Marketing Analytics uses data (marketing/sales/order data) to describe, explain and predict customer behaviour. It allows management to make better business decisions, to optimise marketing tactics and strategies, improve the company’s results and achieve its goals.
There are three kinds of analytics: descriptive, predictive and prescriptive.Descriptive Analytics summarises data and describes what that data tells us. Often used to monitor and report on business activity (what is happening/what has happened and why) but doesn’t go further than this. Used, for example, to monitor performance against set budgets or against prior years. Most commonly-used analysis in business decision-making.
Predictive Analytics uses data to make inferences about what might happen in the future given what happened in the past, i.e. forecasting. May use mathematical or statistical methods (e.g. inferential statistics), advanced computer algorithms or models, or by simply identifying and extrapolating patterns or trends (e.g. graphically). Indicates, for a given type of business activity, what could be expected to happen in the future given what has already happened. An effective way of handling risk and uncertainty, allowing management to pre-empt potential problems (e.g. declining sales, dwindling customer base) before they arise.
Prescriptive Analytics is the most advanced form of analytics, employing sophisticated mathematical and computational models for simulation and optimisation. Makes predictions of likely outcomes (what will happen, when and why) and identifies the best course of action to produce an optimal result, such as generating more sales, making the company more competitive, or increasing profits.