In any business, a vast amount of data is generated daily, like the number of orders, order details, customer details, or the total revenue generated. Bulk of data is advantageous for business intelligence, however, it’s not enough. Studying patterns and trends extracted from data is crucial, which in turn, helps improve decision-making.
Coming to the million-dollar question, what is predictive analytics of big data and how can it help one’s business grow? Let’s explore!
What is predictive analytics?
Predictive analytics refers to statistical analysis, data mining, machine learning, and other methods used to synthesise business insights and future market trends from present collected data.
According to statistics, top benefits firms consider while using predictive analytics tools include improved productivity and efficiency (63% of respondents), effective decision-making (57% of respondents), better financial performance (51% of respondents), and maintaining a competitive advantage. (48% of respondents) (Source: FinancesOnline)
- Improves customer targeting
Through predictive analytics tools, one may be able to view each customer’s unique product history. Hence, one can easily decide the opportunities for selling similar products that may interest the customer.
Let’s take the example of a business selling electronic products like smartphones, smartwatches, and voice assistant devices. A customer may have purchased a smartphone two months ago. After a few months, the customer may consider purchasing another similar product, like an earphone, to listen to music. Predictive analytics using Business Intelligence Tools helps judge which product the customer is most likely to be interested in, ensuring that one can judge the target audience for a product.
- Improves customer retention
In a business, data regarding customer purchases and product sale trends can also help retain customers. For example, let’s consider that there is a customer who purchases a smartwatch. They may be offered an extended warranty of 2 months over the 1-year warranty of the smartwatch to retain the customer. Predictive analytics using Business Intelligence Solutions can help obtain such data about the company customers who have purchased smartwatches.
- Helps avoid risks
In every company, there are many risks involved. The most predictable of all is of overstocking slow-moving products. For example, there may be a business selling fashion or lifestyle products. With the help of Business Intelligence Solutions, this company can analyse which product/SKU is less in demand and hence identify a slow-moving product. The business can avoid overstocking/understocking products that aren’t in demand and plan the inventory better. It will help avoid risks for the business as they will carefully use the working capital and ensure proper warehouse space management.
- Helps ensure profitability
Did you know that research based on Fortune 1000 companies revealed that companies can obtain an additional $65 million in income if they increase their data visibility by 10%? (Source: 3 Steps for Measuring ROI of Data Quality for Data-Driven Marketers, Forrester)
In an organisation, predictive analytics can help determine the profitability of selling a specific product, the costs associated with manufacturing products, etc. For example, suppose a company realises that the cost of production of pastries is high due to the high cost of sugar. In that case, it may switch its supplier to one that supplies sugar at a comparatively lower cost or an alternative to the current sugar in use. This decision improves profitability.
- Helps make financial predictions
In any organisation, one must make many predictions based on past business trends. For instance, predicting revenue or costs for the next quarter may be a matter of concern for a business. With the help of Business Intelligence Solutions, a company can analyse data to help determine the average cost of manufacturing, the average revenue per month, and so on. Data can be obtained related to the average price of a product or estimated profitability on a monthly, quarterly, or yearly basis.
In a nutshell…
Companies can use predictive analytics tools to analyse big data for various industries including retail, education, finance, etc. Companies can continually adopt these tools to improve business efficiency.
Nandini Infosys is a leading provider of Business Intelligence Solutions in Gurgaon. Do you want to experience business efficiency using software solutions? Then, click here to learn about Nandini Infosys and its offerings.