January 1, 2011
The quake that hit the global financial markets last year left shoppers and retailers bracing for a cold and lackluster Christmas. As anticipated, post-holiday consumer surveys reported holiday sales far below expectations as a result of record low spending. The only winners in the face of the economic downturn were value retail outlets such as Walmart which experienced increased consumer traffic (69 percent shoppers in 2008 as compared 33 percent in 2007), as a direct result of aggressive value-for-money promotions and discounts.
Dramatic shifts in consumer behavior, ranging from withholding spending to bargain hunting, have resulted in top-line growth pressures for manufacturers and marketers alike. With budget cuts and increasing ROI as the mantra of the day, slashing marketing budgets is considered to be a given; as a result, marketers with limited budgets are obsessively looking at ways to justify marketing investments which can optimize revenue.
While many of us are busy dusting off the covers of our "how to survive in a shrinking marketplace" guide, savvy marketing gurus are turning to innovative solutions such as predictive analytics to improve ROI. For example, Walmart, Tesco, Home Depot, and Royal Bank of Canada, have turned to predictive analytics to produce tactical insights which translate into better targeted marketing strategies and resultant customer retention. CMOs are gradually waking up to the advantages offered by predictive analytics as compared to other decision-making tools in predicting, with near-perfect accuracy, the probability of a win versus loss of a sale under intensely competitive and disruptive economic conditions.
