“Prediction is indispensable to our lives. Every time we choose a route to work, decide whether to go on a second date, or set money aside for a rainy day, we are making a forecast about how the future will proceed— and how our plans will affect the odds for a favorable outcome. – Silver, Nate (2012-09-27). The Signal and the Noise: Why So Many Predictions Fail-but Some Don’t. Penguin Publishing Group
As marketers and salespeople, we have become obsessed with data that will help us predict the future, especially as it relates to new revenue and the Customer (as in, who will become one and who will not). The rapid onset and rise of Big Data over the last several years and the numerous tools that have been built to analyze it has helped us understand buying behaviors, tendencies and/or trends customers and prospects have shown. Unfortunately all of these great technologies focus almost exclusively on historical data, modeling and extrapolating that data into future expectations. As such, you can only model your future outcomes on “known unknowns”. As much as we like to automate and have machines do the work for us (hello robot cars!), the human element still plays a massive part in forecasting revenue.
So how can an organization utilizing predictive analytics get to an even deeper level of knowledge (the “unknown unknowns”) regarding sales? One option you may not be familiar with are internal prediction markets. Prediction markets can allow you to identify business-critical events, anticipate most likely outcomes and mitigate market and operational risks through the “wisdom of the crowd”.
The wisdom of the crowd. What does that actually mean for a business? Let’s look at what a prediction market is and how it brings that collective wisdom together.
A Prediction Market collects and generates data that is not available anywhere else by utilizing collective social intelligence. The ‘crowd” is made up of specifically-invited individuals who have a wide-ranging knowledge of your business(employees, suppliers, partners, retailers, etc.) and engage in your market by way of making an informed prediction of an outcome. The predictions are continually measured via algorithms that provide the latest formulaic prediction. The invited crowd is also able to provide information as to why they made that prediction. Leadership is provided with the latest information in real time by way of charts, dashboards and reports.
The crowd is rewarded for sharing their knowledge and insights with prizes for their accuracy and timing (the earlier the predictions the better, obviously). Prizes enable engagement that the individuals are engaged and are providing their best “bets” on what will occur so that they can potentially win something of value. Both sides win in this case; the company gets real-time forecasts on critical future events and participants have a vested interest in being correct.
We all know there is no guaranteed way to 100% accurately predict your quarterly or annual revenue, your growth, how a new product, new service or introduction into a new market will fare. But getting engaged feedback from a targeted crowd can get you significant results to accurately assessing an outcome or event.
Think about the power of real-time insights. Every one of your employees or someone in your company’s ecosystem knows something about your business that can impact it positively or negatively in the future. Utilizing technology to capture that knowledge and reward those who provide it is a winning combination!