Introduction

to Predictive
Analytics
Shareen A. Navarro, DIT
Learning Outcomes
❑ Develop a deep understanding regarding
analytics life cycle and concepts on predictive
analytics.

2
1
Overview of
Business Analytics
What is business
analytics?
Business Analytics
▸ Analytics is defined as the extensive use of data,
statistical and quantitative analyses, explanatory
and predictive modeling, and fact-based
management to drive decision making.

5
Business Analytics
▸ BI/BA is an umbrella term that combines
architectures, tools, databases, analytics tools,
applications, and methodologies
▸ It is used for data-driven or fact-based decision
making which is often seen as more objective than
other alternatives for decision making.

6
Benefits of Business
Analytics
▪The ability to provide accurate information when needed,
including a real-time view of the corporate performance and its
parts
▪A survey by Thompson (2004)
–Faster, more accurate reporting (81%)
–Improved decision making (78%)
–Improved customer service (56%)
–Increased revenue (49%)
7
2
Analytics Life
Cycle
9
Connecting to Data
▸ Data in an organization comes
from one or more sources
whether these are spreadsheets,
transactional systems or data
warehouses.

10
Preparing Data for Analysis
▸ Data in real world is dirty and to
ensure the quality of data for
analysis, it needs to undergo the
so called Data Pre-processing.

11
Build Analytics Content
▸ Different models are used to
analyze the data to create reports,
visualizations, and dashboards.

12
Analyse Manually and
Automatically
▸ The results of the analyzed data
will be deployed to the end users,
where they can use it to manage
their day to day operations.

13
Collaborate and share
insights
▸ Analyzed results are shared to
other stakeholders and used to
discover insights that could lead
to competitive advantage.

14
Analytics help users make
decisions:
▸ Share insights and visualizations

▸ Sharing of insights via intuitive dashboards,

reports and visualizations is essential
components of business analytics

15
Analytics help users make
decisions:
▸ Optimize performance

▸ Choose to set benchmarks for company’s

performance (KPIs)

16
Analytics help users make
decisions:
▸ Analyze and predict trends

▸ Predictions often based on historical

data to find out how performance varies
across time

17
Predictive Analytics

2
Predictive Analytics
▸ understanding the future
▸ looks into the future to provide insight into what will happen
and includes what-if scenarios and risk assessments
▸ uses many techniques from data mining, modeling machine
learning, and artificial intelligence to analyze current data to
make predictions about future

19
Some of the events predictive analytics may
address include.

1. Customer attrition (CHURN)

- no. of paying customers who fail to become
repeat customers
- Loss of clients or customers

20
Some of the events predictive analytics may
address include.

2. Customer conversion

21
Some of the events predictive analytics may
address include.

3. Online purchase patterns

- Gen Z | 2-17 years old
- Millennials | 18-35 years old
- Generation Xers | 36 – 51 years old
- Baby Boomers | 52 – 70 years old
22
Some of the events predictive analytics may
address include.
4. Product adoption (customer
cross-selling and up-selling)
- Process of users becoming aware of a product,
understanding it’s value, and beginning to use it

23
Some of the events predictive analytics may
address include.
5. Customer online behavior
(website visit behavior)
- Process of online shopping from a consumer’s
perspective

24
How Predictive Analytics Works?

▸ An inductive approach makes no presumptions of patterns

or relationships and is more about data discovery.
Predictive analytics applies inductive approach or inductive
reasoning to big data using sophisticated quantitative
methods to explore all the data and to discover
interrelationships and patterns.

25
Examples of Companies using
Predictive Analytics in Real-time:
▸ Grocery stores use data from loyalty cards, ongoing
promotions, and historical purchases to offer coupons for
items you are likely to buy in the future.
▸ Predictive analytics applied to specific behaviors of
customers browsing a web site enables delivery of a
personalized experience.

26
Operationalizing Predictive Analytics
▸ Optimizing business processes and reducing operational
costs
▸ Engaging deeper with customer and enhancing the
customer experience
▸ Identifying new product and market opportunities
▸ Reducing risk by anticipating and mitigating problems
before they occur
27
Industry Examples
INDUSTRY USE CASES

Energy and Utilities Energy consumption patterns and management

Financial Services Fraud identification, loan defaults, and investment analysis

Food and Beverage Supply chain demand prediction for creating, packaging, and
shipping time-sensitive products
Healthcare Re-hospitalization and risk patterns in health-related data

Travel Buying experience optimization, upselling, and customized

offers and packages
28
Industry Examples
INDUSTRY USE CASES
Insurance Fraud identification and individualized policies based on vehicle
telemetry
Manufacturing Quality assurance optimization and machine failure and
downtime predictions
Transportation Service and delivery route optimization
Marketing Consumer behavior prediction, churn analysis, consumption, and
propensity to spend
Travel Buying experience optimization, upselling, and customized offers
and packages

29
THANKS!
Any questions?
You can find me at:
▸ shareen.navarro@unp.edu.ph

30