- April 30, 2019
- Posted by: Dan Marks
- Category: Big Data, Data Analytics
Today’s competitive business environment is driven in large part by data analytics. By collecting and analyzing historical data, organizations can estimate what’s likely to happen in the future. This approach is the basis of predictive analytics. With a predictive analytics strategy in place, information such as previous sales, inventory levels, and customer behavior can be used to uncover insightful patterns and estimate future outcomes.
There are many different benefits of using a predictive analytics approach. For example, you can estimate future sales, assess the risk of financial investments, and predict when your machines are likely to require maintenance.
Using predictive analytics will make your business more efficient and competitive in today’s data-driven environment.
What is predictive analytics?
Simply put, predictive analytics is a technique that uses historical data to predict future events. Predictive analytics answers the question “what will happen?” by using statistical algorithms and machine learning to sift through large quantities of data. Many businesses are taking advantage of this approach to improve overall efficiency and gain a competitive edge.
There are many valuable insights that historical data contains. For example, data regarding customer purchases can be used to uncover trends in consumer behavior- and to predict levels of demand during various times of the year.
Carrying out predictive analytics has also become easier, partly because of the large amounts of business data available. Data collected from sales transactions, IoT sensors, inventory recordings, and customer complaints can all be used to predict future outcomes.
In addition, the presence of more robust software, advanced computers, and machine learning are helping businesses to analyze data faster and to uncover hidden trends/patterns lying within this data.
How to implement predictive analytics in your business
There are 3 important steps you should take when implementing a predictive analytics approach.
1. Develop a plan for collecting data
You can’t estimate any future outcomes without first collecting historical data. Make sure the information you collect, store, and organize is of high quality- and covers both internal and external sources.
2. Select the right tools for data analysis
Predictive analytics is all about turning historical data into future predictions. To do this successfully, you need to use the right infrastructure, tools, and algorithms.
Small businesses may be able to use in-house predictive analytics software, while larger organizations may need to hire an outside consultant like Mactores to take care of their data analysis needs.
3. Estimate future outcomes based on your business goals
When preparing models for estimating future outcomes, you should always consider what your goals are. Your business goals will guide the type of data you collect, and how you analyze this data to uncover critical insights. For example, if you wish to hit a particular sales target, you may carefully analyze historical sales data to determine how feasible your goals are.
How Predictive Analytics can benefit your business
There are many use cases for predictive analytics, and this approach can benefit your business in many different ways.
Cut down your operational costs
One of the most significant benefits of predictive analytics is that you can save on operational costs. For example, forecasting inventory levels allows you to reduce warehousing costs; while forecasting customer demand enables you to adjust production expenses as necessary.
Reduce business risk
Predictive analytics is also used to assess the ROI of marketing campaigns and financial investments. Companies use historical data to develop credit risk models when providing loans, insurance coverage, or credit cards.
Implementing predictive maintenance
Manufacturers use predictive analytics to determine when their machines are likely to break down. In this way, maintenance can be carried out in advance to prevent costly downtime.
By using historical data to predict what will happen next, your business will be in a better position to optimize future outcomes.
Are you looking for the right analytics solution for your business? Mactores tailors the right solutions to help your company increase productivity and efficiency giving you the competitive advantage. Learn more about how Mactores can take your company to the next level.