Do you know, Netflix offered a whopping $1 million to anybody who could help them in improving their recommendation engine’s quality by 10%? The purpose of this experiment was just to find out ways to improve their recommendations that are provided to their end customers.
But why are we talking about Netflix?
We are not talking about Netflix but trying to highlight the importance of understanding the customers’ needs. Netflix tried to predict their customers and their demand in the year 2006 with this experiment. More than a decade has passed but in today’s scenario, it is even more crucial to be able to predict as accurately as possible to be relevant.
With changing times and demand, the predictive analysis came to being and became crucial for every business’s decision-making process. In this article, we will tell you how it is crucial for YOUR business’ decision making too!
Predictive Analysis – What is it and how does it work?
Predictive analytics can be considered as a practice, which extracts relevant and useful information from the existing sets of data and helps businesses in determining patterns as well as predicting future trends and outcomes. Although the predictive analysis doesn’t predict the future accurately, it can forecast what might happen. The prediction that it does is based on acceptable levels of relatability, it includes risk-assessment and every possible what-if scenarios.
Businesses have started to cultivate the landscape of predictive analysis because of its predictions help deliver the value perceived by the customer.
More computing power, more storage, and more data!
Massive repositories of customer interactions that you have are potential raw source material. These are used to establish a pattern in customers’ behavior patterns with predictive analytics. When you realize it – the accessibility of data and the collected data helps the implementation of predictive analysis.
Then as almost every business has sound computing power, it made the implementation of predictive analysis faster, easier, and more correct.
In easier words, the predictive analysis doesn’t work on some foreign sophisticated system, it works with your system and data. No wonder, almost every company started to interact more with their customers.
Let us take a deeper dive and understand the process of predictive analytics.
Predictive analytics – the process
This where the project is defined – the outcomes, identification of the data sets, business objectives, scope, and deliverable. This step enables you to approach the project with clear intents and objectives.
Collection of data
This is when the process starts and it starts with the preparation of the data from various sources. The process of data mining can take a little longer than expected, but this is the backbone of the entire process.
The process of modeling, cleaning, and inspecting data is data analysis. The main objective of data analysis is to discover useful information, which will be ultimately used in the decision-making process.
The statistical analysis validates the assumptions that are made during and after the data analysis. Further, statistical analysis validates and test every hypothesis using standard models of statistics.
The predictive modeling offers the ability to create predictive future models that are close to being accurate. The predictive modeling can also help you understand in assessing future scenarios based on today’s trends.
Predictive model deployment
The predictive model deployment will provide you the option of deploying the analytical results that you gathered from all the previous processes. You can deploy the analytical findings into the present process of decision making.
This is a process that will come in only if you have deployed the predictive model. The models will be monitored and managed to review the performance of the model and make sure that you are getting results.
Which decisions can you take with predictive analysis?
We understand you want it to predict everything! Who wouldn’t? The predictive analysis will give you predictions based on accurate studies and statistics. Therefore, the chances of them being true are pretty high. With the data and information that you will get from predictive analysis, you can take a lot of decisions easily. Here are a few instances:
- Which advertising can prove to be most effective?
- Which marketing campaigns channels and campaigns, as well as customer demographics and behaviors, can contribute to your existing business outcome?
- Modeling which campaign will work best for a particular business problem
- How many leads converted with your existing strategies? Based on the finding, you can decide or modify your strategies.
- The longevity of customers based on their past behavior and purchase history?
The list can go much longer.
Time to turn data into predictions!
There is no longer “insufficient data!” The limitation has faded and it’s time to make the most of your data and predict the future with the predictive analysis. Based on the findings, you can make a decision and when you have numbers with accurate evidence to back them, decision making becomes much easier and better.
i95Dev has helped numerous clients implement their strategies. With a deep understanding of Magento, we helped growing companies build that much-needed eCommerce platform. For more information on how we can help you, contact us today.