6 ways how predictive analytics is contributing to businesses

Data analytics is widely used across businesses to glean insights from raw and structured data to improve business value and productivity. Predictive Analytics is an extension of data analytics that is deployed to map behavior patterns and predict future trends. The crux of predictive analytics is to outline relationships between current and historical data to predict future outcomes.

Read below to know how predictive analytics can contribute to businesses.

#1. Forecast and meet customer needs

Poor understanding of customer needs and demands leads to revenue losses, risky investments and affect’s reputation.

To give you a context, the key objective of any business is to meet their client’s requirements and customer needs vary rapidly. Today, businesses are making their utmost effort to meet their customer’s needs at the appropriate time.

With predictive analytics, customer’s behavior under various scenarios can be analyzed and segmented to understand their needs correctly. Also, this can help businesses forecast customer’s behavior and needs pertaining to a situation. Thus, using this information, businesses can make data-driven decisions to improve customer acquisition, retention, and services with reduced customer churn factors.

#2. Proper Resourcing and Workflow

Potential customers walk out of a store because of poor customer services. Poor staffing is a hidden factor that mostly gets ignored in such cases. Proper Staffing is imperative to guide customers during a busy day like marketing or promotional event, season sales and many such occasions.

A real-time example is Alabama’s Birmingham Zoo – they used predictive analytics to make informed staffing and marketing decisions. Predictive analytics helped the zoo predict the number of attendees on a particular day by mapping historical data across weather data, school calendars, national holidays, etc.

#3. Effective Sales Strategy

Many luxury goods retailers were hit hard due to recession. Predictive analytics can equip companies with information to handle such abrupt situations.

Consider the case of Jewelry TV (JTV) – they were one of the victims of the recession. The company experimented with various strategies to increase sales but everything was in vain. Eventually, they leveraged predictive analytics to pull them out of the situation.

"A regression model helps you understand what's impacting your revenue. When you start building a predictive analytics model, it can tell you why what you've been doing isn't working -- customers don't care," said Ryan McClurkin, former director of strategic analytics at Jewelry TV and currently chief of business analytics and marketing at PhotoBarn.

#4. Optimize Pricing and Profitability

In the supplier and consumer chain, companies strive to increase revenue whereas customers demand value for their money. Creating a balance between the two has been the key challenge for businesses for years. Predictive analytics can provide a holistic price-sensitive demand forecast combined with competitive intelligence to best handle the circumstance.

#5. Maintain the correlation between sales and return

Product returns are bitter. As per the National Retail Federation, in 2014, merchandise worth nearly $3.2 billion was sold in the US. Among which 8.89% was returned – this amounts to $284 million in lost revenue. Predictive analytics can provide information to optimize inventory and help reduce product returns. Furthermore, this can help maintain a correlation between sales and return efficiently.

#6. Improve fraud detection to mitigate risks

Not only trends and customer needs, but even risks can also be foreseen with predictive analytics. Mapping patterns from previous fraudulent activities will enable businesses to predict risk scenarios as well as be prepared with immediate counteractive measures for such scenarios in advance. Apart from process and workflow optimization, this will also help businesses sustain their reputation.

Summing Up

Predictive Analytics is certainly a breakthrough in technological advancement that provides real-time insights for businesses to refine processes to increase revenue and be armed for uncertainties.

Jency is an enthusiastic writer and enjoys spreading knowledge through her writing. Her perks include business strategies, technologies and self development.