IBM - Using Predictive Analytics to Segment, Target and Optimize Marketing
Divide & ConquerUsing Predictive Analytics to Segment, Target and Optimize Marketing February 2012 Trip Kucera, David White ~ Underwritten, in Part, by ~
February 2012Divide & Conquer: Using Predictive Analytics to Segment, Target & Optimize Marketing Analyst InsightData collected by the Aberdeen group in August 2011 (Predictive Analytics for Aberdeen’s Insights provide theSales and Marketing: Seeing Around Corners) found that companies using analysts perspective on thepredictive analytics enjoyed a 75% higher click through rate and a 73% research as drawn from anhigher sales lift than companies that did not use this technology. However, aggregated view of researchnew research published here (based on data collected in December 2011) surveys, interviews, andshows that even among users of predictive analytics there are significant data analysisdifferences in the level of business performance achieved. Theseperformance differences accrue from subtly different applications oftechnology, as well as different capabilities within the organization. This newresearch reveals the best practices sales and marketing organizations can Defining Leaders & Followersadopt to maximize their return on investment (ROI) in predictive analytics. Aberdeen measured the overall performance and effectiveness ofLeaders Deliver Significantly Higher ROI marketing organizations thatLeaders (the top-performing 35% of companies) outperform Followers (the participated in our survey, basedremaining 65% of companies) in several aspects of marketing performance. on their aggregate performanceFigure 1 illustrates three of these metrics. on 4 criteria. The top performing 35% of companies (Leaders) were segmented from the remainingFigure 1: Marketing Leaders Outperform Followers 65% (Followers) using the 4 criteria below. The relative performance of Leaders and 13.0% Followers is also shown: Y-Y change in lifetime customer value 2.3% √ Average uplift from a marketing campaign - Leaders 6.7%, Followers 3.3% Average response 7.1% √ Year-year change in the rate average value of a sales 4.8% transaction - Leaders 13% Leaders increase, Followers 2% decline Followers √ Year-year change in customer 2.6% retention rate - Leaders 4% Average opt-out rate 3.9% increase, Followers 1% increase √ Year-year change in operating 0% 2% 4% 6% 8% 10% 12% 14% profit margin - Leaders 3% Percentage, n=112 increase, Followers 0% change Source: Aberdeen Group, December 2011Although both Leaders and Followers use predictive analytics, leaders usethis technology to drive much greater business impact on sales andThis document is the result of primary research performed by Aberdeen Group. Aberdeen Groups methodologies provide for objective fact-based research andrepresent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.