Making Predictive Analytics Practical: How Marketing Can Drive Engagement
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Transcript of Making Predictive Analytics Practical: How Marketing Can Drive Engagement
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Predict To Prosper In Digital ExperienceRowan Curran, Researcher
June 16, 2015
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© 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
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We need to deliver personalized experiences to this customer
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UK teleco combined customer records, geospatial analysis, and train scheduling to
identify high-value customers.
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Google Now takes contextual details to deliver in-the-moment content
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Many sites, many devices, many apps
Base: 135 digital experience delivery decision-makersSource: 2015 Digital Experience Delivery Online Survey
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The need for content in context drives the biggest tech investments
Base: 135 digital experience delivery decision-makersSource: 2015 Digital Experience Delivery Online Survey
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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
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Digital experiences feed mobile mindshifts
Software to manage, deliver, and optimize experiences consistently
across every digital touchpoint.
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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
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Feeding all types of analytics
Past Present Future
Learn Decide Anticipate
Predictive Analytics
Real-time Analytics
Descriptive Analytics
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Predicting The Future For Contextual Experiences
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Descriptive analytics stick you in the past.
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Predictive reveals tomorrow . . .
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. . . to make the right decisions today.
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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.
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Relationships
Finances
Devices
Attributes
History
Predict characteristics, likely behaviors, likes, and needs.
Customer
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Behavior
Channel
Weather Location
Time Use in-the-moment context to predict next-best-action.
Customer
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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.
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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
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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
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“We are drowning in data and starving for insight.”
— Global Bank
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A flood of data, a trickle of insights
Insights for lines of business:
Source: October 16, 2014, “The Customer-Activated Enterprise” Forrester report
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Customers deserve a great experience across their entire journey
These get attention
These deserve more attention
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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
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Open the spigot with DX platforms
Extensions+Custom
code
Commerce Service
Customer data Content
Otherservices
Marketing
Analytics+
Insights
Contextualdelivery at “theglass”
Touch points
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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
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Analytics Must Drive Actions
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Neither data nor insights are enough to drive great
customer experiences.
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Without delivery, insights are wasted
Software to manage, deliver, and optimize experiences consistently
across every digital touchpoint.
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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
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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
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Four customer experience gaps loom
Performance Gap
Convenience Gap
Personalization Gap
Trust Gap
What businesses
deliver
What customers
expect
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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
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Predictive platforms
WCM
Testing
Recomm-endations
SearchCampaign
Mgmt
Commerce
Custom
It’s an ecosystem of solutions
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Predictive platforms
WCM
Testing
Recomm-endations
SearchCampaign
Mgmt
Commerce
Custom
It’s an ecosystem of solutions
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It’s an ecosystem of solutions
Predictive platforms
WCM
Testing
Recomm-endations
SearchCampaign
Mgmt
Commerce
Custom
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It’s an ecosystem of solutions
Predictive platforms
WCM
Testing
Recomm-endations
SearchCampaign
Mgmt
Commerce
Custom
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Predictive platforms
WCM
Testing
Recomm-endations
SearchCampaign
Mgmt
Commerce
Custom
It’s an ecosystem of solutions
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Predictive platforms
WCM
Testing
Recomm-endations
SearchCampaign
Mgmt
Commerce
Custom
It’s an ecosystem of solutions
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Predictive platforms
WCM
Testing
Recomm-endations
SearchCampaign
Mgmt
Commerce
Custom
It’s an ecosystem of solutions
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Predictive platforms
WCM
Testing
Recomm-endations
SearchCampaign
Mgmt
Commerce
Custom
It’s an ecosystem of solutions
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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)