Predictive Marketing
Predictive marketing is the practice of extracting information from existing customer datasets to determine a pattern and predict future outcomes and trends. This premise has been around for decades, however in the past, pulling useful data from the vast pool information available on the web was grueling. Today, with the dawn of big data, tools for data mining are becoming more accurate, algorithms more complex.
AgilOne, a company based in Sunnyvale California is “beefing up its predictive powers even more” with its Predicted Lifetime Value tool. This tool has potential to be incredibly useful to many retail companies. For example, at a clothing company AgilOne’s software might find customer information such as where they have shopped in the past, what products they purchased, and the items that may have been abandoned in their shopping cart. Doing this for any given customer and comparing the data to the top 20% of buyers (the ones who have historically spent the most at the company), a company can predict if the customer could become a big spender, how much they will spend and how likely the customer is to buy a product if they haven’t already.
In particular, the program targets someone who has a high Predicted Lifetime Value but a low likelihood to buy. This might be someone who visits the a website often, has registered on the site, and signed up for more info, even placed items in their shopping cart, but hasn’t actually purchased anything yet. Pinpointing customers like this, the company could do things like strategically send coupons to lure in a purchase. If a large enough population of customers wants a particular type of product or a particular article of clothing, the company can call for a sale on that item.
This program reflects the concepts of price setting in markets as well as the strength of nodes in a web of nodes. When the clothing company implements a sale on different items in the store (at a price where they would still profit, obviously) to reel in customers, the prices could be market clearing is they are decided based on the info from AgilOne’s platform. If a customer has a high Predicted Lifetime Value at multiple companies then he/she becomes a node in the network that has high bargaining power, as all the companies will want to entice him with their special wares.
“It’s not a perfect science, but it has the ability to dramatically increase trust, engagement, and conversion between buyers and sellers in the immediate future. And that goes for both marketing campaign results as well as the engagement with your sales team. Exciting stuff.” – Matt Heinz, President, Heinz Marketing
An AgilOne screen, showing the new Predicted Lifetime Value
Citations:
http://marketingland.com/predictive-marketing-platform-agilone-tunes-up-its-predictions-of-customer-lifetime-value-148738
http://marketingland.com/another-prediction-this-one-is-85-accurate-114919
https://www.marketingtechblog.com/what-is-predictive-marketing/