In all of human history, people have worked ardently to predict the future. Weather forecasts, revenue forecasts, fashion forecasts, and whatnot. All in the hope of achieving better results and being prepared for adversities. And, in all honesty, it has worked quite well.
With the ample amounts of data being produced every day, virtually anything can be predicted and the most logical course of action is to take advantage of that data for our benefit.
Especially, as a business where data is recorded at every step, building your marketing strategies based on repetitive past trends can turn out to be a gold mine and help you in creating a profitable marketing mix.
So, if you are thinking, where to start with predictive analytics, let us help you understand.
What is predictive analytics in marketing?
Living in a technologically amplified world with a huge data influx, marketers have gained a high potential for research and analysis. Through this kind of analysis, you can understand the dynamic of your target market, which is dependant upon 4 major factors traditionally, which are: Strengths, Weaknesses, Opportunities, and Threats (or SWOT)
This will consist of certain elements that collectively make up the marketing analysis.
Market current and past trends – This will tell you about your buyer personas, cost structures, and product popularity.
The profitability of the market – This will include research about the supplier and buyer powers, entry barriers, your investments, and possible returns.
Market growth rate – By growth rate, we mean how long is your product trend likely to remain in the marketing. For instance, if you have made a long-term investment but your product is likely to be a fad, it might not be profitable for you.
Market size (or demand) – Another crucial factor for marketing analysis is sizing the market against your supplying capacities and other competitors. For example, if your product/service has a huge demand, it is possible that there is also a lot of competition. In such cases, you may or may not be able to gain popularity initially and you would have to be prepared for that.
Distribution channels – To put it simply, if you have a great product but the connectivity between you and your target audience is either complicated, non-existent or too expensive for your budget, it might be a good idea to first work out the logistics.
Success Criteria – Key success factors are the parameters that you define for your business based on which your business will be considered successful. It can be high quality, customer services, resource utilization efficiency or any other defined USP.
Industry’s cost structure – In simple words, this factor allows you to estimate the cost of making a sale. If you know the breakdown of your investment costs for your business, you can work out ways to cut down on them and improve your profits. It also helps you in building better competitor strategies.
What are the benefits of marketing analysis?
Edge over competitors: Predictive marketing analysis not just gives you access to important data but it gives you access to profitable data, like, customer or user behavior on your website, purchase history and trends, sales volume, etc. By comparing this data with your competitors you can determine your USP and why people choose your business over your competitors and refine your future sales ad production.
Risk reduction: The very idea behind analyzing trends to build strategies is minimizing surprises and risks in business. While it is crucial for insurance and finance, it is profitable when applied to marketing strategy and can help you in maximizing your profits.
Improved sales and marketing campaigns: Even when your marketing operations are doing well currently, with predictive analysis, you can find out more opportunities and possible future risks and refine your operations accordingly.
This processes can prove to be highly comprehensive and detailed. They might even require you to have dedicated people working on them, depending upon the size of your business, which can be easy for an enterprise but not so much for SMBs.
However, with many analytics companies, you can still enjoy all the benefits of predictive marketing and take your business to the next level.