We are naturally curious beings and are so invested in the future and what it holds for us. Perhaps that is why astrology, horoscopes, palm readers, and their ilk continue to thrive. In fact one of the movies which dwelt upon this subject of predictive analytics in the human context was “Minority Report” where pre-cogs – humans with the ability to see the future – are used to stop crime. It is this curiosity of the future and how it can be leveraged in the business context that has led to predictive analytics gaining momentum. In fact in many businesses, it is an integral part of their growth and marketing strategies.
Let’s see what predictive analytics is, its
uses in business and what the future portends.
Inhibitors to a more prevalent Predictive Analytics landscape
Imagine having tons of data– structured or unstructured – lying in storage in different IT systems, across your business. Now imagine using analytics techniques such as statistical modeling and machine learning on historical data to predict future outcomes with precision – predicting weather is a classic case of using data analytics But like any data science, businesses continue to face a few challenges with predictive analytics, however much it continues to gain momentum.
- Talent – the chasm between required and available data scientists continues to grow. This lacuna leads several companies to hastily invest in sub optimal software that they assume can parse these data sets and uncover business intelligence.
- Adoption – several businesses are still unable to comprehend how predictive analytics can actually help them, as they are used to their legacy systems.
- Data – businesses have ginormous amounts of data lying dormant in several systems. The challenge is to have access to quality raw data, both internal and external for effective predictive analytics.
- Data Protection – data is the most critical asset of any enterprise and hence concerns over its privacy, security and ownership inhibit access to it. Tools – what kind of predictive analytics tools does my business need and why, are two of the most significant questions the business must answer before investing in predictive analytics software.
While many businesses are still grappling with these fundamental inhibitors to greater adoption of predictive analytics, data also reveals high adoption. According to the Predictive Analytics Technology Report, 36.8% of high-growth companies planned to invest in predictive analytics, while a Forbes insights report suggests that 86% of companies that have been carrying out predictive marketing initiatives for at least 2 years witnessed “increased return on investment as a result of their predictive marketing”.
power of predictive analytics
The ROI on predictive analytics is not surprising. With predictable analytics, getting answers to complicated marketing questions is no longer in the realm of impossible.
“Will this marketing campaign do well?”,
“Will this customer buy my product or invest in my service again?”,
“Are my customers nestled in this geography, coming from this socio-economic strata?”,
“Will my readers download this case study,”
“What’s the probability of my readers/ users/ customers responding to this email?”
are just a slice of the myriad questions predictive analytics can help uncover answers to.
With the power of prediction, businesses can forecast customer churn, customer lifetime value, customer segments and personas to target, leads to conversion rates, cross-sell and up sell opportunities, and several such marketing criteria that can help in blue printing a strategy roadmap, which eventually will help sell more, gain customer traction and hear the cash registers ringing. Ka-ching!
Analytics cannot be ignored
Yes, businesses are aware of the challenges in adoption of predictive analytics, but can they afford to ignore it? While predictive analytics has evolved and become integral to businesses today, how will it continue to shape the future of business?
Wide spread usage – Several more industries are going to use it rigorously – from banking to insurance, healthcare to travel, manufacturing to hospitality – every industry is going to adopt it more aggressively.
Easy access to data insights – Data insights will no longer be restricted to the C-suite or a level below. Increasing democratization of data at all levels within the enterprise will be the norm, allowing for better usage, ideas and stronger strategies to develop.
Integration with IoT – Seamless interconnectedness with devices and applications will enable businesses to draw behavioral data bringing them closer to understanding their customer and personalizing delivery of services.
Simplifying data visually – Because a picture is worth a thousand words, data insights represented visually will become more and more prevalent.
Sentiment predictive analysis – Predictive analytics is moving in the direction of assessing patterns of human behavior and predicting the likelihood of a customer buying health insurance, committing suicide, buying a car, and so on are not in the realm of science fiction.
The idea of pre-cogs actually seeing the future and preventing crime before it actually happens is no longer science fiction, but an inevitable possibility. It’s true when they say art imitates life, and predictive analytics is definitely going to underpin the success of business in future.