Predicting the future is the centerpiece of predictive analytics and the heart of this chapter. Prediction is about providing information on what will happen, what could happen, and what actions are needed. Predicting the future is based on analytics that include predictive models and forecasting.

Predictive Models

Predictive models aim to address the who, when, and why questions for business issues, such as those related to customer behavior, product usage, and likelihood to purchase. Questions we can answer with predictive models include

  • Which of my existing customers will turn to the competition?
  • Why will my existing customers leave?
  • When will my customers leave?
  • Whom can we retain?
  • Why would a new prospect convert to being a customer?
  • When will a prospect convert to being a customer?
  • Who will buy?
  • What will they buy?
  • Whom can we acquire?
  • Which product and services will a customer buy next?
  • Who is more likely to default on a payment?
  • What are our probable costs?
  • What are our liabilities?
  • What are our future revenues?

Predictive models help executives make informed strategic, operational, and tactical decisions, to prevent and predict transactions or risks or improve the insight into your customers’/members’ behavior.


Forecasting will generally provide answers to questions such as: How many customers will you lose in the next 6 months to competition? How many people will be affected with a certain pandemic disease in the next 12 months in a given ...

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