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March 3, 2023 (Updated: March 8, 2023)
Predictive marketing is a type of marketing strategy you can use to forecast your upcoming campaign success. It uses a variety of company and external data to help you make the most accurate predictions possible. But can market research be part of that data? Today, we’re looking at how predictive marketing and market research work together to enhance your planning and campaign strategies:
Market research or marketing research is the process of predicting the success of a new product or service through direct communication with people outside your company. Typically, you work with your current audience or new potential customers. The purpose of market research is to discover the right target market for a new product or service. It also helps you get real-world insights and feedback on features like usability, necessity, and aesthetics.
Some of the most common types of market research include product testing, surveys, and focus groups. Besides this type of primary research you collect from working directly with people, it also uses secondary information you collected from outside sources, like an external marketing audit. Market research is already predictive because one of its goals is to make estimated guesses on how your audience and new leads will reach when you launch a new product or service.
A prediction market, also called a betting market, is an exchange-traded market where people bet on the outcome of events with an unknown future. If you’re not in finance, where prediction markets most commonly exist, here’s a now-popular real-world example of a prediction market: sports betting. Voter markets where people bet on the outcomes of economic and political events, like the Iowa Electronic Markets, are another example.
Prediction markets depend on scale. The bigger the market with more participants, the more data there is to collect. And the more data you collect, the more accurate the predictions within the market.
We promise, prediction markets and market research can actually work together when you’re doing research as part of your marketing strategy. And we don’t mean getting a focus group together to bet on the Super Bowl. Within marketing, prediction markets fall less in a betting space and more in a crowdsourcing space. The crowdsourcing process involves collecting opinions, ideas, and other information from a large group of people. Like, say, a group of potential customers in a focus group.
Prediction markets are market research when you remove the betting part of the definition. You won’t have a focus group exchange bet money over whether they think your product or service will be a success. But you can collect all their ideas and have your team conclude whether it’ll sink or float. Every time you start a market research activity, you’re then creating a predictive market from which you can collect data, make observations, and do analysis.
In the past, market research was largely a human-based marketing activity. Talking with leads and creating focus groups provided plenty of first-person data that companies could use to get inside the minds of potential customers and clients. Predictive marketing is a highly mathematical and machine-learning-based process to understand more about your marketing potential based on past data. One of the exciting things about the current state of marketing is that human, historical, and statistical data all matter and are all necessary when planning a future strategy or campaign.
By bringing market research into predictive marketing, and using predictive analytics within your market research, you can get more out of every research and analysis activity you do. You can use the data you collect from your market research and add it to your predictive analytics platforms. In doing that, you create a better prediction market with more real-world information. That lets the prediction programs and analyses make better educated guesses on the outcomes of whatever marketing activity you’re trying to predict.
You can also apply what you’ve already learned from predictive analysis to create better crowdsourcing opportunities and prediction markets. By finding just the right target audience for your market research, you have a better chance of seeing how your products or services will fare in the real world.
Don’t just take our word that market research and predictive marketing go together. Here are a few ways you can use both together in your daily marketing activities:
Market research doesn’t have to involve inviting a bunch of potential customers to your office for a focus group. You can do qualitative and quantitative audience research online. Creating surveys, inviting people to online beta testing, and asking for feedback and reviews are just a few examples of ways you can collect audience market research online. The more information you collect from these interactions, the more data you have to add to your predictive marketing algorithms and platforms. This allows you to make better predictions about your audience’s behaviors and segments in the future.
Trying to choose which channels or mediums to share your content and ads in is tricky. Which ones are going to resonate best with your audience? Which can get the most reach and engagement? Market research can help with this, too. A/B testing your ads, promotional materials, and even content provides a lot of data before you publish or share information online. The data you collect from these tests helps you predict what type of content to share in what mediums in the future, based on what audience segments you want to target with each campaign.
Aside from just testing advertising and content elements, you can actually use market research and predictive analytics to optimize your entire marketing process. Market research from your testing allows you to understand what people want to see from your brand and how they want to see it. But paring those insights with predictive analytics helps you understand the historical context of your marketing and how to make a bigger and better statement with each channel.
Marketing optimization works whether you’re using digital marketing, direct marketing, or even print marketing. Your historical insights and your audience feedback come together to make your marketing channels and strategy as efficient as possible.
One of the worst parts of marketing is losing clients or customers you worked so hard to attract in the first place. Market research and predictive analysis can help you spot clients that are most at risk of leaving your company and come up with ways to keep them from doing so. For example, your market research may help you learn about what turns people off to your content, products, or services.
When you cross-reference those data points with historical churn data, you can build a profile of characteristics for clients ready to find a new brand solution. You can then create strategies to better connect with them. By doing this, you change their perceptions of your brand to keep them on with your company.
Driver analysis goes hand-in-hand with customer churn susceptibility. Once you pinpoint who is most likely to leave your brand for another, figure out what you can do to keep them. Market research and predictive analysis are the answer once again. Just as you can uncover what reasons make people leave your company, you can find what triggers—or drivers—make them stay. You can then analyze how enacting those drives on audience segments ready to churn affects their retention rate. This data serves as the basis for your customer retention strategy.
If you’re doing market research, you’re already doing predictive marketing. And if you’re doing predictive marketing without market research, now could be the time to start. If you’re not sure where to begin, consider outsourcing some of your marketing activities to an agency partner. Working with an outside source or consultant can help you do additional research. It can also establish your market research goals, and incorporate predictive marketing into things like your content marketing campaigns.