You Should Already Be Using Predictive Analytics for Growth
Good decisions are necessary to keep businesses competitive and relevant.
When the fate of your company and the people who work for you rely on the decisions you make, you, therefore, can’t be making them on the whim or a hunch.
To improve decision-making, many companies rely on metrics known as Predictive Analytics, you can too.
But what exactly is it? And can it really help your business grow?
In this guide, we will answer those two questions, plus we will look at the Pros and Cons of this tool.
Let’s start with definitions.
What is Predictive Analytics?
As its name suggests, Predictive Analytics is a type of analytic tool that is aimed at predicting outcomes based on collated data. It makes use of statistics and modeling techniques to help determine future performances.
Predictive analytics is used to make predictions about outcomes and future performances. It keeps businesses from making decisions blindly.
With the help of the data provided, a business will go into a new venture with some idea of the possible results of any action taken.
Who is Predictive Analytics For?
Any business can make use of Predictive Analytics.
It is most often used in the marketing industry to help predict the possible outcome of an event or a launch.
For example, the organizers of a sporting event can use predictive analytics to get an idea of how many spectators they should prepare for.
It can also be used by a cosmetics company to help predict the behavior of their customer base regarding a new product.
It can also be used in the following industries:
- Retail
- Pharmaceuticals
- Healthcare
- Banking and Finance
- Debt Collection
- Government and the Public Sector
- Technology
- The Service Industry
This list is by no means extensive as predictive analytics can be used practically in any industry.
What Data Does Predictive Analytics Use?
This entirely depends on you and your company’s needs.
For example, if you are simply running analytics on the possible outcome of your 2nd or 3rd company rebrand. A predictive analytics tool can simply look at the performances of past re-brands to plus take into consideration relevant events to determine how your next re-brand is going to go.
If you are looking for a more comprehensive look into what could possibly happen, the tool can be made to look into local and global trends. It can also look at the performances of other companies that have embarked on something similar.
What Are the Benefits of Predictive Analytics?
There are many benefits to using predictive analytics, they include:
- Improved Decision Making
- Mitigating Risk
- Understanding Customer Needs; Can Help with Retention
- Cost Reduction and Improved Efficiency
- Fraud Detection
Helps Improve Decision Making
One of the most common uses of predictive analytics is helping companies make better business decisions. Being well-informed of the potential outcomes of an action can help you make the best decisions possible.
This leads us to the second benefit listed…
It Helps with Mitigating Risk
Since you are better aware of the possible outcomes of a decision, you can also help mitigate the risks involved.
If your predictive analytics are showing that the outcome may not be as favorable as you would like, you can still modify your plans to help you get the best results possible. And if necessary, you can make the choice to change your course of action completely.
Helps With Understanding Customer Needs and Improving Retention
You can also use predictive analytics to better understand your customer and provide them with the service they are looking for. In turn, this can help you improve your customer retention.
Happy customers stay on for longer and the more customers you have, the better for your company.
Predictive analytics can also be used to predict customer behavior. Here is a good example of how this works:
A big retailer used predictive analytics tools to determine when their customers were pregnant.
Once a customer is flagged as pregnant based on certain behaviors, they pushed marketing materials targeted for new mothers. This success target leads to an increase in sales for mothers’ needs and baby products.
Predictive analytics can also be used to keep customers.
You can set triggers to help predict if a certain customer is losing interest. Once these triggers are set off, you can then employ pre-determined actions that can help regain customer interest. This can be as small as sending them coupons and/or discounts.
It Can Help Improve Efficiency and Reduce Costs
Efficiency is getting the best results with the least effort possible.
If you use predictive analytics well, you can make the best choices and avoid the pitfalls of trial and error.
Mistakes can be costly. Knowing how something is likely to go can help you hone your actions in order to any unwanted results. This helps things run smoother and in the long run, can even help you and your company save money and make maximum profit.
Fraud Detection
Yes. Predictive analytics can be used to detect fraud.
Your analytics tool can be set up to look for customer behavior that can indicate that they are or are about to commit fraud. This comes in helpful for financial institutions and insurance companies.
These analytics can also be used to determine if your website or organization is at risk for any cyber threats or vulnerabilities.
Do You Really Need Predictive Analytics?
The short answer is – Yes.
Yes, you need predictive analytics. It doesn’t matter what industry you’re in, you will benefit from it. It doesn’t even matter how big or how small your company is as the analytics tools can be scaled up or scaled down accordingly.
How to Get the Most of Predictive Analytics?
The key is getting the Right Type of Predictive Analytics.
To do so, you will have to work closely with your analytics provider. Right off the bat, they should be able to provide you with some generic options that work well with other companies in the same field as you are and with the same goals as you do.
But as you delve deeper into what you actually need, personalization will be necessary. You can tell if you are with a good analyst because they will make accommodations for customizations.
Another key is to Have Well-Defined Goals.
You should have a clear idea of what you want your analytics to show. Set clear goals and define your objectives before you even start.
Make room for calibration. Don’t get disheartened if you don’t get it to where you need to it be on the first go. Make room for adjustments and calibration.
The more you modify the tools to meet your needs, the better it will be in the end. Also, schedule in time for calibration at set intervals. This way, you can remain current and relevant.
Final Word
Good decisions come from good data.
And if you have plans of growing your business and helping it reach its highest potential, you will need good data and information. This is where predictive analytics and analytics in general come in.
Make the best decisions you can with the help of predictive analytics tools. Give your business the edge over the competition by making sure that your business decisions are grounded on solid information. Make no place for guesswork or whims.
Also, be sure you are working with the right team. Don’t hesitate to voice out any concerns you have with your analytics team. If it becomes necessary, don’t be afraid to shop around in order to find the right fit. Your business is at stake here and you will need the best if you are going to succeed.