Predictive analytics is a broad term used to describe a variety of statistical and analytical techniques that evaluate current and historical facts to forecast future events or behaviors. Predictive analytics allows organizations to target potential customers, determine more accurate pricing, and identify risks and opportunities. All functions across an organization benefit from predictive analytics including sales and marketing, human resources, R&D, manufacturing, operations, logistics, risk management, finance, and accounting.
Empower IT’s clients derive three major benefits from using predictive analytics: revenue generation, cost optimization, and risk management.
- Revenue Generation - predictive analytics helps identify which customers are most likely to buy new offerings, which will buy only if there is a promotional offer, and which segments will not be interested. This will ensure that you channel your marketing budget to the right audience. These tools help support decisions based on professional experience and provide further objective insight into client demands and price sensitivity.
- Cost Optimization - predictive analytics helps develop forecasting models to estimate store demand based upon consumer demographics, store traits, and historical sales. Typically, supply chain costs constitute a significant portion of the cost base of product marketing. Optimizing supply chain becomes a key challenge. If a new product’s distribution to outlets is not governed by a demand forecast, there are cases of both stock-outs and overstocking. Products requiring reshipment result in increased distribution costs and lost sales if they arrive late.
- Risk Management - predictive analytics is utilized to assess both risks and opportunities. Which customers/suppliers/vendors are likely to default and which are likely to be profitable, long-term partners? Armed with this insight on expected behavior, an organization can make decisions about scarce resource allocation.