Making Predictive Analytics Practical: How Marketing Can Drive Engagement

Predict To Prosper In Digital Experience
Rowan Curran, Researcher
June 16, 2015

© 2015 Forrester Research, Inc. Reproduction Prohibited 3
Image source: Associated Press (AP.org), photo by Michael Sohn
The mobile mind shift
The expectation that I
can get what I want in
my immediate context
and moments of need

We need to deliver personalized
experiences to this customer

UK teleco combined customer records,
geospatial analysis, and train scheduling to
identify high-value customers.

Google Now takes contextual details to
deliver in-the-moment content

Many sites, many devices, many apps
Base: 135 digital experience delivery decision-makers
Source: 2015 Digital Experience Delivery Online Survey

The need for content in context drives the
biggest tech investments
Base: 135 digital experience delivery decision-makers
Source: 2015 Digital Experience Delivery Online Survey

Big business technology budgets are here!
$70
$90
$110
$130
$150
$170
$190
2009 2010 2011 2012 2013 2014 2015 2016 2017
Millions
Business technology Information technology
Source: October 14, 2014, “Sizing The US CIO’s Business Technology Agenda” Forrester report

Digital experiences feed mobile mindshifts
Software to manage, deliver, and
optimize experiences consistently
across every digital touchpoint.

In the age of the customer, we gather
massive amounts of data
• Behavioral data
• Social data
• Mobile data
• Environmental data
• Sensor data
• Transaction data
• Customer data
• Third-party data
• Financial data
• Sales data
• Product data

Feeding all types of analytics
Past Present Future
Learn Decide Anticipate
Predictive
Analytics
Real-time
Analytics
Descriptive
Analytics

Predicting The Future For
Contextual Experiences

Descriptive analytics stick you in the past.

Predictive reveals tomorrow . . .

. . . to make the right decisions today.

y = f(x)
Predicted
outcome
Prediction
function
Input
variables
A function that takes input variables, applies a
formula and/or rules to predict an outcome.

Relationships
Finances
Devices
Attributes
History
Predict
characteristics,
likely behaviors,
likes, and needs.
Customer

Behavior
Channel
Weather Location
Time Use in-the-moment
context to predict
next-best-action.
Customer

Ways to create predictive models
› Handcraft business rules or program code to
create a predictive model based on human
experts.
› Use predictive analytics tools to build models
that analyze data with statistical and machine
learning algorithms to create a predictive model.

Types of predictive models
› Classifiers
• Predict a specific event, characteristic, or behavior
› Recommenders
• Make a recommendation
› Clusters
• Find groups that share common characteristics
› Numerical, time series forecasting
• Predict a numerical value

Predictive models can have a delightful,
multiplicative effect on the bottom line
Direct Marketing – 1% response rate
Send marketing mail to 1,000,000
customers at cost of $2 per mailing to sell a
$220 service.
$2 x 1,000,000 $2,000,000
1% response rate means 10,000 customer
will buy service
$220 x 10,000 $2,200,000
Profit* $200,000
Predictive Direct Marketing – 3% response rate
Send marketing mail to 250,000 customers
predicted most likely to buy at cost of $2
per mailing to sell a $220 service
$2 x 250,000 $500,000
3% response rate means 7,500 customer
will buy service
$220 x 7,500 $1,650,000
Profit when using a predictive model* $1,150,000
Traditional
Predictive
* Profit calculation does not include other expenses

“We are drowning in data
and starving for insight.”
— Global Bank

A flood of data, a trickle of insights
Insights for lines of
business:
Source: October 16, 2014, “The Customer-Activated Enterprise” Forrester report

Customers deserve a great experience across
their entire journey
These get
attention
These
deserve more
attention

Systems of
automation
connect the
physical world
Systems of
engagement
touch people
Systems of insight
power digital
business
Systems of
record host
processes
Source: “Digital Insight Is The New Currency Of Business” Forrester report

Open the spigot with DX platforms
Extensions
+ Custom
code
Commerce Service
Customer data Content
Other
services
Marketing
Analytics
+
Insights
Contextual delivery at “the glass”
Touch points

29© 2015 Forrester Research, Inc. Reproduction Prohibited
The battle for the future of your customers
of technology decision-makers have
implemented predictive analytics.
Greater than 45%
40%
of technology decision-makers plan
or are interested to implement
predictive analytics.
Base: 984 Technology Decision-Makers
Source: Forrester’s Business Technographics Global Data And Analytics Survey, 2015

Analytics Must Drive Actions

Neither data nor insights
are enough to drive great
customer experiences.

Without delivery, insights are wasted
Software to manage, deliver, and
optimize experiences consistently
across every digital touchpoint.

Learnings
Digital insights
Link data and action through digital
insights and continuous learning
All possible
data
All possible
actions
Right
data
Effective
actions
Source: April 27, 2015, “Digital Insight Is The New Currency Of Business” Forrester report

Three uses of predictive insights for better DX decisions
› Augment human expertise and intelligence
• Enhance human decision-making with dashboarding
• Provide context around the prediction to help the user leverage their knowledge and expertise
› Automated experiences and actions
• Deliver contextual, experientially-relevant content using rules driven by predictions
• Shape customer journeys by directing to next-best-actions
› Discovery of new products and services
• Explore data and predict areas where there are business gaps
• Prototype new products and services and predict their potential impact based on current offerings

© 2015 Forrester Research, Inc. Reproduction Prohibited 35Source: August 7, 2014, “Closing The Experience Gaps” Forrester report
Four customer experience gaps loom
Performance Gap
Convenience Gap
Personalization Gap
Trust Gap
What
businesses
deliver
What
customers
expect

Bridge the valley with predictive analytics
Performance:
Internet scale, real-time, any device,
instrumented for data-driven improvement
Convenience:
Simple, compelling, complete, unified delivery across
channels, can act immediately, anywhere
Personalization:
Context-rich, next best action, location-aware, socially
connected, customer-journey-mindful
Trust:
Honest, accountable, transparent,
contextual, reliable, privacy-respecting
What
businesses
deliver
What
customers
expect
 Source: August 7, 2014, “Closing The Experience Gaps” Forrester report

Predictive
platforms
WCM
Testing
Recomm-
endations
SearchCampaign
Mgmt
Commerce
Custom
It’s an ecosystem of solutions

Predictive
platforms
WCM
Testing
Recomm-
endations
SearchCampaign
Mgmt
Commerce
Custom

Get going with predictive digital experiences
› Start with a single customer touchpoint and ask: what information could
I predict to make their experience better?
› What data is available in the organization to understand our customers
and behaviors?
› What technology capabilities do we already have to leverage
predictions(e.g. can we create offline models to put into existing rules
engines)?
› Create a shared culture: this challenge is everyone’s problem!
(marketers, developers, operations)

forrester.com
Thank you
Rowan Curran
rcurran@forrester.com
@ShortPierReview

Making Predictive Analytics Practical: How Marketing Can Drive Engagement

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Making Predictive Analytics Practical: How Marketing Can Drive Engagement

Similaire à Making Predictive Analytics Practical: How Marketing Can Drive Engagement (20)

Dernier

Dernier (20)

Making Predictive Analytics Practical: How Marketing Can Drive Engagement

Notes de l'éditeur