Many marketers look at predictive analytics, machine learning (ML) and artificial intelligence (AI) like they do the Jetsons: as a future where an AI-based robot Rosie intelligently takes care of tasks while the people worry about working a three-hour week.
The reality, however, is much different. As predictive analytics plays a growing role in the marketing suite, a pragmatic approach informs how marketers can apply predictive analytics to hone their work today.
While ML and AI may, in their final stages, automatically take actions for marketers based on data inputs and predictive algorithms, that is not the case today. Marketers instead have the opportunity to rethink their expectations of these technologies and how they can help make us more effective in lead generation, conversion and building long-term customer value by balancing the smarts of predictive technologies with the best of marketer expertise.
The customer journey is the best place to start resetting expectations around predictive analytics, which I define as an umbrella term for using a bunch of techniques to analyse current data to make future predictions.
From modeling and validating to measuring and optimising, predictive analytics in the customer journey can help make us all more productive marketers.
When Predictive Analytics Meets the Customer Journeys
The customer journey is no longer a linear path. In fact, any one person might take any of a myriad of paths. While these paths may seem random and much like the path of a disc in a plinko game, predictive analytics can help us become smarter marketers by connecting digital breadcrumbs that aren’t readily apparent otherwise.
With individualised modeling powered by data insights, marketers can target both at the segment and individual level. They can optimise campaigns, content and more for prospects as they move along the path to purchase — with technology that allows them to do so at scale.
Validating customer journeys has traditionally been an intensive, manual exercise to understand the key campaign elements, like lead prioritsation, nurturing, content and more, that provide better insights and validate what is the best course of action for a marketer to take at a given point in the customer journey.
Applying predictive analytics allows us to more quickly and efficiently confirm that we are capturing the steps that prospects take, identifying important milestones in the journey that keep them moving forward and flagging previously unknown gaps. Capturing data points in real-time validates what’s the best content, nurturing, or other step to take, and in some cases will make recommendations or potentially automatically take action to deliver the right touchpoint to the right person at just the right time.
Measurement has traditionally offered a lagging view of success. Yet, ML and predictive analytics can give us a more real-time measurement of what’s working and what’s not. As algorithms are able to take a wide variety of data inputs, quickly correlating massive amounts of data, marketers can within moments have insight into metrics like lead velocity that help us not just automate, but optimise our processes.
People prefer to do business with companies who make their experience more relevant at every turn. Predictive analytics can help achieve this by not just personalising but individualising the customer journey. Smart marketers apply predictive analytics insights to go beyond mere automation to create a customer journey optimised for individual prospects and specific business outcomes.
For example, marketers at an electronic component manufacturer took customers’ digital breadcrumbs and combined them with measures of what was working to optimise customer touchpoints. By tailoring content to different prospects at different times in the buying process, the marketers successfully increased its conversion rate by over 1000 percent.
When to Apply Predictive Analytics
When to use — and just as importantly, when not to use — predictive analytics is important when balancing automation and marketing expertise. Let’s quickly assess three areas that play a role in optimising the customer journey.
Content — Predictive analytics can validate what content performs best across measures, such as among certain market segments, and/or at certain stages of the buying journey. More than just measuring content, predictive analytics can auto-recommend content that will best help the prospect move forward in the process, and can even automatically take action to serve content to a specific prospect at the time they will be most receptive to it. These data-driven actions are constantly assessed and updated for constant improvement.
Nurturing — Predictive analytics is helpful to honing marketer effectiveness by illustrating what nurturing activities work best for which market segments. For your defined segments — whether they be people living in a specific geography, or more nuanced — predictive technologies can inform the best way to nurture a given segment. These data-driven systems will update your nurture flows to create a virtuous cycle of nurture paths that drive greater and greater value to your organisation, and to customers.
Leads — Marketers can expect predictive analytics to help float top targets to the top, with the combined use of prospect profiles and behaviours. Predictive analytics shines when it comes to analysing mounds of prospect behaviour, and it can quickly connect the dots between valuable activities and those touchpoints with lower influence, and recommend which activities lead to faster conversions and are therefore of higher value. Predictive analytics is “always-on,” constantly collecting new data points that can help marketers develop a process of continuous updates to lead scoring, getting prospects in front of the sales team at the optimum time.
At the end of the day, customers are interacting with brands in more ways, through more channels, than ever before. As the customer journey becomes less linear and more individualised, there is a clear opportunity to pragmatically apply predictive analytics, ML and AI to make sense from the noise. Marrying the smarts of predictive technologies with the best of marketer expertise, smart marketers can create competitive advantage through modeling and validating, measuring and optimising the customer journey.
About the Author
Adam Mertz is the vice president, Marketing & Strategy at Act-On. Adam has more than 20 years marketing experience including leading Customer Marketing, Field Marketing and Product Marketing teams.
Economic recovery likely to prove a ‘stuttering’ affair
By Rupert Thompson, Chief Investment Officer at Kingswood
Equity markets continued their upward trend last week, with global equities gaining 1.2% in local currency terms. Beneath the surface, however, the recovery has been a choppy affair of late. China and the technology sector, the big outperformers year-to-date, retreated last week whereas the UK and Europe, the laggards so far this year, led the gains.
As for US equities, they have re-tested, but so far failed to break above, their post-Covid high in early June and their end-2019 level. The recent choppiness of markets is not that surprising given they are being buffeted by a whole series of conflicting forces.
Developments regarding Covid-19 as ever remain absolutely critical and it is a mixture of bad and good news at the moment. There have been reports of encouraging early trial results for a new treatment and potential vaccine but infection rates continue to climb in the US. Reopening has now been halted or reversed in states accounting for 80% of the population.
We are a long way away from a complete lockdown being re-imposed and these moves are not expected to throw the economy back into reverse. But they do emphasise that the economic recovery, not only in the US but also elsewhere, is likely to prove a ‘stuttering’ affair.
Indeed, the May GDP numbers in the UK undid some of the optimism which had been building recently. Rather than bouncing 5% m/m in May as had been expected, GDP rose a more meagre 1.8% and remains a massive 24.5% below its pre-Covid level in February.
Even in China, where the recovery is now well underway, there is room for some caution. GDP rose a larger than expected 11.5% q/q in the second quarter and regained all of its decline the previous quarter. However, the bounce back is being led by manufacturing and public sector investment, and the recovery in retail sales is proving much more hesitant.
China is not just a focus of attention at the moment because its economy is leading the global upturn but because of the increasing tensions with Hong Kong, the US and UK. UK telecoms companies have now been banned from using Huawei’s 5G equipment in the future and the US is talking of imposing restrictions on Tik Tok, the Chinese social media platform. While this escalation is not as yet a major problem, it is a potential source of market volatility and another, albeit as yet relatively small, unwelcome drag on the global economy.
Government support will be critical over coming months and longer if the global recovery is to be sustained. This week will be crucial in this respect for Europe and the US. The EU, at the time of writing, is still engaged in a marathon four-day summit, trying to reach an agreement on an economic recovery fund. As is almost always the case, a messy compromise will probably end up being hammered out.
An agreement will be positive but the difficulty in reaching it does highlight the underlying tensions in the EU which have far from gone away with the departure of the UK. Meanwhile in the US, the Democrats and Republicans will this week be engaged in their own battle over extending the government support schemes which would otherwise come to an end this month.
Most of these tensions and uncertainties are not going away any time soon. Markets face a choppy period over the summer and autumn with equities remaining at risk of a correction.
European trading firms begin coming to terms with the new normal
By Terry Ewin, Vice President EMEA, IPC
In recent weeks, the phrase ‘never let a good crisis go to waste’ has received a large amount of usage. Management consultancies, industry associations and organisations, including the Organisation for Economic Co-operation and Development (OECD) have all used it in order to discuss how the current crisis, caused by the Coronavirus pandemic, presents an opportunity for new and worthwhile change.
The saying is also commonly used to indicate that the destruction and damage that is caused by a crisis gives organisations the chance to rebuild, and to do things that would not have previously been possible. This has the potential to impact financial trading firms, where projects that this time last year would not have made much sense now appearing to be as clear as day. In Europe, banks and brokers alike are beginning to think about what life will look like post-pandemic, and how their technology strategies may need changing.
We can think of three distinct phases when it comes to a crisis. Firstly, there is the emergency phase. This is followed by the transition period before we come to the post-crisis period.
Starting with the emergency phases, this is when firms are in critical crisis management mode. Plans are activated to ensure business continuity, and banks and brokers work to ensure critical functions can still take place so as to continue servicing their clients. With regards to the current crisis period, both large and small European banks and brokers were able to handle this phase relatively well, partly due to the fact that communications technology has reached the point where productive Work From Home (WFH) strategies are in place. For example, cloud-connectivity, in addition to the use of soft turrets for trading, has enabled traders from across the continent to keep working throughout lockdown. From our work with clients, we know that they were able to make a relatively smooth transition to WFH operations.
In relation to the current coronavirus crisis, we are in the second phase – the transition period. This is the stage when financial companies begin figuring out how best to manage the worst effects of the ongoing crisis, whilst planning longer-term changes for a post-crisis world. One thing to note with this phase, is that no one knows how long it will last. There is still so much we don’t know about this virus. As such, this has an impact on when it will be safe for businesses to operate in a similar way to how they were run in a pre-pandemic world. But with restrictions across Europe starting to be eased, there is an expectation that companies will start to slowly work their way towards more on-site trading. For example, banks are starting to look at hybrid operations, whereby traders come in a couple of times a week, and WFH for the rest of the week. This will result in fewer people in the office building, which makes it easier to practise social distancing. It also means that there is a continued reliance on the technology that enables people to WFH effectively.
Finally, we have the post-crisis period. In terms of the current crisis, this stage is very unlikely to occur until a vaccine has been developed and distributed to the masses. Although COVID-19 has caused mass economic disruption, many analysts are predicting a strong rebound once the medical pieces of the puzzles are put into place. It may not be entirely V-shaped, but the resiliency displayed by the financial markets thus far suggests that it will be healthy.
Currently, many European trading firms are taking what could be described as a two-pronged approach.
The first part of this consists of planning for the possibility of an extension to phase two. Medical experts have suggested that there could be some seasonality to the virus, with the threat of a second wave of COVID-19 cases in the Autumn meaning that the risk of new restrictions remains. If this comes to fruition, there would be a need for organisations to fine-tune their current WFH strategies and measures, and for them to take greater advantage of the cloud so as to power communications apps.
The second component consists of firms starting to think about the long-term needs of their trading systems. Simply put, they are preparing themselves for the third phase.
It is in this last sense, that the idea of never letting ‘a good crisis go to waste’ resonates most clearly.
Currency movements and more: How Covid-19 has affected the financial markets
The COVID-19 pandemic has been more than a health crisis. With people forced to stay indoors and all but the most essential services stopped for multiple weeks, economies have suffered and financial markets have crashed. Perhaps the most public and spectacular fall from grace during the early stages of the pandemic was oil. With travel bans in place around the world and no one filling up at the pumps, the price of oil plummeted.
Prior to global lockdowns, US oil prices were trading at $18 per barrel. By mid-April, the value had dropped to -$38. The crash was not only a shocking demonstrating of COVID-19’s impact but the first time crude oil’s price had fallen below zero. A rebound was inevitable, and many traders were quick to take long positions, which meant futures prices remained high. However, with stocks piling up and demand sinking, trading prices suffered. Unsurprisingly, it’s not the only market that’s taken a knock since COVID-19 struck.
Financial Markets Fluctuate During Pandemic
Shares in major companies have dipped. The Institute for Fiscal Studies compiled a round-up of price movements for industries listed by the London Stock Exchange. Tourism and Leisure have seen share prices drop by more than 20%. Major airlines, including BA, EasyJet and Ryanair have all been forced to make redundancies in the wake of falling share prices. The automotive industry has also taken a knock, as have retailers, mining and the media. However, in among the dark, there have been some patches of light.
The forex market has been a mixed bag. As it always is, the US dollar has remained a strong investment option. With emerging markets feeling the strain, traders have poured their money into traditionally strong currency pairs like EUR/USD. Looking at the data, IG’s EUR/USD price charts show a sharp drop in mid-March from 1.14 to 1.07. However, after the initial shock of COVID-19 lockdowns, the currency pair has steadily increased in value back up to 1.12 (June 25, 2020). The dominance of the dollar has been seen as a cause for concern among some financial experts. In essence, the crisis has highlighted the world’s reliance on it.
Currency Movements Divide Economies
In any walk of life, a single point of authority is dangerous. Indeed, if reliance turns into overreliance, it can cause a supply issue (not enough dollars to go around. More significantly, it could cause a power shift that gives the US too much control over economic policies in other countries. Fortunately, other currencies have performed well during the pandemic. Alongside USD and EUR, the GBP has also shown a degree of strength throughout the crisis. However, these positive movements haven’t been shared by all currencies.
The South African rand took a 32% hit during the early stages of the pandemic, while the Mexican peso and Brazilian real dropped 24% and 23%, respectively. Like the forex market, other sectors have experienced contrasting fortunes. Yes, shares in airlines and automotive manufacturers have fallen, but food and drug retailers have seen stocks rise. In fact, at one point, orange juice was the top performer across multiple indices. With the health benefits of vitamin C a hot topic, futures prices for orange juice jump up by 30%. The sudden surge had analysts predicting 60% gains as we move into a post-COVID-19 world.
Looking Towards the Future through Financial Markets
The future is always unknown and, due to COVID-19, it’s more uncertain than ever. However, the financial markets do provide an indication of how things may change. The performance of USD and EUR in the forex markets suggest there could be a lot more trade deals negotiated between the US and Europe. The surge in orange juice futures suggest that health and wellness will become a much more important part of our lives. Even though it was already a multi-billion-dollar industry, the realisation that a virus can alter the face of humanity has given more people pause for thought.
Then, of course, there’s the move towards remote working and socially distance entertainment. From Zoom to Slack, more people will be working and playing from home in the coming years. The world is always changing, but recent have events have made us appreciate this fact more than ever. The financial markets aren’t a crystal ball, but they can offer a glimpse into what we can expect in a post-COVID-19 world.
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