketers understand not just what worked in the past, or even what is working right now, but what will drive performance in the future. For example, the insights gained from predictive analytics can be used to identify the high-potential markets or audience segments brands should be targeting and determine the best combination of channels, tactics and creative strategies to drive activity within those groups.
Predictive insights can also be used to inform media budget allocation at brand, campaign or channel level based on what is most effective at achieving the marketer’s specific KPIs. Or, they can be used to identify potentially costly problems at a very early stage before they become major issues. Predictive analytics arms marketers with the knowledge to adjust strategies proactively rather than waiting for a campaign to finish before analysing the results and seeing where they went wrong.
How can it transform marketing performance?
One of the key ways predictive analytics transforms marketing is by enhancing the customer experience. Through techniques such as behavioural pattern analysis, predictive analytics delivers insights so marketers can create customised journeys for individual segments that have an impact at multiple levels.
Being able to target users with more personalised and relevant content based on their likelihood to follow certain paths can help nurture and establish customer relationships. Marketers can then focus on the leads that are most likely to convert.
They can also strengthen relationships with existing customers, forecast churn rates and deliver insights into how to reduce them. By continuously using predictive analytics, marketers gain a deeper understanding of what works for each consumer, enabling them to increase precision and conversions over time.