What is Predictive Analytics and its Importance to Businesses

What is Predictive Analytics ?

Predictive Analytics is an emerging field in knowledge management and business strategies that deals with the use of quantitative data to arrive at a model of predicting human behavior. The field of predictive analytics is increasingly being used to model everything ranging from consumer behavior patterns to weather forecasting to making predictions about political events and predicting the course of diseases in patients. Predictive Analytics is closely allied with the other trend of Big Data that is rapidly being adopted by businesses all over the world.

The key point about Predictive Analytics is that it uses all kinds of data ranging from the macro to the micro to arrive at models that predict human behavior. The use of this technique can be extended to understand what motivates consumers to buy or not buy products as well as map emerging trends in marketing and business strategy. On a more general level, predictive analytics can be used to reduce crime, combat terrorism, and solve niggling healthcare issues related to how diseases can erupt in some places and the prognosis for their spread to other areas and patients.

How Predictive Analytics Works

Predictive Analytics is concerned about predicting the events that have not happened yet which seems to be mundane when one considers the vast amount of information that is available on the internet in this information age. If you think that predictive analytics is something kind of a clairvoyance or oracle like peering into the future, you are right in so far as the ability to predict the future is concerned.

The key difference between other methods and predictive analytics is that it is based on data and facts as well as information, which means that it is scientific and methodical, rather than based on intuition and hearsay. Of course, it must be mentioned that predictive analytics leads to outcomes that can be made use of by human intuition. However, the point is that the human element comes after the data is analyzed and not at any point in the data collection or analysis part.

Some Real World Examples

Some real world examples of how predictive analytics can be used are helping marketers target which customers will cancel the purchase or indulge in the buying process. For instance, in recent months, there has been much media frenzy about how the leading retailer, Target could predict whether women consumers who shop at their stores are pregnant. The other real world instance is when the technique was used to predict the outbreak of a nasty form of viral fever in the United States in the recent past. These examples serve to illustrate the use of Big Data in the technique called predictive analytics. The key aspect about predictive analytics is that it is about knowing the unknowable which means that the known unknowns can be converted into known knowns. This power of predictive analytics has huge potential to be a game changer in the field of business.

Predictive Analytics can be used for both good and bad purposes

A note of caution is due when talking about the power of predictive analytics. First, it must be used responsibly as the access to just about everything about consumers and citizens must not be misused.

Next, the people who have access to the predictions must not use them for undesirable ends. Having said that, predictive analytics is a tool for positive gains for corporations who would love to know where the next game changing trend(s) would emerge and how they can profit from them by targeting their products accurately and reliably. Moreover, corporations just love the fact that they have more control over the future and can own the future, which is what every business leader wants in order to be successful.

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