Predicting future scenarios based on displayed behaviour. That probably sounds like music to every modern entrepreneur's ears. But how do you ensure that this does not remain an ideal image and actually becomes a reality? This article will give you three ingredients you need to get started with predictive analytics.
The benefits of predictive analytics are obvious. The examples are numerous:
A telecoms company uses predictive analytics to predict which customers are about to cancel their subscriptions. By analysing customer behaviour, such as decrease in usage or negative feedback, they can offer targeted offers or solutions to retain these customers. Result: a significant reduction in customer turnover.
A retail company uses predictive analytics to predict sales trends. By combining historical sales data with external factors such as seasonality or holidays, the company can better estimate how much stock is needed. This reduces situations of surplus as well as scarcity, reducing costs and increasing customer satisfaction.
A lender uses predictive analytics to predict the risk of default. The model combines historical credit data, income and economic trends to assess an applicant's creditworthiness. This results in better decisions and fewer default losses.
That way, you solve problems even before they occur. And above all, you discover opportunities that remain hidden to other, non-data-driven organisations. Sounds good, doesn't it? In any case, it's reason enough to get started with predictive analytics.
In these economically uncertain times, with a - perhaps large - number of impending bankruptcies, growing fraud risks and increasingly stringent laws and regulations on customer controls, it is important to get moving. Indeed, the predictive power of data has become indispensable to plan a stable future.
But how do you take the first steps in this? These three ingredients should already be on point to create a working environment in which predictive analytics can flourish.
Bring IT and business together from the start
Data-driven business is not a task for either IT or the business. Do you want to make the most out of the predictive power of data? Then, you will need to ensure that IT and the business work together from the very beginning.
The marketing, sales and service teams know the business best and know better than anyone else which variables define success. In turn, IT has the technical ingenuity and acts as a critical sounding board. Not by blindly carrying out what business units ask for, but by engaging in a constructive dialogue with each other.
Break silos and open your infrastructure
To best predict the future, models need large amounts of data. Deploying predictive analytics is neither useful nor successful if data does not flow through the organisation.
The traditional structure of companies, with separate departments that each have their own systems and store their data in separate places, stands in the way of data-driven business. Even before IT and the business sit down to take the next steps, it is necessary to take a critical look at your infrastructure first.
By using APIs, among other tools, communication between systems and platforms is quite easy today. And then, you are able to break through the still existing (data) silos.
Clean and keep data, because garbage in = garbage out
Datasets have a set number of variables, while the future is determined by an unlimited number of factors. Predictive analytics therefore does not tell you exactly what will happen, but it does provide you with insights. Insights that help you determine a direction or make choices. One hundred per cent guarantees can never be given, however.
On the other hand, do you want the forecasts to be as correct and accurate as possible? Then, it is important that the data you base the insights on is 100% reliable. No matter how fine and sophisticated your predictive models is, if you insert incorrect information into them, it makes the outcomes unreliable by definition. After all: garbage in = garbage out. Therefore, make sure your data landscape is clean from the start and that it stays that way.
Organisations that are not data-driven are left behind competitors. Data-driven business is the future, but we understand that organisations continue to struggle with this. That is why we are here to help you get started with predictive analytics.
Is data-driven business as a topic high on your agenda, but you have no idea where exactly to start? Are you looking for high-quality data to support your decisions and/or enrich your own database? Or are you looking for the right tools to take the next step within your digital transformation? Whatever your challenge, we would love to hear how we can help you.
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