Executive Summary

The calculus of marketing has become complex as an increasing number of variables enter into the equation. Fragmentation of product markets, media and channels and their inter-dependence has added several imponderables in the planning and execution of marketing strategies. If companies continue with their old practices of mass marketing, they are more likely to invest large sums of money that will not yield a rate of return.

The rate of return from marketing investments can be raised with an intelligent use of information. A growing number of companies use customer data for segmentation and learn to target groups of customers with personalized service. Their ability to achieve their goals improves as they learn from the data they receive from past marketing campaigns.

The costs of serving customers have increased and companies need to increasingly cater to micro-segments to gain a competitive advantage. They have to take into account not only demographic and socio-economic variables but also behavioral traits that help to segment at a more granular level. Competitive differentiation is achieved by more than product differentiation; an array of transactional conveniences as well as nuances of relationships provides the edge companies need.

Business intelligence goes further and uncovers opportunities and alerts companies to competitive threats. Data uncovers needs that are often overlooked in the course of mass marketing. Similarly, companies can discover in the patterns of data a lurking threat from a competitor and take prompt action to pre-empt it.

In an environment of uncertainty that fragmentation has caused, predictive analytics helps to anticipate with some degree of accuracy the outcomes that can be achieved from the products, services, process benefits and relationships that companies offer. The virtuous circle of data based forecasts and feedback from marketing campaigns lowers the error rate in decision making.

Increasingly, companies have to choose the moments when the customer is most receptive to their messages rather than overwhelm them. These opportunities come when customers choose to contact call centers or are receptive to relevant information that contributes to their participation in events rather than those jarring calls from telemarketers and frustrating mass mailings. Call center agents and sales people have to learn to make impromptu offers by reading the mood of the customers. They are more likely to be effective if they are armed with information about the profile of the customers.

In sum, predictive analytics is about achieving better results with lower costs. The key to achieving this goal is to choose the most relevant product, service, channel and media to reach a specific segment of the population.

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