Data analytics has its own significance in the business industry these days.
Organizations of all sizes and in all sectors can always harness the benefits of data analytics to their business development. Every business uses a data analytics model depending on what kind of outcomes they are aiming to achieve. The most common type that companies utilize into their business models is the predictive model.
What is a predictive analytics model?
Predictive analytics is currently the most utilized model in terms of data analytics. Predictive analytics models are used by analytics professionals to predict historical data, determine patterns and identify trends.
There are actually different types of predictive models and each model is created according to its specific functions:
- Classification model. Industries such as finance and accounting are two sectors that often integrate this type of predictive model. It works by categorizing different historical data sets and it is able to provide broader insights in answering certain questions.
- Cluster model. This type of predictive model sorts data sets and separates them according to similar attributes. Examples for this are target marketing campaigns, identifying which areas in a city have high volumes of crime, grouping load applicants based on their loan attributes, and more.
- Forecast model. It focuses on evaluating numeric values for new data sets that are based on the results of historical data. This predictive model is usually used for call centers that want to predict their total support calls in an hour.
Another example is for shoe stores to determine how many stocks they need to keep on-hand for a particular sales period.
- Time series model. A time series model uses time as its input parameter, including a collected series of data points. It enables end users to have a clear understanding of how a single metric is developing over time.
- Outliers model. This type of predictive model is also useful for the finance and industry sectors as it helps is determining fraudulent acts. Outliers model can evaluate the total amount involved in fraud, the location, time, nature of purchase, and its purchase history.
Does your business need a predictive analytics model?
In utilizing predictive analytics models to your business, you need to start by outlining what predictive questions you are aiming to be answered. Another thing is, you also have to consider how your chosen model can be optimized into different algorithms.
This will help you determine how you can leverage its use into your organization’s own advantage. More so, in assessing your options, focus on each predictive analytics model’s strength and capabilities.
