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Most B2B professionals today are using some form of analytics to make better-informed marketing decisions. However, most are using a basic form more exactly known as “descriptive analytics” as opposed to the higher technology-based “advanced analytics.”
The Verdi Group sat down with John D. Clayton (formerly Senior Manager at Accenture, now Chief Analytics
John D. Clayton
Chief Analytics Officer at
The Verdi Group.
Officer at Verdi) to gain a better understanding of descriptive analytics, how B2B marketers are currently using it, and why they should be moving toward advanced analytics to gain more impactful insights, make better marketing decisions, and help predict the future.
What is Descriptive Analytics?
According to John, descriptive analytics is data from the past that describes the “what” or “what happened?”. The four major areas that make up descriptive analytics are standard reports, ad hoc reports, queries, and alerts.
Standard reports describe what happened. For example, a standard report could be a recurrent report that tracks response rates by date. Standard Reports are what the majority of B2B marketers are using today.
Ad hoc reports are one-time reports that might describe how many, how often, and where. These are usually for a specialized audience.
Queries or drill downs are done to determine what exactly is the problem. Essentially, you’re “drilling down” levels of data to find a definite answer.
Alerts are actions that need to be taken in order to answer a current challenge.
These four areas make up descriptive analytics. They generally address operational challenges and are backward-looking in nature. These insights help marketers gain more insights about their company’s finances, operations, sales, customer behavior, and more.
But how do marketers address more strategic challenges that are future-oriented or require prediction? This is where advanced analytics comes into play.
What is advanced analytics and why does it matter?
“The discipline of advanced analytics is at the intersection of business, mathematics, and technology,” said John. “It stands for the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions.”
Among the four areas that constitute predictive analytics are statistical analysis, forecasting, predictive modeling, and optimization.
Statistical analysis answers the question “What is currently happening?”.
Forecasting or extrapolation explores the question “What are the trends and what if these trends continue?”.
Most importantly, predictive modeling, which answers the question every B2B marketer wants to know – “What will happen next?”
And last but not least is the highest level of advanced analytics, optimization, which is the projection of the best (the most sales, the most dollars, etc.) that can happen. This requires that you build a predictive model beforehand.
According to John, there are four reasons why B2B marketers should move toward advanced analytics:
1.) It gives you insights about the future of your company
2.) It’s strategic and looks forward into the future
3.) It can give you a competitive advantage
4.) It gives you a new level of certainty to the intelligence you may already have
Other benefits of investing in advanced analytics are that you can become more targeted with your message and have a higher chance of getting it right the first time. Plus, you can do more effective segmentation and test offers.
What resources do you need for advanced analytics?
Most marketers who want to start using advanced analytics ask themselves, “Do I need to have an analytics person in order to do this?” According to John, the answer is “Yes, either at your office or through a consultancy.”
While you may already have a descriptive analytics person on hand, John believes you should invest in one or more offsite predictive analytics resources who know the science that makes predictive analytics work (econometrics). This is because most businesses don’t have the time or advanced computing power to process and example such large amounts of data across thousands of “what if” models.
The econometrician hired would be responsible for building models based on the past performance history of your products and services (dozens of variables), also taking into account variables such as seasonality, stock market performance, weather, and many others.
As an econometrician by training, John takes big data, organizes it, creates the models, does time-series regressions on it, and tests the models using statistical analysis and advanced software. In the end, he comes up with conclusions or insights about a business’s future.
“It’s not a simple mathematical equation,” said John. “Predictive modeling is done by computer programs that look at hundreds if not thousands of scenarios to answer the question ‘what is the optimal result?’”. With that said, you’ll want to have a competent person analyzing the data and creating meaningful insights so you can improve your ROI.
Investing in advanced analytics will accurately help your business predict trends, identify opportunities, and optimize your future marketing efforts. The goal is to look beyond “what has happened” (descriptive analytics) and look ahead to “what is the best that can happen in the future” (optimization).
John D. Clayton is the founder of The Verdi Group’s data analytics department. He was formerly Senior Manager at Accenture Analytics. To talk to John about a project, call (424) 666-9258, send us an email at email@example.com, or visit theverdigroup.com/analytics.