In 2018, it's no secret that the internet of things (IOT) gives business owners access to vast amounts of information. Buying habits, payment methods, travel history, shopping preferences…these are just a few of the things you can learn about your customers. Being able to collect and have access to this type of information is just one of the big data business benefits out there.
But what are you supposed to do with all that information?
Sure, it's cool to know that the average visitor to your website spends 14.68 seconds on the homepage. And it's neato to learn that your bounce rate is 32 percent. You could amuse yourself endlessly with the sheer volume of facts and figures you can collect. But even numbers geeks realize that data in and of itself isn't the point.
Business owners are hunting for big data business benefits. They want to find some way to use the data they collect to improve their company's bottom line.
Predictive analytics can be your solution.
What Is Predictive Analytics?
Predictive analytics uses big data to help you arrive at actionable insight.
Want a translation? Big data collects, processes and spits out information that may or may not be helpful or useful. Predictive analytics takes that big data—say, insight into past buying patterns or responses to emails or likelihood of defaulting on payments—and uses that historical data to predict future behavior.
One of the things that differentiates predictive analytics from big data is that predictive analytics tells you what data is relevant to the questions you're trying to answer.
For example, let's say you're trying to decide the best way to invest money to improve your customer's journey and your conversion rates. There are roughly 80 bazillion things you could change that may or may not affect whether a prospect pulls the trigger and makes a purchase. Predictive analytics can help you sift out the data that's really relevant, which can help you spend dollars wisely—and get a return on that investment.
Predictive analytics isn't a sure thing, of course. It's still an educated guess about what prospective clients might do in the future. But that guess is based on volumes of real historical data. The big data business benefits can be great when you start exploring predictive analytics.
Can Predictive Analytics Help You Make More Money?
Much can be written about this question because it gets at the very heart of big data business benefits.
But if you're just dipping a toe into the world of predictive analytics, here are a few areas you might want to focus on.
Evaluating clients and potential clients
Your mother may have taught you to treat everyone the same, but when it comes to maximizing profit, that's not necessarily good advice. Sure, every customer deserves excellent service, but the fact of the matter is that some clients earn you more money than others.
One of the big data business benefits you can reap is using predictive analytics to determine which clients are worth the most to your company.
Predictive analytics can help you allocate resources—whether it's time or marketing dollars—to the clients with the biggest likely return. Regardless of how you acquire clients, knowing which ones are the big fish can be very valuable.
Identifying new potential clients
Once you've sorted out which of your clients are the most likely to be profitable, predictive analytics can develop a profile that can help you identify and reach out to other clients with similar profit potential.
Maybe there's a zip code that's particularly hot. Perhaps there's a trade organization that other prospects may be members of. Or maybe there's a particular marketing tool that was useful in reaching high-dollar clients.
One of the greatest big data business benefits is becoming more adept at allocating your marketing and client outreach dollars. Predictive analytics can help you unlock the insights that let you make the most of your investments.
Yes, your marketing dollars matter. But what may matter even more is the money you invest in your staff.
You already know how expensive it can be to attract, hire and retain good people. One of the big (and often overlooked) big data business benefits is using predictive analytics to help you sort through candidates for employment.
I'm not suggesting you reduce human beings to a number. What I am suggesting is that there are models and assessments that can give you enormous insight into which candidates are likely to be the best (or the worst) long-term prospects. Use your available resources!
Perhaps the best news is that you don't have to be a rocket scientist to reap big data business benefits. You don't have to understand how predictive analytics works in order to get something out of it. There are a host of tools and services—from full-service to more DIY options—that can help you harness the power of big data and make more money in the process.
Read more articles on research.