Have you ever heard of a situation where an eCommerce player like you could predict customers’ purchase plans? Does it appear to be a dream? It is not a dream anymore. You can now find out what your customers are most likely to buy.
Also, gone are the days of stocking up your store by guesswork, hoping that you’re not going to be left with surplus items that nobody wanted to buy. How? Predictive Analytics. Many eCommerce businesses are turning to this new method to enhance their customers’ online experiences and optimize their sales stats.
Besides, eCommerce cannot survive without personalization any longer. We tried explaining to you earlier How Personalization Can Deliver a Great Customer Experience.
By using Predictive Analytics, you too can know the purchases your customers are most likely to make, well in advance of them visiting your site. Armed with this information, you’ll be able to optimize your inventory with the most sought-after goods and tweak your prices accordingly.
With the simplicity of website builders constantly giving rise to fresh competition, Predictive Analytics can deliver strategic benefits. In this article, we’ll take you through five of the most prominent benefits of Predictive Analytics and personalization of eCommerce and show you how you can use it to get the drop on your competitors.
1.Optimize Your Prices Around Your Buyers’ Needs
Typically, online retailers have used A/B split testing on prices with their different products to figure out which works best.
Although this method does work, it also requires a lot of manual effort and is prone to human error. One slip with that decimal point and you could be honoring stereo sales for $20 instead of $200. When you think about it like this, it’s obvious that it’s not worth the risk.
Predictive Analytics approaches testing from a different angle. Instead of manually entering prices, it’ll take into account factors such as:
- Order history
- Customer activity
- Expendable inventory
- Required product profit margins
Although a useful feature, you should keep a careful eye on price management. Once you’ve found that pricing sweet spot, you don’t want automated software to keep changing it up.
It might sound daunting, but it’s never too early or too late to start playing around with price optimization.
As the number of businesses using pricing optimization increases, those who aren’t using it are going to start to feel the pressure. For that reason, it’s best to start early and familiarize yourself with the process. Make the most of the business you’re generating by optimizing your prices.
Just remember, getting pulled into a price war with your competition isn’t going to help anyone. Although it’s good to be competitive with prices, stick to your brand and keep your profit margins steady.
2. Keep Sought-After Products In And Reduce Over-Stocking
There’s nothing more frustrating than finding the item you want online, then noticing that tiny box by the basket button – ‘out of stock’. With Predictive Analytics, however, you can nail your product stocks and make this a thing of the past. You’ll never run short of those most in-demand items, or be left with hordes of goods that just aren’t selling.
One example of a business that’s got this process down to a science is Walmart. By asking their suppliers to take up real-time inventory management, they managed to seriously improve their process.
By using an automated algorithm, Predictive Analytics keeps on top of your inventory, making sure that you don’t order in excess products if there aren’t any forecast of big sales.
With this, you’ll be able to reserve budget for purchasing your most in-demand products for your inventory, maximizing your profit potential. You’ll also make sure that you’re providing your shoppers with the smoothest possible experience.
A research project in 2013 from the Sam M. Walton College of Business and Weber State University uncovered just how important Predictive Analytics is for inventory management.
Their study found that, despite increasing demand, businesses over the past 3 years have often been faced with a skills gap when trying to find a suitable solution. That situation, however, is slowly changing, with more and more IT companies offering packaged solutions that are incredibly easy to deploy.
Southern States are another company that has benefited from Predictive Analytics. By deploying an inventory management system, they were able to maintain their revenue, with 31% less inventory.
For farmers, that means less waste, as their stock is obviously perishable. For any other business, however, that translates into huge cost savings, which can, in turn be passed onto the customer.
3. Make Real-Time Decision By Incorporating Streaming Analytics
Since retail environments are notoriously fast-paced, using historical data for Predictive Analytics doesn’t always work. By incorporating streaming analytics, you can generate customer insights in real-time, meaning you can make business decisions as data events unfold.
With real-time data at your disposal, you’ll be able to work out which days are best for new product launches, find out which products are great for boosting sales and target segments by their preferences and engagement levels. And that’s just the upper level – there’s so much more to real-time data that you can explore. With accurate insights into your customers’ spending habits, the possibilities are essentially limitless.
When it comes to real-time data, Netflix are by far the kings. By hitting pause, play, or browse through titles, all of that information is collected and put into the analytics stirring pot.
Through this, Netflix are able to figure out which titles are most popular, which drive the most engagement, and which colors work best to attract the attention of their viewers. This information is then used to enhance user experience, offering more personalized suggestions that are more likely to be enjoyed.
These can all be applied to an eCommerce site, too. By working out which products are most popular, how your visitors find your products and which paths they take on your site to get to them, you can make real-time decisions to optimize their online experience.
Online shoppers are renowned for their short attention-spans. So, if you can make their journey smoother, you’ll see a noticeable increase in your revenue.
Certain Predictive Analytics platforms can also actually change how your website appears based on a customer’s browsing history. For example, if they’re spending a great deal of time checking out sizing options, you’ll be able to automatically emphasize the size chart.
If they often visit your site and view certain types of products but without purchasing, on their next visit you could promote a blog post that lists a selection of those product’s benefits. Predictive Analytics really is what you make of it – the possibilities are endless.
4. Improve Customer Experience By Optimizing Product Recommendations
Many online businesses use recommendations and promotions somehow, but making them work for you is often less than simple.
One study from Oracle found that 98% of high-growth merchants believe targeting through segmentation is crucial to their business, but over half of them don’t have the required tools.
By using Predictive Analytics, you can bring an end to that. It offers personalized recommendation engines for eCommerce.
Automatically analyzing data, you can use software to create personalized promotions for your eCommerce site. These will then be deployed to target specific groups of customers, greatly boosting engagement rates.
Macy’s deployed Predictive Analytics on their site that allowed them to target their registered users more accurately. Within 3 months, they’d already boosted their online monthly sales revenue by 8-12%. They achieved this by cleverly combining browsing activity with their individual product categories. From here, they sent targeted emails to each of the segments that they’d created.
StitchFix has based their entire business model around the personalized experience that Predictive Analytics can offer. When signing up, users are asked to fill out a short questionnaire. Their answers are then run through a model which compares them to historical data, generating personalized clothing suggestions that they may be interested in. If the customers aren’t happy with the clothes, they can return them for free.
5.Manage Fraud Effectively By Predicting Attacks
Fraud is an unfortunate aspect of the eCommerce industry and billions of dollars are lost to it every year. For this reason, any piece of technology that helps to mitigate you and your customers’ losses from it is incredibly valuable.
By analyzing browsing behavior, purchase habits and payment preferences, predictive analytics solutions can help you to both identify and reduce the risk of fraud. Some of the more ambitious retail firms are even combining it with machine learning to keep them a step ahead of fraudsters.
Predictive Analytics can reduce the loss your business may face from fraud, as it creates rules to stop fraud before it occurs. It can also help to prevent your customers from falling foul of phishing scams, designed to appear as if they’re from your business.
Some leading organizations are largely depending upon data to predict attacks and frauds. They leverage data and predict frauds based on trends that are targeting the industry. According to experts at Gartner, Predictive Analytics can help you predict frauds by using continuous or behavioral authentication.
Predictive Analytics can be a great way to take your eCommerce business to the next level. By integrating it into your site, you’ll be able to deliver a more personalized experience to your customers, which, in turn, will lead to greater revenue.
Whether it be from fraud prevention, better recommendations, or improved stock, the key to successful deployment is finding out what will benefit your customers most and implementing it.
With so many retailers now considering it as an option, cut yourself ahead of the curve and make the most of the opportunity. Just remember – results from Predictive Analytics take time to see. If you continue to monitor and tweak it once your system’s up and running, you’ll see the best results.
It doesn’t matter what stage your business is at online – utilizing a Predictive Analytics system can seriously help you to drive your profit levels. If you’re interested in finding out how our system could help your business, get in touch today. Please contact us at email@example.com.