A deep understanding of customer behavior and what makes them “tick” is key to good marketing. Understanding purchasing behavior allows retailers to optimize their marketing campaigns, improve customer experiences, and enhance retention and loyalty. Recent studies have shown that personalization is the most preferred strategy for marketing executives today. In order to do this effectively, marketers need to be equipped with the capability to analyze data and gain insights.
Organizations are turning to analytics to process their big data, and predictive analytics in particular is gaining traction. Predictive analytics is the analysis of past behaviors of the customers and predicts future trends. This process involves understanding the past, present and future customer behaviors by modeling a mathematical framework which identifies patterns in customer behavior and product usage in order to predict future behavior.
Getting customer data is no more a challenge. The proliferation of technology has empowered companies to collect and record customer data at every touch point. Customers generate information at every interaction. The biggest business challenge for companies today is harnessing volumes of data and converting it into relevant information to increase personalization and relevancy.
Predictive analytics helps to predict, but also to shape marketing goals by analyzing granular real time and historical data and running predictive models on them. For instance, to provide recommendations to customers, Amazon processes past purchase history, ratings and likes, as well as other customers’ purchase history. Netflix leverages users’ ratings on movies and TV shows to produce new movies/ TV shows and genre suggestions. Pandora taps into users’ ratings of songs, artists and genres to make music recommendations. Twitter turns to user connections to recommend new connections. These well known brands are doing extremely well adding new customers every day because of their ability to anticipate customer needs and make appropriate recommendations at the right time.
Here’s how predictive analytics can ensure personalization and relevancy along with the opportunity for faster course correction in your marketing plans:
In essence, predictive analytics empowers companies to provide personalized customer service by offering relevant recommendations to each customer. This personalization improves the brand – customer relationship and allows marketers to drive customer loyalty and retention.
By Aneesh Reddy
Originally published at fourthsource