The predictive analytics market is growing at a torrid pace, and there’s no sign of stopping. It’s expected to continue at the rate of about 21% per year for the next five years so that in 2022, it will be an $11 billion industry.
What’s all the fuss about? Simply put, companies that use predictive analytics outperform those that don’t. Marketers who engage predictive analytics are nearly three times more likely to report revenue growth above their industry average. Perhaps even more interesting, they’re 2.1 times more like to be leaders in their markets and 1.8 times more likely to exceed their marketing goals.
See how other companies are making use of predictive analytics and discover how you, too, can make incorporate them into your business strategy today.
First, a Primer on Predictive Analytics
If you’re hearing the term predictive analytics for the first time, or if you’ve only known it as a vague buzzword up until this point, you’re probably surprised so much of businesses’ budgets are being allocated to it. So, let’s quickly go over what predictive analytics entails before we dive in any further.
Predictive analytics is changing the status quo everywhere from government to retail to IT and can be used for risk management, fraud detection, direct marketing and more. In short, it uses large quantities of data combined with past events to identify trends and forecast future events.
How Other Companies Are Using Predictive Analytics
According to several case studies from Harvard, predictive analytics have the greatest impact when used to improve or disrupt existing insufficient processes.
For those with print publications, worried that your print run will be too large? What makes predicting demand even trickier is that what works for one region or demographic of your business won’t necessarily work for everyone. Predictive analytics can combine historical data with localized search data to help you make sure you have the right investment at the right place at the right time.
By tracking customer browsing and purchases (or lack thereof), companies can offer more efficient pricing options to prospective buyers. Promotions, discounts, and segmented pricing offers increase conversions by meeting customers wherever they live on the demand curve.
Downtime decreases productivity and can cost companies major money. Some industries are using predictive analytics to understand better what causes hiccups in their operations so they can save time and money in the future. One example? Airlines are using predictive analytics to diagnose and catch mechanical errors before they happen to reduce their number of delays and cancellations.
How Publishers Can Make the Most of Predictive Analytics, Too
But you don’t run an airline. You’re a publisher. So what does this mean for your business? Specifically in our own industry, here is how The New York Times uses predictive analytics.
At The Times, data rules everything—except editorial. (Could they be missing an opportunity here, i.e., to improve editorial with analytics? That could be a topic for another day.) Most commonly, they use predictive data to analyze their sales funnel. What converts casual readers to subscribers? And how can they encourage others to do so? This research has led them to push subscriptions and articles on social media (not a surprise in this day and age!). Teams are instructed to avoid promotions or processes that offer theoretical value and instead focus on strategies that have a clear ROI.
You, too, can use predictive analytics to watch your customers’ behaviors and pivot accordingly to boost your bottom line. Say you have a segment of customers who consistently turn away time and time again when they hit the paywall. Logic would suggest they don’t like the price they see when they get there. Consider an email promotion for a free first month of gated content, a subscription discount, or something similar.
But that’s just one idea. The numbers prove it: predictive analytics is helping business owners all over work smarter, not harder. For more ideas on how to use predictive analytics to grow your digital revenues, start with our piece “Predictive Analytics for Profit.”
How Sterling Woods Group Can Help
Predictive analytics play a big role in how Sterling Woods helps clients grow their digital revenues. We use predictive analytics to help our clients find new products and services to launch. Applying analysis early in the product development process increases the odds of success, and we continue to apply advanced analytics to maximize profits from these new revenue streams post-launch.
Want to learn more? Email us at firstname.lastname@example.org to set up a free 30-minute consultation.
About the Author, Rob Ristagno
Rob Ristagno is the founder of The Sterling Woods Group and partners with companies to drive rapid digital revenue growth. Prior to creating Sterling Woods, Rob served as a senior executive for several niche media and e-commerce companies. Rob started his career as a consultant at McKinsey and holds degrees from the Harvard Business School and Dartmouth College. He has taught Product Strategy at Boston College.