Several challenges come with starting up your business, such as staffing, finances, system and database maintenance, outreach, and other prerequisites to elevating your firm. All these aspects must be well-oiled in order to create a profitable and resilient business structure. With the rise of business technologies, it is easier than ever to set up an excellent business structure with limited sources. One technology that small businesses must learn to leverage is predictive analytics.

This article will help startup owners like you to understand what predictive analytics means and how you can take advantage of this process to grow your business.

Understanding what predictive analytics means.

Predictive analytics involves formulating realistic predictions through observing patterns and trends in large amounts of data. Since predictive analytics can help organizations generate insights about the future with precision, these organizations can now use past and present data to forecast trends in the next couple of minutes, days, or years.

Though predictive analytics has been around for several decades, they have only hit the mainstream recently. Some of the reasons behind the boom of predictive analytics are the following:

The key to a useful predictive technology is the base, specifically high quality data. Good data is characterized as easy to understand and collect. Another prerequisite to predictive analytics is big data, or the accumulation and consolidation of huge amounts of data. More importantly, data should come in varied formats and from varied sources. They must also be verified and checked for relevance. The more good data collected and analyzed, the more reliable the predictions are.

What is the key to a useful predictive technology?

The predictive analytics market is expected to be the fastest growing industry between now and 2031. This is not surprising considering that they have many applications besides business. In financial services, predictive analytics are used to develop models for credit risk, forecast market trends, and predict the impact of new laws and regulations on markets. In law enforcement, crime trend data are used to define which communities need additional protection at certain points of the year.

Business is one of the biggest industries that reaps the many benefits of predictive analytics. Fortune 500 companies use predictive analytics because they allow them to scale businesses and processes, serve as a foundation for defining business strategies, and aid them in uncovering hidden patterns and associations among many variables. Simply put, businesses can use predictive analytics to identify risks and opportunities.

Below are ten specific ways that small enterprises can use predictive analytics to boost their businesses.

Reaping many benefits of predictive analytics.

How many of your clients belong to Generation Z? How many live in other countries? Predictive analytics can give you the answer to these questions. Answering these questions will help you understand who your customers are, and by extension, what they need and want. This will help you make tailored marketing messages for each segment of your clientele. As a result, they will be more likely to interact with your ads and make a purchase. You can also use data on your existing customer base to know who your potential customers are, so that you can reach out to them too.

There will always be customers who will not be satisfied with your services. With predictive technology, you can reasonably foresee which customers are thinking of ending their relationship with your company. So, you can act proactively, retain the customer, and save money and effort that would otherwise be spent trying to attract new customers. For example, analytics could tell you that you are losing customers in lower income brackets, so you can offer them a discount.

How can predictive technology help your business?

What is the best price for your product so that you can grow significantly while appealing to more customers? How many customers will you lose if you add $10 to a product’s price tag? Through data analytics, you will know how much your average customer is willing to spend on a product like yours. You will also be able to compare prices with competitors. In the end, you will set a price that makes you and your customers happy.

Based on previous data, analytics help you identify which products are mostly bought by customers at a given day, month, or hour. This information helps you stock up on products which are in demand at certain times and buy or produce less of the products that are not in demand. The weather, political factors, and holidays are just some of the factors considered for sales forecasting.

Customer surveys, customer profiles, and product characteristics will all be considered in making a product that meets customer requirements and increases your profits. One customer survey can give you helpful insights, but imagine comparing customer feedback across the years and throughout periods of different product formulations and packaging. The results will be richer and more reliable.

How predictive technology can enhance product and service quality.

Risk assessment varies across different industries. But a good example of risk assessment is in banks giving loans. How would banks know which clients to trust for big loans? What about clients who are likely to default and the losses associated with this? Analytics use multiple information sources to determine and mitigate the impact of various risks. This is especially important for startups that are more vulnerable to such risks.

Personalized customer service is a competitive advantage of small businesses. This personal touch helps them build a loyal customer base in the face of competition. For example, predictive analytics can be used to project what time and days customers are likely to call your company, so that you can prepare enough staff members to meet the demand. That way, customers will think of your company as approachable and well-equipped.

Simply put, marketing analytics can help you plan your marketing campaign. Knowing how to craft a message based on the characteristics of your target audience is one thing, but knowing when to send the message is another. A perfectly-timed marketing message supports a customer’s journey and ensures that your business provides a nudge at the right time to capture a customer.

Looking at your competitors' websites is not enough. Use Google Trends to find out how popular a brand is, and use social media data to find out how many people are talking about a company and what exactly they are saying about it. Twitter is a good place to start. Also keep in mind that your rivals will see the same information on you. But you can stay ahead of them by using big data technologies to analyze information.

Keep in mind that your rivals will see the same information on you.

How do you identify the best applicants to include in your staff? What about which employees to promote or demote? Using data from recruitment sites, social media, or your own HR department, you can make these decisions more quickly and ensure that your staff is composed of the most qualified and dedicated people.

Bash Sarmiento is a writer and an educator from Manila. He writes laconic pieces in the education, lifestyle, and health realms. His academic background and extensive experience in teaching, textbook evaluation, business management, and traveling are translated into his works. You can find Bash on: Instagram, LinkedIn, or Facebook.