Predictive analytics for engagement and insights
Predictive analytics for engagement and insights
One approach to getting a different perspective in consumer research is to use predictive analytics methods. Predictive analytics is a gamification technique in which people are asked to predict future outcomes. It uses the aggregate predictions of many people to predict future outcomes. Also called predictive markets, predictive analytics is based on a simple modification to your questions. Instead of asking a consumer for a personal opinion, it asks them for an expert opinion. It then rewards people based on how accurate their predictions were.
For example, it’s the difference between asking “What is your favorite movie from the last year?” versus “What movie do you expect to win the Academy Award for Best Picture?” This simple adjustment to the question completely changes how your audience thinks about it and how they are likely to respond. The first asks a personal opinion question, while the the second asks them to make an informed prediction based on their knowledge of the subject matter. Answers to those questions are likely to be different from most respondents, and they give different insights.
Predictive analytics for engagement
Predictive analytics are used for engagement purpose on a daily basis. One example of such predictive markets is daily fantasy sports sites, such as DraftKings or FanDuel. Here, players predict which players will perform well in daily sports. Players are awarded points based on the actual performances of the athletes involved, and rewards are given to the players that received the most points.
Another example of predictive analytics for engagement in the sports world is the annual college basketball championship tournament. Millions of fans fill out brackets (often multiple brackets) in which they attempt to predict the outcome of each game in the tournament, for prizes or bragging rights. Companies and brands often use this to develop marketing campaigns around the college basketball tournament or their own bracket-based campaigns.
What makes predictive markets so engaging? There are several key factors. It is fun to make predictions. It fosters competitive spirit and the drive to dominate. People want to prove their expertise by making better predictions. Predictive markets have prominent leaderboards that show a participant how their picks compare to others. The process of filling out a bracket is, in itself, a fun exercise of increasingly more difficult decisions.
Predictive analytics for preference polling
Preferential polling is another area in which predictive markets can change the understanding. By rewarding points or other rewards for correct predictions, people are encouraged to try to be as accurate as possible. It removes any favoritism bias from their analysis because their desire to be right and receive the reward is greater than their desire to pick their personal favorite.
The difference can be seen in looking at traditional political polls and the current market of a site like PredictIt, the political prediction market. In traditional polls, people are asked which candidate they personally would vote for in the upcoming election. The only consideration in answering this question is their own personal beliefs. With the prediction markets at PredictIt, people invest in “shares” similar to the stock market for what they think is the probable outcome. In making this judgment, they take into account what they hear in the news and their social networks. The decision to invest or not is based on more than their personal opinion.
Similarly, the Hollywood Stock Exchange (HSX) is a stock market simulation game that allows people to invest in movies and actors in the entertainment industry. Investors purchase stocks in the movies and stars they think will perform well. Prior to release, the prices for a movie’s shares is determined by the market. After release, the value of a share is determined by actual box office performance. In this way, investors want to invest in the movies they think will be successful to maximize their payouts. The share price reflects this: movies that are expected to be blockbusters have significantly higher share prices. Leaderboards allow investors to compare their performance to others.
Predictive analytics for insights
But predictive analytics are not just for engagement. They can be used for market insights as well. The subtle change in the question shifts how your audience thinks about the subject and can deliver different insights.
Predictive analytics are often used in pricing exercises. The question “How much would you pay for this product?” is a value question. It is asking them how much they personally would value such a product. If you change the question to “How much would you expect this product to cost?”, it is now more of an analytical question about how they expect the market to respond and how much they think the overall market would pay. In the first case, they are only considering how much they would pay for the product. In the second case, however, they are also thinking about how much their friends and family would pay. It provides a deeper pricing analysis without increasing the sample size.
Predictive analytics leverages the aggregate predictions of a large sample of people to predict future outcomes. It feeds the core motivational desires of competence, autonomy, and relatedness (see Gamification 101). That is, people want to demonstrate their expertise and dominance. Predictive analytics give them great control over how they engage with the market. Leaderboards and sharing predictions allows users to relate to each other. Together, it gives users a strong motivation to provide accurate, high quality predictions, which leads to better quality data and insights.