How Predictive Analytics is Revolutionizing Decision-Making in Tech
Learn how predictive analytics work in a business environment.
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Predictive analytics will play a key role in business decision-making in 2023, with AI, machine learning, and data science being utilized by businesses, large and small, to boost revenue and achieve maximum growth. Capable of processing huge amounts of data to find hidden and valuable insights, predictive analytics is key to unlocking potential.
In this article, we will focus on how predictive analytics work in a business environment, using data to make informed decisions that can make a big difference.
What is Predictive Analytics?
Predictive analytics processes large amounts of data, analyzes it to find useful and relevant information, and then develops predictive models to provide valuable insights relating to different scenarios, both past and present. Thanks to these scenario-based insights, predictions can be made about future events, enabling businesses to make better decisions in terms of identifying new trends, changing product offerings, and more.
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Predictive analytics is an advanced tool but still requires expert human knowledge to be used effectively. Analytics provides the facts and relevant data, while it is up to the user to identify how it can be applied to real-world, future scenarios. Combined, predictive analytics and decision-making processes can help businesses achieve tangible results.
Predictive Analytics In Practice
A common use case for predictive analytics is in marketing, with a common example being behavioral targeting. This involves leveraging consumer data to create better marketing strategies, whether that is web content, social media campaigns, or direct advertising, allowing businesses to reach new customers.
This works by evaluating historical behavioral data and using it to predict how customers may behave in the future. This can help to provide accurate forecasts in terms of sales trends at various times in the year, such as the holiday period, assisting marketers in creating better, more targeted campaigns.
As well as looking into sales trends, predictive analytics can also assess the sales funnel, checking the effectiveness of each stage, from initial awareness to a completed purchase. For example, algorithms could determine how many content/ ad offerings a lead typically interacts with, and when, before ending a purchase or critical action. This can help to improve targeted ad campaigns in the future, giving insight into when a customer is more likely to interact during the customer lifecycle.
This method can also identify what types of content are regularly interacted with, whether that is a social media post or a PDF download within an app. With PDF SDKs, customers can quickly download PDF content such as vouchers or product information to their phone, a clear sign of buying intent.
Combining Predictive Analytics and Decision Making
In business, it is becoming common practice to combine predictive analytics and decision-making, relying on advanced algorithms, past behavioral data, and statistics to accurately predict future behaviors. Not only does this help businesses make more accurate decisions, but it also allows them to be made quickly, providing a competitive advantage.
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Decisions can be regarding market trends, customer interactions, marketing campaigns, investment-related risks, and anything else that can have a significant impact on a business.
Combining Predictive Analytics and Decision Making: The Benefits
For some people, the benefits of predictive analytics may not be clear, preferring to rely on existing processes to shape the future of their business. However, there are several benefits that cannot be overlooked, especially if a company is aiming to grow quickly in this modern and competitive digital environment.
The benefits of predictive analytics combined with decision-making include:
- The use of machine learning and artificial intelligence makes it possible to predict future outcomes and trends, allowing the decision-making process to determine the best action.
- With accurate predictions, businesses can stay ahead of the competition and take action quickly to launch marketing campaigns or new products.
- Accurately anticipate customer needs and changes in the market to make the necessary adjustments.
- Extremely large data sets can be analyzed which would not be possible using manual techniques. These data sets can include customer demographics or purchasing trends, helping to identify new, previously untapped opportunities.
- Identify potential threats before they can become an issue, helping to safeguard operations and allowing businesses to take a more proactive approach.
- Helps to better allocate marketing resources, targeting only relevant customers so time or money is not wasted on leads that do not meet the criteria in terms of the targeted demographic or are unlikely to result in a conversion.
Making Informed Decisions with Data: Best Practices
When creating a predictive model that is based on predictive analytics with the aim of making more informed business decisions, there are certain dos and don’ts that can have a significant impact on its effectiveness.
Below are five best practices that should be followed when creating a predictive model.
- Ensure data sets are fully understood before applying them to a predictive model. This includes knowing where the data is sourced from, how it was gathered, and its structure. Establishing that the data used is completely reliable is vital to guarantee the model makes accurate and relevant predictions.
- You must also adopt a model that is appropriate to your business so that it is suited to the data being processed. Choose a single model that can be used across the business so that it can be easily optimized, instead of using a range of different models that could become complex and inefficient.
- Before launching the model it must be thoroughly evaluated and validated to make sure it is trained correctly and generates the intended results. To do this, test the model on a range of data sets and refine it as needed, while ensuring the model also uses the most up-to-date techniques and methods.
- Once up and running, the model will need ongoing monitoring to determine how it is performing. Always thoroughly test any new data sets and take the time to measure the results against the latest trends and market changes based on your research.
- Schedule regular testing to judge the accuracy of the model, applying a range of cross-validation techniques to determine if the patterns shown within the training data are applicable to real-world scenarios.
Predictive analysis is an invaluable tool in the modern business world, helping companies to make informed decisions that can have a significant impact on the future of their operations.
Assisting with marketing campaigns, sales funnels, and product management, the predictive analysis uses advanced machine learning algorithms to provide insights into future customer behaviors and market events. Without these insights, businesses risk being left behind by their competitors, potentially missing out on lucrative opportunities and failing to understand their customer base.
Nahla Davies is a software developer and tech writer. Before devoting her work full time to technical writing, she managed—among other intriguing things—to serve as a lead programmer at an Inc. 5,000 experiential branding organization whose clients include Samsung, Time Warner, Netflix, and Sony.