Predictive analytics: Using customer data to future-proof your business
Data has long been a powerful catalyst for revolutionizing critical business decisions, and that’s not changing any time soon. From the early days of scattered spreadsheets to the present, data-driven strategies have evolved into a driving force for growth and innovation. Organizations that harness data effectively are the pioneers, leading the charge towards unparalleled success and are unlocking new dimensions of innovation.
Today, machine learning and artificial intelligence have joined forces with data science to help us see into the future with predictive analytics. Marketers can use insights to boost revenue, generate sales, and prevent shopper churn.
What is predictive analytics?
Predictive analytics is powered by machine learning models that analyze past behavior to identify patterns that predict what’s next. In other words, you can predict the future from today’s data.
According to a Venture Beat report, an impressive 44% of companies are embracing the power of data-driven insights by integrating predictive analytics into their marketing strategy.
This growing trend highlights the widespread recognition of predictive analytics as a game-changing tool for businesses. Insights into the future are key to helping brands stay at the forefront of customers’ minds. This is done by identifying opportunities ahead of time and mitigating risks before they happen.
Dotdigital offers four predictive insights: next order date, customer lifetime value (CLV), number of purchases, and churn probability.
Spot opportunities a mile away with Dotdigital
The best thing about seeing into the future is that you have the upper hand. Imagine a world where you could get intel on your customers before they even knew it themselves. Well, you don’t need to imagine it.
More revenue when you need it most
More revenue is always good. But seeing where and when it will come from is even better. Marketers can create campaigns that push people over the sales line with predicted next-order dates.
Let’s say it’s been 21 days since a customer last placed an order, and they’re predicted to place another one in seven days. Here’s what you could do within the next week to increase the likelihood of them making a purchase:
- Send them personalized product recommendations
- Offer them a discount code
- Notify them of any active sales you’re running
Better yet, create a segment of customers who meet similar criteria to maximize campaign ROI. That way, anyone orders in the next seven days could be nudged to the end of the purchase funnel.
Delight your most valuable customers
It’s likely you already know who your biggest spenders are, but that only looks retrospectively. Predicted CLV lets you see the overall value a customer could add to your business. That means you know exactly who to reward, expanding the longevity and value of your most engaged contacts. What are some ways to reward brand champions at scale?
- Remind them to join your loyalty program
- Give them exclusive or early access to sales or products
- Offer them VIP deals to expand their purchasing power with your brand
Foresee, expect, and avoid the risk
In the fast-paced marketing world, staying ahead of the curve is crucial. With predictive analytics, you will see potential risks and make data-driven decisions.
Keep customers shopping with you over competitors
No one likes losing a customer. When churn happens, it‘s often too late to do anything about it, especially if you’re looking at customer data retrospectively. If you can foresee churn, it’s easier to craft experiences that re-engage because you have a key tool on your side: time.
Don’t spend too much or too little on a lost cause
The most effective retention campaigns take a lot of time and resources to create; in fact, they can be very expensive. When you have access to churn predictions, you know where to spend your energy. For example, why spend a week crafting a retention campaign for customers with a 95% churn probability? If they’re already uninterested, the last thing you want to do is push them away with another email.
Target those with a lower probability
Equally, those with the highest predicted churn rates will likely need a much harder sale to get re-engaged—for example, a hefty discount. To avoid reducing your profit margins, it’s best to only send this message to customers with a high probability of churning.
Hyperpersonalize to avoid brand erosion
We can all admit how easy it is to become fatigued by boring emails that don’t offer much value, particularly when they’re not personalized. The last thing you want to do is send an SMS campaign aiming to increase loyalty to a customer whose churn probability is high. You also don’t want to advertise a premium offer to someone with a low predicted CLV. It’s crucial to make sure that your messaging resonates with your audience to safeguard your brand. Otherwise, it may come across as insincere.
Easier customer profiling
If you want to know more about your customers, you can do it at a glance with the Dotdigital predictive diagram in the single customer view. Not only can you access all contact data in one easy location, but you can spot similarities seamlessly. Let’s say you discover that your customers with the highest predicted churn rates have not opened an email in over two months.
You can then determine a customer profile that shows a correlation between engagement and churn. Better still, Dotdigital lets you generate a lookalike segment, which kickstarts your re-engagement campaign in just one click. With Dotdigital, profiling your customers for re-engagement or offering promotions is a few clicks away. This can help prevent customer churn and keep them interested in your brand through different channels.
Step into the future
Predictive analytics has revolutionized marketing. Marketers can now seize the opportunity and navigate risks before they arise. In the age of technological advancements, the potential of predictive marketing will only expand. This will reinforce the need to embrace a future-ready approach for a competitive edge. In today’s world, making data-driven decisions is crucial for success, and predictive analytics is leading the way in this transformation toward a bright future.