With the increasing abundance of sophisticated technologies and applications available, understanding your company’s historical data is a powerful tool to improve decision making and more precisely forecast revenue ahead of time.
What I am talking about is the concept of Database Marketing. Wikipedia defines it as “a form of direct marketing using databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes.”
This “big data” found in databases is insignificant until it is interpreted through analytics. Data analytics is helping businesses become smarter, improve decision making and productivity and even predict incremental results made from marketing dollars. Watch this video from McKinsey & Company on how to make data analytics work to create value for your company.
Here is some proof to how to make your analytics work for you:
In the Hollywood Movie Industry:
According to this blog from the Harvard Business Review, analytics can be used to predict the next Hollywood Blockbusters based on a predictive response an audience may have to a given film. It can even “help determine precisely how best to remake a film and what return you could expect to gain.” In order to understand what your target audience’s given responses may be, you must understand the implications from historical data.
In the Presidential Elections:
In order to effectively predictive business performance, it is important to leverage historical data from past performance as a basis for revenue forecasts of future developments. For example, this article from TIME Magazine explains how Obama’s analytics department effectively crunched huge data sets to maximize efficiency from the election campaign’s sales promotions. This effort helped Obama raise $1 billion in the 2012 election campaign by indicating how to find voters and get their attention and even predicting which types of people will be persuaded by certain kinds of appeals.
The New York Times posted an article on how companies can learn your secrets through predictive analytics. Target in particular is good at this. Their “predictive analytics department is devoted to understanding not just consumers’ shopping habits but also their personal habits, so as to more efficiently market to them.” They were even able to predict the pregnancy of one of their teenage online shoppers. Don’t just take my word, read it here.
Studies have found that during unique life events, like when someone marries, they become “vulnerable to intervention by marketers.” This is why leveraging your predictive analytics is so important. “The study found that when someone marries, he or she is more likely to start buying a new type of coffee. When a couple move into a new house, they’re more apt to purchase a different kind of cereal. When they divorce, there’s an increased chance they’ll start buying different brands of beer.” As companies can learn your secrets, even before customers’ consumer buying habits change (like in the Target Pregnancy Case above), they are able to beat out their competitors by reaching them first. One target execute quotes, “As soon as we get them buying diapers from us, they’re going to start buying everything else too.”
Believe me now? Try it for yourself and see what you can predict.
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