|Analytics is an essential tool for companies to use to gain customer insights / Photo Credit: everything possible (via Shutterstock)|
Analytics is most likely to become the most important tool a company has to gain customer insights, said Daniel Newman of business news platform Forbes. This is the reason why the big data space is expected to generate more than $273 billion by 2023. Companies like Microsoft, Google, Amazon, and the like are investing in gathering and enabling data. As AI and machine learning develop, the way we utilize analytics will also grow and change. Before, businesses are focused on collecting descriptive data about their customers and products. Now, they are extracting both predictive and prescriptive insights from the data they acquire.
Descriptive analytics refers to information on what has occurred in your company such as a monthly sales report, web hit numbers, marketing campaign rates, and more. They provide you insights on how the project performed. Predictive analytics is defined as information about what will happen in your company such as how well a product will sell, who is likely to purchase it, and which marketing tool to use to create the biggest impact. Prescriptive analytics consists of data that not only determines what will happen in your organization, but also to find out how it could happen better if you did certain actions. It provides you with plans and recommendations to help optimize a process, campaign, or service to the highest degree.
Marketing in the past involved drafting campaigns and using descriptive analytics to identify which customers are more open to receiving them. But this approach is not efficient. With predictive analytics, AI and machine learning can help us see more specifically which groups of customers to target as well as which discounts to offer to maximize impact. However, they do not tell you what you should do to further improve your results. By leveraging prescriptive analytics, AI and machine learning can be utilized to guide customers with less human interaction, inform salespeople which product to offer using what words, and tell you which price to use at a certain time in certain situations.
Prescriptive analytics sounds wonderful, but companies need to determine what they want to accomplish first. While powerful, it is not necessarily a fit for every company or campaign you launch.