Predictive Analytics: This Century’s Crystal Ball
It’s getting easier for small and medium-sized enterprises (SMEs) to use predictive analytics (PA) to make informed decisions in areas such as marketing, sales, supply chain optimization, and more. Increasingly, organizations of all sizes are using sophisticated statistical approaches to forecast future trends and behaviors from historical data. It helps to have a crystal ball these days.
While use patterns have long been employed to forecast future demand, technology has made data analytics faster, less costly, and more accessible. As a result, many smaller businesses are now using it to identify growth areas and to market certain products or services to easily identifiable target groups via special offers or other tightly focused approaches.
PA models can help retailers fine-tune consumer messaging; in sales, it can put you ahead of the pack. Real estate agents, for example, can focus marketing dollars on targeting individuals most likely to be interested in certain listings, as well as price forecasting for a specific property. Agents also can pinpoint homeowners who are most likely to sell their homes – and therefore might welcome an approach. It’s a long way from a cold call.
That said, PA is most valuable when predicting group behavior. It’s not so much about the individual customer as it is about identifying behavior patterns of an entire customer segment and using that information to inform business strategy. For instance, if historical data indicates a customer segment is highly likely to move to a competitor, you can respond with a special retention offer. Quickly, directly, easily. And very likely successfully!