Marketing is indeed a very crucial part of businesses. If you know how to formulate a successful marketing strategy, nothing stops you from becoming a successful businessman. To create an effective marketing strategy, you can use specific proven methods, such as predictive analysis. It is a branch of business analysis that helps you predict the future of your business.
What is Predictive Analysis?
Predictive analysis deals with advanced research and makes predictions about the outcomes of the future. It uses past data for the prediction of future behavior. When combined with statistical modeling, machine learning, and data mining with the assistance of historical data, it can efficiently predict future outcomes.
It is beneficial for the companies, as it helps them detect the pattern in numerous data and prevents any upcoming risk or missed opportunities. For this purpose, companies hire predictive analytics experts, and with the use of historical data, they create a mathematical model, which apprehends the vital trends in the company.
Predictive Analysis in Marketing
Predictive marketing analytics can be determined by using demographic and behavioral information, and the obtained results can be used to predict future events, outcomes, and user behaviors. Predictive analysis is used to formulate forecasts about the marketing outcomes and consumer behavior. This process involves mining the data and combining it with artificial intelligence (AI), predictive modeling, machine learning, and statistics in order to obtain the desired results. Applied Data Science can also help improve your predictive analysis. Since predictive analysis makes use of data science to make future predictions, enrolling in a course can strengthen your basics.
Scrutinizing various ongoing and historic patterns in data makes it effortless to determine the detailed prediction of things that may happen in the upcoming years. There are three major analytic models in the business:
- Descriptive Analytics
The very first step to predicting future outcomes is by going through descriptive analytics. It deals with the past data and performance of the company.
- Predictive Analytics
The next step is to look at predictive analytics. It determines anything that will occur in the future by using previous data and algorithms.
- Prescriptive Analytics
In this final step, you can make your closing decision on the basis of your past experiences and outcomes. Prescriptive Analytics determines the ideal alternative to act on and identifies future developments.
Ways to Increase Marketing using Predictive Analysis
Marketing has emerged as a digital enterprise in today’s world, and predictive analysis works as one of its primary tools. It wasn’t easy to analyze different consumer habits earlier, but now it can quickly be done only within a few hours. The goal of predictive marketing analytics is clear, and it is all about where we were in our past years and where we want to be in the future.
Targeting Your Audience
By using demographic and behavioral information, you can easily divide your leads and consumers for developing a new marketing theme. Creating a specific piece of campaign assists the marketing manager in increasing its sales and engaging more customers.
Three ways to use predictive analysis in targeting the audience are as follows:
- Responsive model
By analyzing your audience’s response to some specific stimuli, you can guess the future reactions of your audience.
- Affinity analysis
This method makes it easier for marketing managers to divide their customers based on their characteristics.
- Churn analysis
This analysis will provide the managers with the percentage of consumers they lost in a certain period. It also helps to define the reduced rate of sales or revenue due to the loss of customers.
Content Distribution to Targets
Using predictive analytics, marketing managers will effortlessly conclude which content best suits their targeted audience. Once it is clear which kind of content will work, managers can also determine the proper channel for distributing content and from which platform it will reach all customers—the sales increase when the relevant leads of higher quality reach the target audience.
It refers to the ranking of leads on the basis of their position in the business funnel. The strategy to collaborate in a more significant way is to divide the marketing and sales unit, as every lead is unique.
Scoring leads are done according to the readiness to be purchased. This is done with the help of prescriptive analysis, and it further assists in selling or marketing to future leads based on their predictions for future purchasing patterns. There are generally three stages of the funnel, and on the basis of it, lead scores are determined.
Prediction of Lifetime Value
Using the demographic and behavioral information method similar to the targeting audience, prediction of the lifetime value of customers can be determined. The historical data will help you identify a particular audience that will generate high profit and modify marketing strategies accordingly in order to help you attain a high return on investment (ROI). Moreover, you will become acquainted with whether the targeted audience is loyal or not, and if they are reliable, then which segment of them is trustworthy.
This will deliver more value to the relationship between you and your customers. You will know how valuable and essential the customers are for your business to run steadily. By predictive analysis, you will predict the expected lifetime of the relationship between you and your customer. This way, you will find it effortless to compute the estimated revenue. Understanding these things, making marketing plans, setting budgets, acquiring new consumers, and evaluating the expected ROI will be easy to formulate accordingly.
Upselling and Cross-Selling
Once the consumer’s behavior and trends in purchase or sale are identified, a business can follow upsell, cross-sell, or even combine both of them in order to make more profit. For instance, if a person buys a commodity X and buys another commodity Y after a few months of purchasing X. Now, you know that they are interested in purchasing Y after X because there is a relation or association between the two.
Therefore, whenever they buy X, you can show them the product Y, which will then convince the customer to buy y commodity because they showed interest in purchasing X and Y together earlier. Thus, upselling reduces the time difference between the sale of X and Y, benefiting the business economically.
Moreover, you can also employ a method known as cross-selling, in which you place x and y together on a digital or physical store. Hence, the customer interested in buying both will be more likely to purchase them together. However, to identify pairs, such as x and y, you need to perform predictive analysis of the customers’ purchase history.
Identifying Product That Fits
Predicting consumer behavior, lead scoring information, and historical data will enhance your understanding of the demands of the present audience. You can also utilize this data to predict the demands of your target audience in the upcoming years. Using this analysis, you can create innovative ideas and products that meet the requirements of your consumer base.
Moreover, improve the quality of products and work on their labeling, branding, or packing to increase the sales target. You can take help from data science to obtain this data, and the importance of this technology can be well understood from a top-rated data science course.
Predictive analysis is used to determine the future of businesses, and it also helps you decide the right business strategy for you. However, to learn in-depth concepts and employ predictive analysis at your organizations, you would be required to take a course in data science, which you can get at Great Learning.