by Neil Capel, Chairman and Founder at Sailthru

The ability to accurately predict the next action of every individual customer has been the marketing version of utopia for as long as the industry has been in existence. It has even spawned an entire subsect of marketing to meet the challenge: Predictive Marketing.

Predictive marketing is a modern marketing approach, but one that’s not new

Historically, marketers have used multidimensional data cubes to power “predictions” for their business. The most effective and frequently used approach is RFM modeling, where marketers create segments based on purchase Recency, Frequency and Monetary value to determine their best customers. By combining this data with linear regression analysis, marketers could then pinpoint the propensity for a segment or cohort of customers to take a specific action (e.g. most likely to purchase).

If you think this sounds hard, it’s because it is. And in the end, you’ll have a best guess at what that segment of customers may or may not do, which is a bit of a fool’s errand considering human action is quite unpredictable when based on previous behaviors alone.

Modern predictive technology differs tremendously

The good news is we’ve come a long way in a short period of time from the manual labor of RFM modeling. What’s now possible with predictive technology is revolutionary. The advancements in predictive technology now allow today’s marketer to use data science to generate and apply true predictions at the individual user level, rather than reporting to forecast at the segment level.

Think about it this way: It’s the difference between knowing who recently purchased, how many times and for how much vs. knowing that a specific customer is 99% likely to purchase.

Imagine how your marketing strategy, messaging and budget allocations would change if you had this information at your fingertips? Even further, what if it required no manual legwork on the marketer’s side, but was completely automated?

Download our complimentary ebook, The Definitive Guide to Predictive Marketing, to discover what this transformation looks like, and an outline for how any brand can take this step towards smarter, revenue-increasing marketing.

Neil Capel is the Founder and Chairman of Sailthru. Prior to founding Sailthru, Neil was the Chief Technology Officer for MusicNation, an AlleyCorp company, ASmallWorld, and Money-Media (acquired by The Financial Times). Today, Neil is also an adviser to several startups, including Refinery29.com and Zootoo.com and is a Venture Partner at Bowery Capital, a seed stage venture fund focused on transformational upgrades to enterprise technologies.

Photo Credit: Valerie Everett