Sunday, September 18, 2016
A Much-Needed Reality Check on Predictive Analytics
Predictive analytics has become one of the hottest topics in B2B marketing over the past several months. In a survey last fall by Everstring, 25% of respondents said they were currently using some predictive tools, and another 47% said they were aware of predictive marketing and were investigating how to use it.
Two recent studies by Forrester Consulting reported even higher usage rates of predictive analytics among B2B companies. In one of these studies, 49% of survey respondents said they were currently using predictive analytics, and another 40% said they were planning to implement predictive analytics in the next 12 months. In the second study, 61% of survey respondents said they were currently using predictive analytics, and another 26% said they were planning an implementation within 12 months.
A new study by Econsultancy (in association with RedEye) provides a much-needed dose of reality regarding the adoption of predictive analytics and the challenges of using it effectively. The Econsultancy study was based on an online survey of nearly 400 digital marketers and e-commerce professionals that was fielded in April and May 2016. About half (51%) of the survey respondents were based in the United Kingdom, 23% were based in North America, and 22% were based in Europe. Respondents represented a wide range of industries.
Fifty-nine percent of the respondents to the Econsultancy survey work for client-side enterprises ("companies"), while 41% work for agencies, vendors, or consultancies. The survey results described in this post are based on the answers given by company respondents only.
The Econsultancy study confirms the strong level of predictive analytics usage. Forty percent of respondents reported that their companies are either currently using, implementing, or have budgeted for predictive analytics over the next 12 months. In addition, 80% of respondents said that the use of predictive analytics is "critical" or "very important" to the future of their organizations. Given this view, it shouldn't be surprising that 65% of the respondents said their company's budget for predictive analytics will increase in the coming year.
The Econsultancy research also revealed that predictive analytics is not a "magic wand that automatically guarantees sales." For example, 53% of the survey respondents from companies currently using predictive analytics said that their sales had significantly increased over the past year. However, 50% of respondents with companies that had "evaluated implementing predictive analytics and decided it's impractical" also reported a significant increase in sales over the past year. So, it's questionable whether the use of predictive analytics was the primary cause of the increased sales in those companies that are using predictive tools.
It's also clear from the Econsultancy study that you can't expect predictive analytics to be an overnight success. Only 23% of survey respondents rated their company as "competent" or "highly competent" at the use of predictive analytics, and 35% of the respondents strongly agreed that they "are yet to realize the benefits of predictive analytics."
Predictive analytics is becoming an important marketing tool for many large and mid-size B2B companies. But like most tools, it will take work and practice to maximize the value of predictive analytics in marketing.
Illustration courtesy of Skye D. via Flickr CC.