Seemingly overnight, predictive analytics has moved from the province of statisticians into the conversations of marketing departments everywhere. And while new to the marketer’s toolbox, a report from Forbes Insights indicates that the technology can produce significant results within a handful of years.
The survey of 308 CMOs and business unit directors, which was sponsored by Lattice Engine, found that nearly half of those organizations deemed “highly advanced” in their usage of predictive analytics credit the technology with increasing ROI by more than 25%. Marketers from these organizations, which made up 13% of the surveyed group, have worked with predictive techniques for at least five years and describe them as core functions within all of their marketing initiatives.
Some of the areas in which predictive analytics have paid off most, say these experienced practitioners, are preventing early attrition cost of customer acquisitions, digital promotions offered to specific target groups, lead scoring, and customer propensity to buy a specific product.
Transformative technologies like predictive analytics require company-wide integration if they’re to perform to their utmost, says Nipul Chokshi, senior director of product marketing at Lattice. “One of the things we’ve found in working with customers over a number of years is that there’s a distinction between being a marketing organization that uses predictive analytics technology and being a predictive analytics organization,” Chokshi remarks. “You can make gains in one functional area, but if you go outside of your silo and bring in data from other areas of the organization, those gains multiply exponentially.”
But only 28% of executives surveyed said that the majority of their enterprise information is readily available to them in a single integrated format, though data flow appears to be on the increase. Half of those surveyed said that insights generated through predictive marketing are made widely available across their companies.
However rough the road for predictive analytics’ integration into enterprise operations, it’s clear that it will play an increasing role. Eight out of 10 executives said they intended to increase application of the technology to marketing processes in the coming year, though most marketing organizations remain machine-learning novices. More than half of those surveyed (55%) said they’d only adopted predictive analytics within the past year, and only 15% have been working with it for three years or more.
The chief metrics employed to measure the success of predictive marketing efforts include customer retention rate, cost per lead, customer value, and total conversions. Indeed, emphasizes Chokshi, one of the great appeals of predictive analytics is its ability to affect results from the top to the bottom of the sales funnel. “This is something that’s going to become increasingly important to marketers,” he says.
In conjunction with the release of the report, Lattice introduced a maturity model that marketers can use to assess how far along their organization is in adopting predictive analytics.