Making Predictive Analytics Practical: How Marketing Can Drive Engagement

Predict To Prosper In Digital ExperienceRowan 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-makersSource: 2015 Digital Experience Delivery Online Survey


The need for content in context drives the biggest tech investments

Base: 135 digital experience delivery decision-makersSource: 2015 Digital Experience Delivery Online Survey


Big business technology budgets are here!

2009 2010 2011 2012 2013 2014 2015 2016 2017$70

$90

$110

$130

$150

$170

$190

Business technology Information technology

Mil

lio

ns

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 ofautomationconnect the

physical wo

Systems ofengagementtouch peo

Systems of insightpower digital

busineSystems ofrecord hostprocess

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

Otherservices

Marketing

Analytics+

Insights

Contextualdelivery at “theglass”

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-MakersSource: 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 possibleactions

Rightdata

Effectiveactions

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



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

[email protected]@ShortPierReview

Making Predictive Analytics Practical: How Marketing Can Drive Engagement

Marketing

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