Two ways that data analytics can satisfy customer needs

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Even before considering using the power of data analytics for small or medium companies, the main questions should be how those analytics are going to help businesses to know their consumers, and how it can be useful and consistent to leaders and managers to make an effective application of them. This is considered one of the main challenges to independent and established owners, the value challenge. The value challenge in data analytics is relatable to the extraction of insights from the data collection and how we can interpret them. (AWS, no date)  In this case, we have two main approaches to read, comprehend and take useful outcomes from it: Prescriptive and Predictive. Both are distinct by default and serve different purposes that can enhance knowledge management within small and medium businesses.

A person holding their mobile checking analytics and insights from their social media.
Credit: Georgia de Lotz (Unsplash)

Beforehand, it is important to highlight that there are some important aspects of how giving value and generating management knowledge, as it was detailed in another blog post by James White. Descriptive analytics is defined as the most basic form of interpreting and reading data. This process summarises the raw data collected and tells us what happened in the past. (Wu, 2013) From this step, we dive into two specific processes that use the descriptive approach as a base: Predictive and Prescriptive. Predictive analytics is not simply predicting the future of businesses as the title might suggest. It is about scanning through previous results, processed, relevant and updated data to yield potential outcomes and predict results the company did not achieve yet. (Fallon, 2020) A chief editor who needs to decide what is going to be the next top article in a blog can benefit from Predictive analytics. If they analyse the data gathered previously, assessing what was the most-clicked news in the month before, they can make a decision of what could be the most attractive to write about and publish.


The other way of reading through data is Prescriptive analytics. It can be defined as a deeper step from what Predictive analytics executes. In other words, the Prescriptive approach means that there will be an immersion in the possible results for the future of companies. It answers questions as "what" and "why" of these scenarios and produces recommendations and next steps of how to enhance performances. (Ohio University, 2020) For instance, we can analyse the work it is applied in the Performance Planner integrated into the Google Ads platform. An advertiser can take advantage of the recommendations made by the Planner based on previous results from data collected from ads displayed across the internet, getting their message directly to their final consumer.

In conclusion, both analytics have their advantages and benefits. While the Predictive approach can help small and medium businesses to foresee possible outcomes, the Prescriptive way of analysing data immerses in the data collected and try to generate recommendations and courses of action for business owners, managers and leaders to excel in their business objectives. Both ways of analysing data can improve the management of knowledge around businesses, independent of their size, and this can help to communicate and connect better with consumers and users.

Author: Sergio Augusto

#KnowledgeManagement #DataAnalytics #CustomerNeeds #AnalysingData #ForeseeOutcomes #EnhancePerformance

'Data Analytics Fundamentals' (no date). Available at https://www.aws.training/Details/eLearning?id=35364 (Accessed: 18 February 2021)

‘Difference of Predictive vs. Prescriptive Analytics’ (2020) Ohio University, 4 February. Available at: https://onlinemasters.ohio.edu/blog/predictive-vs-prescriptive-analytics-whats-the-difference/ (Accessed: 1 April 2021).

Jeff Bertolucci (2013) Big Data Analytics: Descriptive Vs. Predictive Vs. Prescriptive, InformationWeek. Available at: https://www.informationweek.com/big-data/big-data-analytics/big-data-analytics-descriptive-vs-predictive-vs-prescriptive/d/d-id/1113279 (Accessed: 1 April 2021).

Nicole Fallon (2020) What Are Predictive and Prescriptive Analytics? - businessnewsdaily.com, Business News Daily. Available at: https://www.businessnewsdaily.com/8655-predictive-vs-prescriptive-analytics.html (Accessed: 30 March 2021).

Wu, M. (2013) Big Data Reduction 1: Descriptive Analytics, Khoros Community. Available at: https://community.khoros.com/t5/Khoros-Communities-Blog/Big-Data-Reduction-1-Descriptive-Analytics/ba-p/77766 (Accessed: 1 April 2021).

Wu, M. (2013) Big Data Reduction 2: Understanding Predictive Analytics, Khoros Community. Available at: https://community.khoros.com/t5/Khoros-Communities-Blog/Big-Data-Reduction-2-Understanding-Predictive-Analytics/ba-p/79616 (Accessed: 1 April 2021).

Comments

  1. James White8 April 2021 at 10:15

    Thanks for your blog Sergio! Both predictive and prescriptive analytics have important roles to play in a companies ability to manage their relationships with their customers and inform marketing strategies. In particular businesses seem to be adopting prescriptive analytics more in recent years because of the innovation in machine learning and the development of software like the performance planner as you mentioned above. I think that we will see prescriptive analytics grow even more in the future as this technology develops further. Thanks again for your great blog post Sergio!

    ReplyDelete
  2. Udit Shokeen13 April 2021 at 16:02

    This comment has been removed by the author.

    ReplyDelete
  3. Natassya Coelho14 April 2021 at 23:09

    Both types of analytics are important for any kind of business. Due to its complexity, there are still few companies that use prescriptive analysis. However, its benefits are diverse, which indicates that, soon, the demand for this type of strategy tends to increase.
    Among its greatest advantages, the fact of making a decision based on data stands out. In this case, it is possible to quantify risks and have access to actions considered ideal in different circumstances. Algorithms have the ability, through current data, to predict consequences arising from each decision made. Therefore, it allows you to follow the path that offers the most satisfactory results.
    The prescriptive analysis allows for more effective planning to be carried out in Marketing and Sales actions, bringing to business intelligence information that has a significant impact. Thank you for opening this discussion, Sergio.

    ReplyDelete
  4. Natassya Coelho14 April 2021 at 23:09

    Both types of analytics are important for any kind of business. Due to its complexity, there are still few companies that use prescriptive analysis. However, its benefits are diverse, which indicates that, soon, the demand for this type of strategy tends to increase.
    Among its greatest advantages, the fact of making a decision based on data stands out. In this case, it is possible to quantify risks and have access to actions considered ideal in different circumstances. Algorithms have the ability, through current data, to predict consequences arising from each decision made. Therefore, it allows you to follow the path that offers the most satisfactory results.
    The prescriptive analysis allows for more effective planning to be carried out in Marketing and Sales actions, bringing to business intelligence information that has a significant impact. Thank you for opening this discussion, Sergio.

    ReplyDelete
  5. Udit Shokeen15 April 2021 at 15:34

    Great post by you Sergio, very detailed and it explains every aspect in a very concise manner. Analytics is an important part of any business as it helps them to understand a pattern of some kind and forsee possible future situations. Selecting the form of analysis based on one's business should be done after much thought and understanding. You’re correcting in saying that while the Predictive approach will assist small and medium businesses in anticipating future results, the Prescriptive approach immerses itself in the data gathered and attempts to create suggestions and courses of action for business owners, managers, and leaders to achieve their goals.

    ReplyDelete

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