Predictive analytics is becoming accessible for small businesses to go ahead in the cut-throat competition by data mining and producing meaningful intelligence. Your customers are providing you with the data that can help you forecast the future. From a customer's purchase history to improving product campaigns, predictive analytics can be the perfect digital marketing solution for your business needs.
What is Predictive Analytics?
Predictive analytics is part of data analytics. Its goal is to forecast future outcomes based on past data and analytics techniques like statistical modeling & machine learning. The predictive analytics tools and models can help businesses use historical and existing data to reliably predict trends and behaviors seconds, days, or years into the future.
Predictive analytics has received several organizations' support. A worldwide market is expected to reach around $10.95 billion by 2022, increasing at a CAGR - compound annual growth rate of about 21% between 2016 - 2022 2017 report published by Zion Market Research.
Predictive Analytics at Work
Predictive analytics extracts its power from a broad spectrum of methods and technologies, including big data, data mining, machine learning, statistical modeling, and various mathematical processes. Businesses use predictive analytics to shift through existing and past data to detect trends and predict events and conditions that should happen at a particular time, based on supplied parameters.
Predictive analytics lets businesses find and leverage patterns within data to detect risks and opportunities. Frameworks can be created, for instance, to discover relationships between many behavioral factors. Such frameworks allow evaluating either the risk presented by a specific set of conditions, making informed decisions across numerous categories of supply chain & procurement events.
Advantages of Predictive Analytics
Overall, predictive analytics can help organizations attract new clients and retain or grow their most profitable current clients.
- It helps predict the search and buying behavior of TA.
- Knowing consumer behavior helps enhance marketing campaigns, promote new products, or cross-sell current ones.
- It helps businesses assess and manage pricing trends, allowing them to employ the ideal price at the perfect time.
- A better understanding of client demands and trends allows best supply chain management resulting in better and cost-efficient overall operations.
- Understanding consumer behavior and patterns will make it simpler to detect and handle fraud, thus lessening the likelihood of risk and eventual losses.
- Predictive analytics usage will deliver an optimistic ROI by as much as 25%, as per 86% of executives using these technologies. (Forbes Insight Survey Report)
Predictive analytics looks into the future more precisely and reliably than previous tools. It can help users find methods to save and earn money. Merchants often use predictive models to predict stock requirements, handle shipping schedules, and form store layouts to maximize sales.
Airlines often use predictive analytics to fix ticket prices considering historical travel trends. Hotels, cafes, and other hospitality sectors can use the technology to predict the no. of guests on any night to maximize occupancy and revenue.
Businesses can also produce new client responses or purchases and promote cross-sell opportunities by enhancing marketing campaigns with predictive analytics. Predictive frameworks can help companies attract, retain, and nurture their precious clients.
Predictive analytics can be used to detect and pause various criminal behavior before any severe damage is infected. Predictive analytics enables businesses to detect unusual activities, ranging from credit card scams to corporate espionage to cyberattacks.
Examples of Predictive Analytics
Businesses today use predictive analytics in infinite ways. The tech helps users in fields like healthcare, hospitality, retail, automotive, aerospace, finance, manufacturing, and pharmaceuticals.
Of them, a few are making use of predictive analytics.
- Retail: Follow an online user in real-time to ascertain whether rendering extra product information or incentives will increase the possibility of a finished transaction.
- Manufacturing: Forecast the location and rate of machine breakdowns. Enhance raw materials deliveries based on expected future demands.
- Energy: Predict long-term demand and price ratios. Ascertain the impact of equipment failure, regulations, weather events, and other variables on service costs.
- Aerospace: Forecast the impact of particular maintenance operations on aircraft reliability, availability, fuel use, and uptime.
- Law Enforcement: Use crime trend data to describe neighborhoods that might need extra protection at specific times of the year.
- Financial Services: Build credit risk models. Predict financial market trends. Forecast the impact of new policies, rules and regulations on organizations and markets.
- Automotive: Infuse records of component strength and failure into oncoming vehicle manufacturing plans. Examine driver behavior to build better driver assistance technologies, and, finally, autonomous vehicles.
Predictive Analytics in Healthcare
Healthcare businesses have become the most enthusiastic predictive analytics adopters because technology is helping them save money.
Healthcare organizations use predictive analytics in many different ways, including smartly allocating facility resources based on historical trends, enhancing staff schedules, recognizing patients at risk for expensive near-term readmission, and adding intelligence to pharmaceuticals & supply acquisition and management.
As per research in 2017, more than half of healthcare executives at businesses using predictive analytics believed that the technology would save them 15% or more of their overall budget for the next 5 years. An extra 26% predicted saving of 25% or more.
The research also showed that most healthcare executives belong to businesses that are now using predictive analytics or planning to do so in the next 5 years. An astonishing figure of 93% of healthcare executives asserted that predictive analysis is essential to their organization's future.
This blog clearly shows the importance of predictive analytics in businesses and how it can help organizations predict the future. It's a task that virtually any organization can handle as long as one sticks to the approach and is inclined to invest the time, efforts, and money necessary to get the project moving. Once put into action, it usually needs less maintenance as it resumes to grind out actionable insights for several years.