Analytics for Marketers
When to rely on algorithms and when to trust your gut
London, May 2023
by Fabrizio Fantini and Das Narayandas
Summary. Advanced analytics can help companies solve a host of management problems, including those related to marketing, sales, and supply-chain operations, which can lead to a sustainable competitive advantage. But as more data becomes available and advanced analytics are further refined, managers may struggle with when, where, and how much to incorporate machines into their business analytics, and to what extent they should bring their own judgment to bear when making data-driven decisions.
In general, humans are better at decisions involving intuition and ambiguity resolution. Machines are far superior at decisions requiring deduction, granularity, and scalability. How can you find the right balance?
There are three common approaches to analytics: descriptive, where decisions are made mainly by humans; predictive, which combines aspects of the other two; and prescriptive, which usually means autonomous management by machines. This article describes when and how to use each approach and examines the trade-offs and limitations. Although the focus is on marketing and sales, the principles may be applied more broadly.