Predictive analytics may not tell your future, but using it can increase your company’s fortunes.
Each time you buy something online, you’re providing more than just your name, address and credit card number. Websites collect a vast treasure trove of valuable information about you, even if you never make a purchase.
The information a company can collect ranges from the search terms you use, to how long you spent looking at specific pages. However, this is still just the “tip of a very large and hidden iceberg.”
When I ask business owners about who their target customers are, most are only capable of responding with a short sentence, “Our customers are married men between the ages of 40 and 60.” This isn’t nearly enough information to make appropriate business decisions.
Some have a much clearer idea of their target audience, and can provide a more complete customer persona based on general trends. However, as of yet, no client has ever presented me with an extremely detailed report of their market’s actual online behaviors.
This is no way to run a business. The more you know about your customers, the better you can predict their needs and cater to them. Collecting and analyzing big data is the best way for you to learn as much as you can about your customers and their behaviors.
What’s Big Data and Why Is It Such a Big Deal?
Perhaps you’ve heard the term “big data” before, but you may not know exactly what it means. To put it simply, it describes a collection of information that’s so large and cumbersome that it’s next to impossible to analyze without using a computer. However, there’s much more to big data than this basic definition.
Back in the early 2000s, industry analyst Doug Laney developed the concept behind big data. He defined it with the Three V’s: Volume, Velocity and Variety.
Companies around the world spend a lot of money on big data.
How Can Your Business Prosper from Big Data?
Although there’s a great deal of hidden potential in big data, it takes one more step to transfer information into knowledge. You can use this information to improve your business through the power of predictive analytics.
Predictive analytics deals with what’s likely to happen in the future using structured and unstructured big data.
Some areas where predictive analytics is most advantageous are with pricing strategies, inventory management and preventative maintenance.
While most small businesses don’t have as much big data as large corporations, every business can still benefit by applying the principals of predictive analytics to build a better understanding of its market.