Predictive Analytics = Predictive Modeling + Forecasting

Predictive Analytics = Predictive Modeling + Forecasting...

At the time of learning SAS, I was always wondered what is the difference between two most demanding terms “Predictive modelling” and “Forecasting”. I got good article from “SAS Knowledge Exchange”, Which helped me to get better understanding of both terms and more detail about Predictive modelling.

When everyone is talking about the Big Data, how to meet customer expectation which is on rise day by day, and most important competition , all companies are moving from “old way of reporting” which used to give the idea about ”what happened?”  To the more precise solution that provide idea about present and also predict the future foresight.

And so Predictive Modelling is ideal and best approach that organizations can use to win the customers and competition. This process of predictive modelling involves detail understanding of: What has happened? What is happening? And what is likely to happen in future. 

Getting insight about the behaviors, requirement, liking and outlook of customers can help organization to make informed decisions and get benefit in increasing the positive outcome of their strategies or build new strategies.

Predictive Modelling is used to predict the sales and marketing customers’ behaviours, fraudulent insurance claims, military supply chain problem, customer attrition or spread of pandemic disease.

“Predictive analytics” is combination of predictive modeling and forecasting. Predictive modeling aims to address the who, when, and why questions for business issues, such as those related to customer behaviour, product usage, and likelihood to purchase.

Predictive Modeling can help us to get answer of:

·         Which of my current consumers will go to the competition?

·         Why will my current customers leave?

·         When will my customers leave?

Forecasting responses to questions such as:

·         How many customers will you lose in the next 6 months to competition?

·         How many people will be affected with a certain pandemic disease in the next 12 months in a given country?

·         What are the expected liabilities from incurred, but not reported, insurance claims?

Main advantage of predictive analytics includes effective and lucrative campaigns with messages and suggestions that are relevant to the target customer. Companies can improve response rate by recognising customers that are most likely to respond to a deal or most likely to leave for a competitor, increase acquisition rate, reduce marketing campaigns costs and even save some lives.

 source:http://www.sas.com/knowledge-exchange/business-analytics/uncategorized/what-is-predictive-analytics/index.html