Predictive Analytics is one of the most common AI applications used across many industries, such as healthcare, banking and insurance companies.
This type of software allows organisations to plan for the most probable outcomes, making predictions about future business events based on historical data.
What is Predictive Analytics?
Predictive Analytics is a category of data analytics, that uses current and past data to generate future insights and forecast events that should occur based on supplied parameters.
Using historical data and analytic techniques, such as Machine Learning, Predictive Analytics can reliably forecast trends and behaviours into the future.
Organisations can then find and utilise patterns contained within the data, in order to detect risks and opportunities or reach a business goal – such as reducing waste or saving time. This generates clear and actionable outcomes that organisations can use.
Why Is Predictive Analytics Now Used?
More organisations are now turning to Predictive Analytics to increase their competitive advantage. Some of the reasons for this is due to:
- Growing volumes and types of data
- Advancement in technology
- Easier-to-use software
- A need for competitor advantage and differentiation
Why is Predictive Analytics Important?
Businesses are using Predictive Analytics to help solve problems, as well as to detect new opportunities. This includes:
- Detecting Fraud
- Optimising Marketing Campaigns and Strategies
- Improving Operations
- Reducing Risk
Predictive Analytics Models
Predictive Analytics has a range of methods and technologies, inducing Machine Learning, data mining and big data. It also uses models – which allow organisations to turn past and current data into actionable insights. Some examples of common models are:
- Customer Lifetime Value Model – customers who are most likely to invest in more products or services
- Customer Segmentation Model – customer grouping based on characteristics and past purchasing behaviours
- Quality Assurance Model – Spots and prevents defects to avoid disappointments for customers
Using Machine Learning
Using Machine Learning with Predictive Analytics allows organisations to make more accurate predictions due to large amounts of data being utilised – using more data and getting a clear image of the organisation’s business history.
These predictions include a list of the most probable outcomes along with confidence score indicating, to assess the accuracy of the prediction based on software estimation.
If you want to know more about Predictive Analytics and how it can benefit your business, contact us now to see how we can help your business.