What Is Predictive Analytics? Practical Uses and Benefits
Data is a crucial part of any successful business strategy. The insights that an analytics company in Chicago gets from predictive analytics positively influences business growth. It is practical for decision-making and helps in understanding customer demands.
This article covers the major points you should know about predictive analytics:
- What is predictive analytics?
- Top practical uses and benefits
- Why use predictive analytics
We have a lot to discuss, so get ready to take notes. Let’s go!
What Is Predictive Analytics?
Predictive analytics identifies market trends and notable patterns in consumer behavior to estimate future outcomes. For instance, AI-powered predictive analytics helps forecast inventory to reduce margins for error and create a reliable system for better returns. It can predict trends and refine strategies based on past data.
However, its accuracy depends heavily on the available data. You need extensive historical information to yield reliable results, and keen insight to mitigate the influence of external factors on most trends.
Predictive analytics reshapes any business strategy for greater efficiency when used in context and with rich data. It also has numerous practical uses that make it vital in modern marketing.
Most Common and Practical Use Cases
To use any tool or asset effectively, you must know what it does and how it helps your business. Just as you would not hire an analytics company in Chicago if you live in another country, your choices should match your intended results or long-term business goals.
Below are three of the most common business applications of predictive analytics:
1. Discover Trends in Data
One of the primary functions of predictive analysis is to help businesses understand user behaviors. A typical example is tracking content engagement to know the audience’s sentiment about a brand.
For instance, a Hegewisch photo studio wants to discover what content performs best on social media. They collect comprehensive information on their online activity to analyze how people react to their copy.
Assessing a post based on likes and reposts alone provides little to no insight into how potential customers perceive the business, its services, or the photographer’s skills. Supplementing these with qualitative (e.g., reviews) and demographic data (e.g., age) results in a more holistic view.
An analytics company in Chicago helps the photo studio by analyzing its social media posts by theme. This step helps them understand the unique market segments. The Hegewisch photo studio then adjusts its strategy for more precise targeting in ads and content.
2. Reduce Business Risks
Risky decision-making stems partly from lack of insight or understanding of the market. Gaps in either of these seriously threaten any business because they paint an inaccurate picture of the situation. The slightest miscalculation can have a major impact on day-to-day operations.
Predictive analytics can help bridge these gaps by making the data clear and insightful. Retail is an excellent example of an industry incorporating predictive analytics in risk management.
A supermarket chain operating in Englewood, Fulton Market, and Wrigleyville maintains the same inventory across all locations. However, each neighborhood has unique needs. The Englewood supermarket serves a racially diverse clientele, so importing goods from other countries attracts more customers. On the other hand, the Fulton Market and Wrigleyville locations benefit more from carrying various light snacks.
3. Maximize All Resources
Predictive analytics guides businesses in maximizing resources. It sets a realistic target and builds a reliable preview of possible outcomes so leaders make informed decisions about resource allocation.
For instance, regression analysis determines the relationship of variables. It gives clues on what works and equips businesses with insight into better strategies to develop.
Another method that every top Chicago analytics company uses is the decision tree. It is a data-backed flowchart of possible options and their predicted outcomes. For example, a Northalsted family-owned restaurant uses it to weigh the cost and benefit of extending or modifying operating hours.
Creating neural networks and leveraging machine learning enhances decision-making. It also automates much of the work needed for future iterations. Training AI algorithms on massive data libraries produces forecasts that accurately capture customer behaviors.
5 Reasons to Use Predictive Analytics
Predictive analytics is also valuable for other digital marketing strategies. Knowing how and why to integrate it with campaigns influences your market performance, especially against leading competitors.
Here are five practical reasons why predictive analytics belongs in every digital marketing plan:
1. Provide What Customers Demand
Following trends is a reliable, worthwhile, and effective strategy for building a successful business. However, establishing yourself as a trailblazer is equally essential. To do that, be in touch with the people’s line of thought.
Predictive analytics allows you to deeply understand your customers. For example, a Lakeview ecommerce shop tracks user behavior to enhance the company’s suggested product listings and increase sales.
Lakeview’s well-known wide open spaces and scenic views, such as the famous Wrigley Field Stadium and the sweeping coastline of Belmont Harbor, imply demand for picnic gear or other entertainment supplies.
2. Know What Drives Website Traffic
Content creation is another area that benefits from predictive analytics. This analysis helps determine which posts or themes people respond to best. Combining predictive analytics and machine learning to understand on-page activity gives your understanding a boost.
Tracking eye movement is another method to gain insight into how visitors interact with your business. It produces a map of hotspots (areas on a webpage that draw the most attention) and visualizes how users move through the page and consume content.
Tracing movement while users browse augments content, website, and marketing strategies. The more you understand what goes through your audience’s mind, the better you address common content or product development problems.
3. Get Invaluable Customer Insights
Predictive analytics goes beyond providing a passive glance at customer needs. It also helps identify themes in qualitative data, such as comments and feedback. It widens your options for data and boosts the value of doing customer surveys.
A Chicago analytics company, for instance, helps food truck operators identify the factors that draw and retain their customers. Asking paying customers for their honest opinions can heighten positive aspects of their experience and increase sales.
Learning how price, taste, and service influence customer choices is crucial in refining future strategies. Predictive analytics also tell you why your market avoids the cheapest options.
4. Encourage Operational Efficiency
Greater efficiency is a natural benefit of predictive analytics. It affects operations, smooths workflow, and improves cost-benefit analyses.
Say an online retailer wants to remedy logistics problems hurting sales and customer satisfaction, such as delivery times. A top marketing firm in Chicago suggests analyzing factors that affect speed, including traffic conditions and time.
The data allows the company to present customers with a more realistic time frame. Knowing the cause of delays also improves delivery routes for greater efficiency. This keeps the business profitable and customers happy.
5. Understand Customer Behaviors
Knowing what pushes repeat sales inspires Chicago business owners to strategize more carefully. However, the reliability of analysis depends on the type of data, where you obtain it, and how you collect it. Getting into the nitty-gritty details of research and data collection is daunting for non-experts. Thankfully, finding a step-by-step article is easy.
Outsourcing predictive analytics is another viable option to maximize resources. A team of experts already has a sense of what drives Chicagoans and how to put these tools to the best uses for you, so much of the work is whittling down the variables to suit your business’s specific audience.
Businesses can only maintain success and growth by turning to research, especially predictive analytics. Understanding your target audience by looking into past data is one of the most basic tenets of marketing. Looking into the future with this data is a new but necessary frontier.
Need help applying predictive analytics to your Chicago business’s digital marketing strategy? Contact Digital Authority Partners to learn how we can help.
Want To Meet Our Expert Team?
Book a meeting directly here