Precision Marketing
What if you could better predict which of your customers are most likely to purchase again? Or who will defect to a competitor? And what if you could locate new clients who are similar to your existing best clients? You can do all of these things, and more, with Precision Marketing.
Precision Marketing allows you to 'see the future' using your existing customer and sales data. The process involves creating statistical prediction models using available information about your customers and their past purchase or service histories. The model takes historic data and gives customers (or prospective customers in new markets) a certainty score for future actions. This score is the probability that the person will act in a certain way, and is based on their particular combination of predictor-characteristics.
Every category of customer information—e.g. their age, favorite colour, buying frequency or how many times a customer purchased in the past year—may be a variable in a complex model predicting future behavior.
Precision marketing models can predict, with a high degree of certainty, which customers are most likely to, for example:
- Respond to a product or service offer;
- Defect to a competitor;
- Spend more (and if so, when and on what); and
- Make repeat or additional purchases.
With this knowledge, you can bring about desirable outcomes (e.g. more profitable sales) and prevent undesirable ones (e.g. customer attrition). You can better target communication, design product and service offers, and direct limited resources to customers with the highest potential.
Case Study : Financial Institution
A client, a leading credit union, wanted to sell more personal loans.
Gavin Wills developed a predictive model using their existing personal loan portfolio. He provided a profile of potential loan clients to 95%+ certainty using a combination of six main variables.
This gave the credit union the ability to identify and rank all existing account holders in order of their probability of obtaining a personal loan.
Using Census data, Gavin also provided colour-coded maps showing the detailed areas of Brisbane, the Gold Coast and Sunshine Coast with the highest concentrations of people with the desired profile.
This provided the ability to focus marketing on these areas and avoid expending limited resources on other areas.
View a colour map and correlation graph by clicking this image: 
Case Study : Independent School
A client, a top independent school located in an ageing market, wanted to identify high-potential areas into which they could promote the school.
Gavin Wills conducted Precision Marketing using their existing enrolments, and provided a profile of families with the highest probability of enrolling their children at the school. This analysis went well beyond the obvious factors of age, religion and family income that are normally considered by schools.
The insights obtained led the school to revise its strategy, which previously focussed on more obvious market areas with lower potential. (Another independent school client actually used its own market maps to help determine school bus routes that would allow prospective students to attend the school.)
The school has since successfully maintained enrolments, using Precision Marketing as one of their key strategic tools.
Wills Capabilities
Modelling software varies in ease of use, but every marketer and vendor who uses Precision Marketing or predictive modelling agrees that it requires a specialist. This investment pays off in shorter project times, better analysis and higher returns. A range of knowledge is required including statistical methods, specific business knowledge, skill with the software, and the ability to interperet and communicate results.
Wills Business Improvement has this knowledge and experience. Gavin Wills has undertaken predictive modelling for a range of clients in different industries. SPSS and relevant database systems are generally used. We coordinate the acquisition and use of data from public and private sources as required, and engage specialised mapping services to aid in the communication of results.
When clients wish to proceed with marketing campaigns, Wills assists in the design of campaigns to allow ongoing performance measurement and further feedback and refinement of approaches.
Benefits of Precision Marketing
Using Precision marketing your business can better achieve target outcomes (e.g. more profitable sales) and prevent undesirable outcomes (e.g. customer attrition). You can precisely target communication, design product and service offers, and direct limited resources to customers with the highest potential.
The World Wildlife Fund is one international organisation that uses Precision Marketing (often referred to as predictive analytics or predictive modelling). The Fund reports that by using this process, it achieved the following improvements in donation rates:
- 172% higher ROI
- 25% more donations
- 28% higher average gift size
- 125% lower cost per piece mailed
Your business may also be able to focus its marketing to achieve significantly higher positive response rates or sales in desirable customer segments at much lower cost.
Even if your business also engages in broadcast advertising using mass media, predictive modelling helps you to refine your message and target people and areas with the highest probability of responding.
Note that on predictive modelling maps it is possible to clearly identify groups of households where e.g. a 75%+ positive response rate can be expected, while the neighboring group has less than a 25% probability. Thus predictive modelling enables you to save significant time and money on direct marketing. And if you have a sales or broker network you can direct your people to the highest-potential areas. You can also identify your best sales people and best sales approaches more accurately, and develop a virtuous cycle of continuous improvement.
Predictive modelling is an ideal value-adding service for franchisors and industry associations to provide to members, providing extraordinary benefit and a powerful reason for continued membership.
Getting Started with Precision Marketing
A great way to test Precision Marketling in your organisation is to start with a relatively straighforward model to find a simple answer that can be easily applied and monitored. This approach can demonstrate clear benefits at relatively low cost, and a creates support for the approach at different levels of your organisation.
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