One of the most popular application of predictive analytics is optimization of marketing campaign management. I've implemented it several times for clients in four different industries and here is my solution.

Introduction to campaign management

Marketing departments are usually responsible for management the marketing campaigns. Campaigns always have some triggers - may be planned, triggered by customer events and various alerts. Campaigns are run for a purpose and usually carry strong call-to-action message. Most common call-to-actions are acquisition, x-sell, retention or win-back.  Campaigns are delivered through various channels. There are channels for Above The Line (ATL) and Bellow The Line (BTL) communication.

Feedback loop is very important. In my solution consists of four components: responses collection & reporting, evaluation across customer segments, predictions what happens next and ROI analysis / projection.

Role of predictive analytics

Predictive analytics is used for campaign optimization. Can identify the best customers for campaign with specific goal. This approach saves the most of budget or lead to better results with the same budget. For example with 20% of budget you achieve 80% of all possible sales in a campaign. Or you can identify customers at risk of churn and run very precise campaigns with "stay with us" call-to-action.

Customer segmentation provides better insight. One campaign can work well in one segment and fail completely in another. The segmentation unveils such fails and you never repeat the same failure twice in given segment. And finally we got to the profitability. It's always great to measure it backwards and see what happend. And it's even better to simulate what will happen next! In this circle you have all required data for projections.  To certain point the customer behavior is well predictable. So you can make your go / no go decision well informed.

Conclusion

Predictive analytics is optional and for companies whose mastered it delivers great value. The majority of companies is not using it at all. Some companies use predictive analytics and don't run any campaigns. They let results in the drawer. For various reasons. The most common reason is lack of good infrastructure what makes the process manageable for business people without hard skills. That is the topic for my next post. Stay tuned.

Joseph Kovac

CEO of 7SEGMENTS

http://www.7segments.com