Why? What organization couldn’t benefit from making better decisions? Just ask the Obama campaign, which used sophisticated uplift modeling to target and influence swing voters. Or telecom firms that use predictive analytics to help prevent customer churn. Or police departments that use it to reduce crime. The list goes on and on and on. Virtually every organization could benefit from predictive analytics. Don’t confuse traditional business intelligence (BI) with predictive analytics. BI is about reports, dashboards, and advanced visualizations (which are still essential to every organization). Predictive is different. Predictive analytics uses machine learning algorithms on large and small data sets alike to predict outcomes. But predictive is not about absolutes; it doesn’t gaurentee an outcome. Rather, it’s about probabilities. For example, there is a 76% chance that this person will click on this display ad. Or there is a 63% chance that this customer will buy at a certain price. Or there is an 89% chance that this part will fail. Good stuff, but it’s hard to understand and harder to do. It’s worth it, though: Organizations that employ predictive analytics can dramatically reduce risk, disrupt competitors, and save tons of dough. Many are doing it now. More want to.
Few understand the what, why, and how of predictive analytics. Here’s a short, ordered reading list designed to get you up to speed super fast:
William Shakespeare wrote that “What’s past is prologue.” Big data surely builds on our rich past of using data to understand our world, our customers, and ourselves. Now the world is flush and getting flusher in big data from cloud, mobile, and the Internet of things. What does it mean for enterprises? In a word: opportunity. Firms have taken to big data. Here are my four predictions for key enterprise big data themes in 2013:
Firms will realize that “big data” means all of their data. Big data is the frontier of a firm’s ability to store, process, and access (SPA) all of the data it needs to operate effectively, make decisions, reduce risks, and create better customer experiences. The key word in the definition of big data is frontier. Many think that big data is only about data stored in Hadoop. Not true. Big data is not defined by how it is stored. It can and will continue to reside in all kinds of data architectures, including enterprise data warehouses, application databases, file systems, cloud storage, Hadoop, and others. By the way, some predict the end of the data warehouse — but that’s nonsense. If anything, all forms of data technology will evolve and be necessary to handle the frontier of big data. In 2013, all data is big data.
Rowan Curran, Research Associate and TechnoPolitics producer, hosts this episode to ask me (your regular host) about The Pragmatic Definition Of Big Data. Listen (5 mins) to hear the genesis of this new definition of big data and why it is pragmatic and actionable for both business and IT professionals.
Podcast: The Pragmatic Definition Of Big Data Explained (5 mins)
Big data is driving disruptive change across the economy in business such as healthcare, retail, communications, and entertainment. The potential for firms to use big data to create permanent relationships with customers is huge, and the time to get onboard is now. Big data is driving disruptive change across the economy in business such as healthcare, retail, communications, and entertainment. The potential for firms to use big data to create permanent relationships with customers is huge, and the time to get onboard is now. I was thrilled to be featured in the first episode on a new series, Big Thinkers In Big Data, hosted by TWit network's Sarah
Customer Intelligence (CI) professionals invest in data-mining, predictive analytics and modeling tools and technologies to make sense of the deluge of data. In the past, they've had to adapt horizontally-focused analytics and modeling solutions to a customer intelligence and marketing context. Today, however, they can consider a gamut of customer analytics and marketing-focused analytics providers that have not only analytics production expertise but also domain and role-focused expertise.
We just published our first evaluation focusing on the customer analytics category here: The Forrester Wave™: Customer Analytics Solutions Q4 2012 . After screening more than 20 providers for analytics products specifically catering to customer analytics applications, we identified and scored products from six of the most significant providers: Angoss Software, FICO, IBM, KXEN, Pitney Bowes, and SAS. Our evaluation approach consisted of a 70-criteria evaluation; reference calls and online surveys of 60 companies; executive briefings; and product demonstrations. The core criteria included key dimensions such as core functionality (data management, modeling, usability); analytics production; analytics consumption; analytics activation and customer analytics applications. The evaluation also included the strength of the current product and corporate strategies in the customer analytics market as well as the future vision for this category.
We found that four competencies define the current customer analytics market:
Every year the Center For Digital Strategies at Tuck chooses a technology topic to "provide MBA candidates and the Tuck and Darthmouth communities with insights into how changes in technology affect individuals, impact enterprises and reshape industries." This academic year the topic is "Big Data: The Information Explosion That Will Reshape Our World". I had the honor and privilege to kick off the series about big data at the Tuck School of Business at Dartmouth. I am thrilled that our future business leaders are considering how big data can help companies, communities, and government make smarter decisions and provide better customer experiences. The combination of big data and predictive analytics is already changing the world. Below is the edited video of my talk on big data predictive analytics at Tuck in Hanover, NH.
I’m excited to announce that our new research on how firms use customer analytics was just published today. The new research reveals some interesting findings:
Customer analytics serves the customer lifecycle , but measurement is restricted to marketing activities. While customer analytics continues to drive acquisition and retention goals, firms continue to measure success of customer analytics using easy-to-track marketing metrics as opposed to deeper profitability or engagement measures.
Finding the right analytics talent remains challenging . It’s not the just the data. It’s not the just technology that hinders analytics success. It’s the analytical skills required to use the data in creative ways, ask the right questions of the data, and use technology as a key enabler to advance sophistication in analytics. We’ve talked about how customer intelligence (CI) professionals need a new breed of marketing scientist to elevate the consumption of customer analytics.
CI professionals are keen to use predictive analytics in customer-focused applications, Forty percent of respondents to our Global Customer Analytics Adoption Survey tell us that they have been using predictive analytics for less than three years, while more than 70% of respondents have been using descriptive analytics and BI-type reporting for more than 10 years. CI professionals have not yet fully leveraged the strengths of predictive analytics customer applications.
Any big data or analytics conversation would be remiss without the mention of "data scientists." Much has been written about data scientists– who they are, who they should be, and where to find them. My colleague James Kobielus wrote an interesting series of blog posts about the skills required to become a data scientist.
From a customer intelligence (CI) perspective, we outlined four segments of CI professionals — marketing practitioners, marketing technologists, marketing scientists, and customer strategists. Of these, marketing scientists typically orchestrate the customer and marketing analytics function. They manage the reporting, analysis, and predictive modeling processes using marketing and customer data.
In a CI context, we find that the role of the marketing scientist has evolved from being a pure data analyst drowning in data analysis to that of an analytics translator — someone who is equally comfortable with building advanced predictive models and also adept at embedding the output of the models into customer-facing processes. What type of marketing scientist does your analytics team have?
We recently published a report on why "Customer Intelligence Needs A New Breed Of Marketing Scientist" (accessible to Forrester clients). In the report, we highlight ways to develop analytics translators across the staffing cycle — starting from attracting the right talent, nurturing the relevant skills, training with new skills, and incenting them based on business impact.
Does your firm use customer analytics to optimize relationship marketing efforts? Does your firm use analytical techniques to understand and predict customer behavior? If so, we want to hear from you.
We are launching our first Customer Analytics Adoption Survey for customer analytics users. With this survey, we want to understand how you use and apply customer analytics in your organization. In particular, we’re fielding questions to understand the goals and challenges with using customer analytics, the descriptive and predictive analytics techniques and models you use, the business impact of customer analytics, the customer metrics you track, and how you prioritize customer analytics initiatives across the customer life cycle. We encourage you to participate in this survey, as this information will help you benchmark your customer analytics adoption against peers and assess future opportunities.
You don’t need to be a scientist to boost your business with applied mathematics
On 22/9/09 SPSS Inc. announced a new certification process to confirm an individual’s expertise with some of their statistical solutions. “Look at this”, I thought “sophisticated software still requires experts to unfold the value they can provide”. Being a physicist by background, I like it how applied mathematics can improve business. However, not everyone sees beauty in algorithms or is interested in statistics.