Lately, more businesses than ever before are relying on predictive analytics to gain a competitive edge and increase their bottom line. But what is predictive analytics and how can it help your business?
In a nutshell, predictive analytics uses data from the past to predict sales in the future. The results are typically used to make decisions that will lead to better business performance. It doesn’t involve a magic wand—all you need is plenty of data and some statistics in order to make decisions.
How can predictive analytics benefit your business?
Using predictive analytics can help you to understand your clients and what they are looking for so that you can cater other aspects of your business accordingly. By predicting customer behavior, you can improve strategic decision making. Predictive analytics can also help you:
- Forecast next quarter’s sales
- Identify important trends
- Make decisions about advertisements
- Assess risk
- Maximize marketing budget
- Forecast inventory
What do you need to use predictive analytics?
First, figure out what you want you want to predict. Once you have the predictions in place, what will you do? Decide what actions you’ll take based on your insights.
You’ll need data, and lots of it. The data will need to be prepared and filtered by a data management expert, which takes time. Then, you can begin to build analytical models and put them to work on your data. All of this cannot be done by one person alone. It’s a process that involves a team of data analysts, model builders, and so on.
When you own a business, you need to always search for insights that ultimately benefit your customers and your bottom line. Predictive analytics can help you do all of these things if you have the right data, build the correct statistical models, and make the right assumptions.