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How to leverage Predictive Analytics to Understand Customer Behavior
How to leverage Predictive Analytics to Understand Customer Behavior
Organizations are constantly in search of new and efficient customer engagement strategies. In today’s highly competitive scenario, it is imperative for businesses to maintain an edge to gain customer retention and expand their reach. Predictive analytics is an ideal solution, which aids them to understand their customers better, retain them, and further acquire new customers effectively. Predictive analytics tools enable implementation of effective marketing campaigns and measure the effectiveness of marketing methods and offers, on different customer segments.
Predictive Analytics to aid Marketing Strategy
Big data technologies, along with predictive analytics, aim at providing actionable insights to organizations. It is possible to source data from multiple channels, so a better insight on customer behavior is arrived at and used appropriately to enhance their experience and retain them as loyal customers.
The major objectives a business targets at, with its marketing is to get deeper customer insight, engage customers at the right time, ensure consistency across multiple channels, and establish a continuous and ongoing communication. To forge a deeper customer relationship, it is necessary for businesses to employ the right marketing strategies based on the customer behavior insights they get with the help of predictive analytics. Predictive analytics enables an organization to assess historical data and predict future customer behavior. This information enables companies to understand and predict the actions of their customers.
Business can as a result optimize their marketing campaigns, boost customer experience, and enhance retention and loyalty. Customer centric marketing strategy is hence a highly preferred method. Predictive analytics evaluates past customer behavior and predicts future trends. In short, it gives a better understanding of present, past and future customer behavior via behavior patterns and product usage.
How Organizations Leverage Predictive Analytics
With collection of customer information being much easier and faster now due to sophisticated and accessible technologies, companies are able to collect customer data and record them at every stage of customer life cycle. The hardest part however is using the data collected to increase customer centric efforts. Predictive analytics helps in this aspect by meticulous analysis of granular historical and real time data, and by using predictive models based on the data. Many top companies have benefitted from this process:
• Amazon uses ratings, likes, past and present purchase history of customers and comparison of present purchases to similar purchases done by others to make recommendations on future product purchase and as a result has over 89 million active users
• Netflix uses user ratings of its television shows and movies to make recommendations on TV shows, movies, and genre and as a result has 36.6 million streaming users and 8 million DVD subscribers
• Pandora utilizes user ratings on genres, artists and songs to make recommendations on new music- has over 70 million users
• Twitter uses the user connections and the websites that users visit to recommend fresh connections- has over 200 million active users
The above popular brands have found success in adding new customers due to their strategy of anticipating customer needs and making the right recommendations on at the right time.
Catering To the Bottom Line
While companies collect huge amount of data, not all the information collected can be used. Predictive analytics enables processing of the data to assess the variables present and decide on the valuable data, so the business objectives are met with. For a deeper insight on your customers, you need to recognize the predictive patterns and elements present related to every customer including the variable data received from other channels, departments, and even associates.
With the insights gleaned from predictive analytics, it is possible to respond to changing market conditions and the business tactics of your competitor such as promotions. You will be able to implement the right strategies that address the changes in customer behavior as a result. With the information arrived at from the analytics, it is possible to make proactive changes, stop negative trends and seize opportunities exactly at a time when your customers are ready.
Exploring New Horizons with Predictive Analytics
Predictive analytics along with other big data technologies helps to identify trends, boost performance, understand customers, predict behavior, and enable strategic management. Some common spheres of business that the analytics has been used beneficially include:
Strengthen security and detect frauds: Multiple methods of fraud detection including business rules, link analytics, and anomaly detection etc. results in accurate and predictive performance. The behavioral analytics analyses all network activity in real time, so abnormalities related to persistent threats, occupational fraud, and zero-day susceptibilities are spotted right for strengthening cyber security.
Marketing: Customer response to sales, promotion of cross selling opportunities, attracting, retaining and growing a loyal customer base as well as maximizing their spending are a few of the important applications of predictive analytics in the marketing field.
Risk: Credit scoring is the rating used to assess the likelihood of a customer’s default factor on purchase of insurance, cars or homes. Predictive analytics model produces credit score from all data related to the creditworthiness of a customer. Insurance collections and claims are other areas where analytics is highly useful.
Business operations: Forecasting inventory, management of factory resources, deciding on the number and pricing of flight tickets in airlines, number of hotel guest expected and adjustment of prices based on maximum occupancy in the hospitality industry etc., are some of the key areas predictive analytics is used.
Predictive analytics does not give a precise account of future happenings, but helps to identify trends or patterns, which can be used to assess the probable future outcomes. Although it is not foolproof, with a precise predictive analysis model, it is possible to accurately predict outcomes that help in effective decisions and investments. Organization looking to implement predictive analytics solutions can opt for guidance from technology consulting companies that can help them assess and implement the right solutions to meet their business specific needs.
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