Go Big With Big Data Marketing Or Go Home: 10 Predictions For Retailers In 2014
By Dominique Levin, AgilOne
Big data isn’t going anywhere in 2014. And if you’re a mid-market retailer, this is certainly going to be a revolutionary year in the industry.
Predictive marketing analytics company, AgilOne, did a survey of 70 mid-market retail executives about their use of big data and predictive marketing analytics in day-to-day marketing. The findings show that adoption of this technology was strong in 2013, and the trend will continue even further in 2014.
Based on the survey results, AgilOne came up with 10 big data marketing predictions for mid-market retailers in 2014:
1) 80% of retailers will have a central customer data warehouse with the ability to link all data points to unique customer channels. 51% of retailers already have a central customer data warehouse, where they associate all customer actions with a single customer record. By the end of 2014, another 29% will have deployed this technology, bringing the total penetration to 80%.
2) More companies will integrate offline, call center and loyalty transactions with their online customer data. Today, most retailers start by analyzing online transactions (76%) and email engagement (69%), but in 2014 more and more retailers will add information from other channels – especially offline channels – to their central customer data warehouse.
3) Nearly 70% of retailers will be using predictive analytics for at least one of their sales channels. Predictive marketing analytics is rapidly becoming mainstream. 44% of marketers are already using predictive analytics in at least one of their channels – most often email – whereas another 25% are planning to use predictive analytics in the next 12 months.
4) Marketers will move beyond using only likelihood to buy predictions and will begin to utilize recommendations, customer clusters and likelihood to churn predictions. Marketers are moving from focusing exclusively on customer acquisition, and thus, likelihood to buy algorithms, to really hone in on growing the customer relationship over time. Therefore, algorithms that predict retention and can grow customer lifetime value – like cross-sell or upsell recommendations – are growing in importance.
5) Predictive modeling will move beyond email and direct mail to include social media and offline transactions. While email will remain the most popular channel to enhance through predictive analytics, retailers will also experiment with one-on-one predictions and actions in other channels such as their brick-and-mortar stores and call centers.
6) Nearly 70% of retailers will be doing customer segmentation. More marketers are replacing rule-based segmentation with clustering based on customer attributes like demographics. Clustering is basically segmentation that’s done using predictive algorithms. It’s an advantage to leverage clustering because it can take 50 or more attributes into account when grouping customers into actionable personas.
7) Marketers will move beyond new customer welcome campaigns (and finally) launch abandoned cart campaigns, customer win-back campaigns and VIP customer appreciation programs. Did you know that 61% of marketers still don’t have an abandoned cart campaign deployed? It’s hard to believe as it’s consistently getting easier for marketers to get these basic campaigns right. Retailers are moving toward more sophisticated retention marketing strategies like VIP programs and proactive outreach to at-risk customers.
8) Over two-thirds of retail marketers will decide how to invest their marketing dollars based on which channels attract the highest customers with the highest lifetime value. With analytics, retail marketers are able to predict who their high-value customers are as early as the shopper’s first purchase. 43% of marketers already take customer value into account when allocating marketing dollars to specific acquisition channels, but by the end of 2014, over two-thirds of marketers will be optimizing marketing spend based on customer lifetime value.
9) Almost half of marketers will have tried Facebook lookalike campaigns to acquire more valuable customers. Only 36% of retailers have experimented with Facebook lookalike campaigns. We predict that by the end of 2014 half of retailers will have experimented with these campaigns. The power of lookalike campaigns is that you can use Facebook to find more customers that resemble your most valuable customers.
10) Half of retailers will outsource the creation of analytics models, but most will have marketers on staff that know how to use the outcome of analytics models. By the end of 2014, half of mid-market retailers plan to outsource model creation. On the flip side, 63% of retailers currently have people on staff that can interpret and operationalize predictions, and by the end of the year, 74% of retailers will have data-driven marketers on staff.
Big data marketing and predictive marketing analytics can help retailers understand customers better, deliver one-on-one experiences across channels and reduce marketing campaign costs. It is no wonder that predictive analytics is becoming so popular among retailers: it can be game-changing and literally triple your margins. To learn more about AgilOne’s survey findings, download the predictive marketing analytics report.
Dominique Levin runs marketing at predictive marketing analytics company, AgilOne. She can be reached at dominique.levin@agilone.com
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