You must have heard how knowledge of the past can lead to insights into the future, right? Well, that is exactly what the field of predictive analytics is there for. The term predictive analytics refers to the analysis of historical data, through machine learning techniques and statistical algorithms, in order to decipher probabilities of future outcomes.
Short History of Predictive Analytics
When it comes to tracing the history of predictive analytics, the fact is that one needs to go back in time to 1940s—the time known as the dawn of computer age. Ever since Alan Turing laid the foundation of the work, during the days of World War II, to decode German messages, the field of predictive analytics has progressed continuously.
In the 1950s and 1960s, analytics became a lot more available for commercial usage. From using predictive analytics for predicting weather to using insights for improving air travel and logistics—this was the era when predictive analytics were first employed for the good of common man.
When it comes to tracing the history of predictive analytics, the fact is that one needs to go back in time to 1940s—the time known as the dawn of computer age. Ever since Alan Turing laid the foundation of the work, during the days of World War II, to decode German messages, the field of predictive analytics has progressed continuously.
In the 1950s and 1960s, analytics became a lot more available for commercial usage. From using predictive analytics for predicting weather to using insights for improving air travel and logistics—this was the era when predictive analytics were first employed for the good of common man.
Since then, predictive analytics, as a field, has come a long way. From being used in credit risk decisions to predicting the optimal price for stock options over the course of time to inclusion in Google algorithms for maximizing the relevance of search results—predictive analytics appear to have found a way in every walk of life.
Usage of Predictive Analytics in Different Industries
As has already been mentioned, predictive analytics are being used in, almost, every walk of life and industry nowadays. Here are a few examples just to present an idea of what predictive analytics are exactly about.
Finance
The financial industry is, perhaps, the industry that’s utilizing predictive analytics in the best possible manner. Through the use of predictive analytics, financial institutions have greatly improved their pricing decisions.
Moreover, banks are more equipped than ever to forecast their liquidity positions in the foreseeable future. Based on past consumer behaviors, banks can model the inflows and outflows of cash. Such forecasts and data analysis prove to be essential when it comes to avoiding liquidity crunches and minimizing risks.
Retail
When it comes to the retail industry, one cannot stress enough on the importance of customer loyalty and retention. Once a customer has disengaged from your brand, there’s not much left for you to do, right? This is the reason why it’s recommended to prevent such a scenario in the first place.
Predictive models can do wonders to indicate which customers are straying and the ones who have prospects of bringing about long term business. If you find out that you’re losing a good customer, it’s essential for you to consider retention policies that are meant just for them. From special offers to added incentives, there’s a lot that you can do to ensure that they stick to your brand…if they’re a good prospect of course!
Healthcare
When you speak of the healthcare industry, the biggest problem that, both, doctors and patients come across is that of treatment. A lot of trial-and-error is required before a suitable is found for a patient. This makes the treatment less efficient, considering how unnecessary operating costs mount up.
Predictive analytics can be used to make more informed choices regarding the treatments of patients. The medical history and demographics of a patient could be used in order to determine the best possible treatment plan for any patient under question.
Health Insurance
When you speak of a hybrid of finance and healthcare industries, the health insurance industry comes instantly to mind. First of all, the characteristics of the individuals who have already purchased health insurance plans are studied. Next, a profile indicating the kind of people buying a specific product is prepared. Predictive analytics is then applied to discern the policy holders likely to make a claim in the near future.
The more the data available on the history of claims, the more accurate the predicted results will be. Moreover, extraneous information about policy holders is also taken into account by predictive analytics.
Marketing
In the contemporary age, marketing is, perhaps, the most important department that businesses have. With intense focus on quality and fierce competition, selling really is a matter of who can attract customers in the best possible manner. This is the reason why marketers are actively integrating predictive analytics into their marketing strategies.
However, in order to leverage your marketing strategy on predictive analytics, you’ll need robust customer data that can be used to make predictions about the behaviors of your customers. On top of that, the recognition of trends is a complicated matter, requiring the expertise of an experienced marketer. Remember: if you leverage your marketing strategy on predictive analytics without a sound base, you’ll end up doing more bad than good.
Human Resource
A good business can only become great on the backs of its employees, right? Well, this is exactly the reason why one needs to put in great thought before the hiring and firing of employees. This is the where the need for predictive analytics in human resource comes into the picture.
Predictive analytics aid the HR officials in deciphering metrics like who will meet the performance quota, give excellent service to customers, feature low error rates or spend the budgeted funds efficiently. These are crucial considerations that, literally, shape the manner in which an organization is managed. At the heart of it all is predictive analytics and the impact it has on the supervision of employees.
Closing Thoughts
When you take it all into perspective, you have to say that predictive analytics is of utility in every field of business and industry that one can think of. Gone are the days when the wonders of predictive analytics were mere myths that could be read about only in books. In the contemporary world, predictive analytics, undoubtedly, has real world applications!
Do not forget! AnswerMiner has a built-in prediction model that you can use to make predictions based on your collected data.
