Why marketers are betting big on predictive analytics

Lattice Engines is one of many software providers capitalizing on this trend

Give a marketer a sale, and you'll keep his company afloat for a day; teach him to predict future sales, and you may just ensure his longevity.

That, in essence, is the premise behind predictive marketing, a concept that's increasingly taking hold in enterprises today.

Tapping into the analytics trend that's being felt throughout the business world as a whole, predictive marketing applies algorithms and machine learning to big data to help marketers direct their efforts in the most profitable directions. Predictive-analytics tools can help marketers gauge ahead of time what a particular customer will buy, for example, as well as when and how much. Equipped with that information, companies can tailor their campaigns accordingly.

Amazon is a shining example: Its recommendations engine reportedly accounts for roughly 30 percent of the company's sales.

Successes like that may help explain investors' excitement about predictive-analytics purveyors such as Lattice Engines.

Lattice on Wednesday announced a fresh US$28 million in Series D funding, bringing its total investment intake so far to $75 million. The company's software is now used in more than 100 organizations worldwide, it says, resulting in higher sales rates, conversions and cross-sales successes as well as reduced churn.

Predictive analytics can help marketers across the entire customer lifecycle, said Fern Halper, director of TDWI Research for advanced analytics.

For instance, "predictive analytics helps in segmenting customers, finding patterns in their behavior, offering them the promotions that they would be likely to respond to, and predicting what customers would likely churn," Halper explained.

Marketing and sales are, in fact, among the top areas that organizations start with when deploying predictive analytics, she added, as increasingly easy-to-use tools bring such capabilities within closer reach for nonexpert business users.

Read more:The top 3 directions predictive analytics will take in 2015
Why predictive analytics matters
How predictive analytics is tackling customer attrition at American Express

Also fueling the technology's growth is the sheer deluge of data out there today.

"There's so much data and so many channels that firms like Lattice are now necessary to help marketers interpret and understand and, to some degree, optimize their campaigns in real time," said Greg Sterling, vice president for strategy and insights with the Local Search Association. "Firms and tools that offer ways to make sense of all the data are increasingly important."

Like any technology, however, predictive-analytics tools must be used wisely.

"Predictive analytics can be important if done right -- and often that's a big 'if,'" cautioned Denis Pombriant, managing principal at Beagle Research Group.

Analytics can be used for two purposes, he explained: to identify correlations and to find causation. "We need both, but too often vendors pay a lot of attention to correlation and not enough to causation," he said.

If a marketer determines that customers often buy product A when they buy product B, for example, it's important to understand why -- the causation underlying that pattern -- in order to be able to predict a particular individual's purchase behavior, he explained.

Lattice does a good job of identifying both causation and correlation, Pombriant added. "This puts your sales effort on a whole new plane," he said. "That's why investors are paying attention."

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

3 marketing mistakes to overcome when courting prospective customers

Marketing that urges respondents to ‘buy now’ is a little like asking someone to marry you on your first date. At any time, only 3 per cent of the market is looking for what you’re selling, so the chances of your date randomly being ‘The One’ is pretty slim.

Sabri Suby

Founder, King Kong

Why are we dubious about deep learning?

The prospect of deep learning gives those of us in the industry something to get really excited about, and something to be nervous about, at the same time.

Katja Forbes

Founder and chief, sfyte

Why you can’t afford to fail at CX in 2019

In 1976 Apple launched. The business would go on to change the game, setting the bar for customer experience (CX). Seamless customer experience and intuitive designs gave customers exactly what they wanted, making other service experiences pale in comparison.

Damian Kernahan

Founder and CEO, Proto Partners

Red Agency YouGov Galaxy Report, February 2019 Predictors Study. https://redagency.com.au/re...

Vanessa Skye Mitchell

DNA-based marketing: The next big thing?

Read more

RIP holden

Max Polding

Marketing professor: For Holden, brand nostalgia ain’t what it used to be

Read more

Where does the claim that 2 million Australians have tested come from ? Anecdotal information suggests that this is way off the mark.

David Andersen

DNA-based marketing: The next big thing?

Read more

Thank you for the info , being part of a digital marketing agency in kerala , this proved handy and get to know with upcoming trends. htt...

Dotz Web Technologies

Predictions: 9 digital marketing trends for 2019

Read more

So who then is correct? The Research or The skilled Digital people.

Anene

Report reveals Australia faces digital skills shortage

Read more

Latest Podcast

More podcasts

Sign in