Google leverages Predictive Analytics

Predictive Analytics

Google has applied the methods successfully across its enterprise. Netflix keeps users' queues packed through it. Pandora is reinventing the radio with it.

Before Google, internet search was sorting through 1,000 items. Google simplified internet search to the 3 most likely to match a user's need. Google beat Dogpile and Yahoo by applying predictive analytics.

Recommendation engines will improve online stores by turning searching into finding and in return improve the company's profit.

Predict Customer Actions

The better a system can determine the customer’s actions, the better the company can target the customer. A recommendation engine can predict the customer’s actions and increase profits.

For example, a company can lower its costs of customer acquisition by knowing which customers will become repeat customers through the offer of a coupon. The system can determine the 60% of customers who will become repeat customers. The targeting of this set rather than all customers lowers the costs and improves revenue on the 40% of customers who are inclined to become repeat customers without a coupon offer.