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Predictive Marketing Predictive Marketing Predictive Marketing Easy Ways Every Marketer Can Use Customer Analytics and Big Data Ömer Artun, PhD Dominique Levin This book is printed on acid-free paper. ♾ Copyright © 2015 by AgilOne. All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom. For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Library of Congress Cataloging-in-Publication Data: Artun, Omer, 1969– Predictive marketing : easy ways every marketer can use customer analytics and big data / Omer Artun, Dominique Levin. pages cm Includes index. ISBN 978-1-119-03736-1 (hardback) ISBN 978-1-119-03732-3 (ePDF) ISBN 978-1-119-03733-0 (ePub) 1. Marketing. I. Levin, Dominique, 1971– II. Title. HF5415.A7458 2015 658.8—dc23 2015013473 Cover image: Wiley Cover design: Abstract Shoppers © Maciej Noskwoski/GettyImages Printed in the United States of America 10987654321 Dedicated to My darling wife Dr. Burcak Artun for always believing in me Ömer Artun My husband Eilam Levin without whom it would not be worthwhile Dominique Levin CONTENTS Introduction: Who Should Read This Book ix PART 1 A Complete Predictive Marketing Primer 1 Chapter 1 Big Data and Predictive Analytics Are Now Easily Accessible to All Marketers 3 Chapter 2 An Easy Primer to Predictive Analytics for Marketers 23 Chapter 3 Get to Know Your Customers First: Build Complete Customer Profiles 43 Chapter 4 Managing Your Customers as a Portfolio to Improve Your Valuation 63 PART 2 Nine Easy Plays to Get Started with Predictive Marketing 75 Chapter 5 Play One: Optimize Your Marketing Spending Using Customer Data 77 Chapter 6 Play Two: Predict Customer Personas and Make Marketing Relevant Again 93 Chapter 7 Play Three: Predict the Customer Journey for Life Cycle Marketing 103 Chapter 8 Play Four: Predict Customer Value and Value-Based Marketing 115 Chapter 9 Play Five: Predict Likelihood to Buy or Engage to Rank Customers 123 vii viii Contents Chapter 10 Play Six: Predict Individual Recommendations for Each Customer 137 Chapter 11 Play Seven: Launch Predictive Programs to Convert More Customers 145 Chapter 12 Play Eight: Launch Predictive Programs to Grow Customer Value 155 Chapter 13 Play Nine: Launch Predictive Programs to Retain More Customers 169 PART 3 How to Become a True Predictive Marketing Ninja 183 Chapter 14 An Easy-to-Use Checklist of Predictive Marketing Capabilities 185 Chapter 15 An Overview of Predictive (and Related) Marketing Technology 197 Chapter 16 Career Advice for Aspiring Predictive Marketers 209 Chapter 17 Privacy and the Difference Between Delightful and Invasive 215 Chapter 18 The Future of Predictive Marketing 221 Appendix: Overview of Customer Data Types 229 Index 237 INTRODUCTION: WHO SHOULD READ THIS BOOK his book is for everyday marketers who want to learn what predictive Tmarketing is all about, as well as for those marketers who are ready to use predictive marketing in their organizations. Whether you are just getting started with your research, or have already begun to implement predictive marketing, you will find many practical tips in this book. We share what marketers at companies large and small should know about predictive marketing. We show you how to achieve the same large returns as early adopters such as Harrah’s Entertainment, Amazon, and Netflix. We also give you a practical guidebook to help you get started with this new way of marketing. And above all, we share stories from companies small and large, from retail to publishing, to software to man- ufacturing. All of these marketers have achieved revolutionary returns, and so can you. About This Book We are passionate about improving the quality of marketing and about arming marketers with the knowledge and tools they need to make mar- keting relevant again. We hope that the chapters that follow give mar- keters the vocabulary and the inspiration to start to understand and use big data and machine learning–powered marketing. We believe this will lead to a win-win for customers, businesses, and marketers. Customers will have more relevant and meaningful experiences, businesses will be able to build more profitable customer relationships, and marketers will gain visibility and respect within their organizations. We look forward to continuing the dialogue on our website www.predictivemarketingbook .com, the “Predictive Marketing Book” LinkedIn group (https://www .linkedin.com/groups?gid=8292127), or via twitter.com/agilone. ix x Introduction: Who Should Read This Book This book is divided in three main parts. The first part, “A Complete Predictive Marketing Primer,” introduces many of the foundational ele- ments in predictive marketing, including what is happening under the hood of predictive marketing software, how data science and predictive analytics work, and what are fundamentals behind the customer life- time value concept. The second part of the book, “Nine Easy Plays to Get Started with Predictive Marketing,” is a playbook with concrete strategies to get you started with predictive marketing. The last part of the book, “How to Become a True Predictive Marketing Ninja,” gives an overview of predictive marketing technologies, some career advice for marketers, and looks at privacy and the future of predictive mar- keting. Many of the chapters can be read as stand-alone essays, so use the executive summary below to jump to the chapters that are most relevant to you. What Is in This Book Chapter 1: Big Data and Predictive Analytics Are Now Easily Accessible to All Marketers Predictive marketing is a new way of thinking about customer relation- ships, powered by new technologies in big data and machine learning, which we collectively call predictive analytics. Marketers better pay atten- tion to predictive analytics. Applying predictive analytics is the biggest game-changing opportunity since the Internet went mainstream almost 20 years ago. Although some large brands have been using pieces of pre- dictive marketing for many years now, we are still in the early stages of adoption, and this is the right time to get started. The adoption of predictive marketing is accelerating among companies large and small because: (a) customers are demanding more meaningful relationships with brands, (b) early adopters show that predictive marketing delivers enormous value, and (c) new technologies are available to make predictive marketing easy. Chapter 2: An Easy Primer to Predictive Analytics for Marketers Many marketers want to at least understand what is happening in the pre- dictive analytics black box, to more confidently apply these models orto Introduction: Who Should Read This Book xi be able to communicate with data scientists. After reading this chapter marketers will have a good understanding of the entire predictive analyt- ics process. There are three types of predictive analytics models that mar- keters should know about: unsupervised learning, supervised learning, and reinforcement learning. Many marketers don’t realize that 80 percent of the work associated with predicting future customer behavior is going towards collecting and cleaning customer data. This data janitor work is not glamorous but essential: without accurate and complete customer data, there can be no meaningful customer analytics. Chapter 3: Get to Know Your Customers First: Build Complete Customer Profiles Building complete and accurate customer profiles is no easy task, but it has a lot of value. If yours is like most companies, customer data is all over the place, full of errors and duplicates and not accessible to everyday mar- keters. Fortunately, predictive technology, including fuzzy matching, can help—at least some—to clean up your data mess and to connect online and offline data to resolve customer identities across the digital and physi- cal divide. Just getting all customer data in one place has enormous value, and making customer profiles accessible to customer-facing personnel throughout the organization is a great first step to start to deliver better experiences to each and every customer.
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