Analyze this.

• Author: Smith, Lang
• Position: Business & Finance

FOR ANY sales-driven business, it is not the size of the data that matters, it is what you do with it. No longer a discretionary luxury, predictive analytics now are the name of the game for those who seek to utilize customer metrics in a meaningful way to establish a competitive advantage, gain notable market share, and boost bottom lines. In fact, "smart selling fueled by predictive analysis is expected to jump 77% among high performers" throughout 2016, according to Salesforce Research's "2015 State of Sales Report." Not only that, but high performers are four times more likely to use predictive analytics.

Just what exactly is predictive analysis? Simply put, it is the ability to predict more precisely a customer's future spending based on their past behaviors. Of course, there actually is no way to predict the future, but predictive analysis can give companies invaluable insight that can make or break a CRM (customer relationship management) system. If you are not using predictive analytics, your current CRM system likely is falling short in several areas. Here is why:

Forecasting likely customer behaviors. There is an old saying in sales: "Buyers are liars." Still, salespeople are forced to enter notes based on what the customer tells them. Besides these basic notes that often are unreliable, it almost is impossible for a CRM system to determine a consumer's actual behavior. However, predictive analytics software comes with a certain level of assumptions. In this case, the assumption is the future will continue to be like the past. Often, however, behaviors change. That is why it is vital to have a system that not only can change with your customers, but learn and adapt to their new actions to make predictive calculations based on past, present, and future behaviors.

Enhancing customer relationships. It is very difficult to build a true customer relationship if you have no way of accessing and analyzing their prior behavior with your company. A CRM system cannot track customer actions automatically. It depends heavily on manual human interaction and cultivation, relying on the accuracy of a salesperson's notes, which often are less than desirable. The most common use of predictive analytics is, in fact, to increase and improve customer relationships. The better you know your customer, the more sales you ultimately can make. Using sophisticated algorithms to reveal how your customer behaves allows you to communicate better with that...