What is predictive analytics?
Predictive analytics uses data mining and text analytics, as well as predictive modeling to anticipate what will likely happen in the future based on insights gained through descriptive and diagnostic analytics.
The ability to predict what is likely to happen next is essential to satisfying customers, improving operations and beating the competition. Predictive analytics is about using patterns found in your historical and real-time data to signal what is ahead. You can use predictive analytics to identify risks and opportunities for the future in terms of sales, assets, productivity and more.
Some of the questions you may ask at this point include:
Will sales in the northeast be up or down in May this year?
What type of response will a key segment have to the upcoming promotion?
When are assets likely to fail or require maintenance?
Will results compare favorably to plan by the end of the year?
How predictive analytics works
For example, a sales manager at a retail store chain may want to predict what type of promotion will appeal to a certain customer segment the most. She can look at data about her customers, including past buying behavior, social media content, and channel preferences, as well as their responses to previous promotions. Then she can use predictive analytics to score each customer on how likely they are to respond to certain promotions.
Using predictive models, statistical analysis, data mining, real-time scoring, and a range of advanced algorithms and techniques, you can anticipate customer response to promotions, predict asset failure, identify the potential for fraud and be more proactive in all areas of the business. You can make more informed decisions based not only on what has happened, but also on what is most likely to happen in the future.
Predictive analytics gives you an edge on the competition by analyzing trends and relationships in current and historical data to forecast future trends. You can then employ prescriptive analytics to evaluate different paths to follow, and act with confidence.
Customer story: Infinity Property & Casualty
Infinity Property & Casualty uses predictive analytics to improve right-tracking of claims to speed claim handling. (03:17)