The analysis of a large volume of data is already an indispensable part of the decision-making process for any business, regardless of its volume. Big data is used to resolve routine problems, such as improving the conversion rate or to achieve customer loyalty for an eCommerce business. But did you know that you can also use it to predict situations before they occur? This is the added value of predictive analytics, the use of big data to anticipate user behaviour based on historical data and act accordingly to optimise sales.
For online businesses, periodically performing predictive analytics is synonymous with improving your understanding of the customer and identifying changes in the market before they happen. The predictive models extract patterns from historical and transactional data to identify risks and opportunities. Self-learning software will automatically analyse the data at hand and offer solutions for future problems. This will allow you to design new sales strategies to adapt to changes and boost profit growth.
Specifically, predictive analytics allows you to:
- Anticipate market trends.
Based on data from previous periods, predictive analytics will identify the points of maximum and minimum demand that the company might experience throughout the year. This allows eCommerce businesses to react before their competition by preparing a good customer acquisition campaign and having enough stock on hand to meet demand. They can also design a dynamic pricing strategy to optimise sales.
Along the same lines, dynamic pricing relies on predictive analytics to adjust prices to the needs of the market. Through tools like the dynamic pricing tool from Minderest, more than 20 different KPIs can be analysed automatically to establish the best prices for your products and services while always taking into account historical data and the results of decisions made in the past.
- Design personalised offers.
Predictive analytics allow you to predict which offers will be most effective according to the specific characteristics of each client. With good segmentation, you can predict future behaviour and attitudes for each user group based on how they have acted in the past and offer them only those products are services which are of interest to them. The key to achieving this can be found in the analysis of the information about what each client bought, how much they spent, their location, the channel used, and other key performance indicators.
- Optimise resources in the sales
Through predictive analytics, you can also predict the behaviour of your clients throughout the sales funnel. It’s possible to detect whether there’s a risk of them abandoning their commercial relationship with the eCommerce business as well as if they’re open to making new purchases in the future. In short, you can identify the most profitable customers, those which should receive more attention from the company.
Despite its many benefits, CEOs and marketing managers should keep in mind that, since it’s based on historical data, predictive analytics can’t always find an explanation for changes in the behaviour of buyers or competitors. If a new element that changes the dynamics of the market comes into play, such as the emergence of new virtual assistants for purchasing like Alexa, this tool won’t be able to predict it.
Analysing the competition’s strategy
In addition to knowing the market situation, it’s important to be aware of the strategies the competition is using. In this sense, one key factor is monitoring the prices and promotions offered by each competitor to determine their profit margin and predict the actions they could take in the coming months. This is another offshoot of predictive analytics that allows an eCommerce business to pull ahead of its direct competitors.
Through price tracking tools for retailers, it’s possible to detect any price changes from other companies in the sector, whether they are medium- or long-term changes or sporadic discounts. As a consequence, you can identify their campaigns, promotions, and the timeframe in which these are carried out.
As a whole, the incorporation of big data as a differentiating factor in decision making becomes a competitive advantage for those businesses that are looking to increase their sales.