What Is SAS Predictive Modeling? SAS Predictive Modeling use known results to develop (or train) a model that can be used to predict values for different or new data. Modeling provides results in the form of predictions that represent a probability of the target variable (for example, revenue) based on estimated significance from a set of input variables. This is different from descriptive models that help you understand what happened, or diagnostic models that help you understand key relationships and determine why something happened. Entire books are devoted to analytical methods and techniques. Complete college curriculums delve deeply into this subject. But for starters, here are a few basics. There are two types of predictive models. Classification models predict class membership. For instance, you try to classify whether someone is likely to leave, whether he will respond to a solicitation, whether he’s a good or bad credit risk, etc. Usually, the model results are in the form of 0 or 1, with 1 being the event you are targeting. Regression models predict a number – for example, how much revenue a customer will generate over the next year or the number of months before a component will fail on a machine. Why is predictive analytics important? Organizations are turning to predictive analytics to help solve difficult problems and uncover new opportunities. Common uses include: Detecting fraud. Combining multiple analytics methods can improve pattern detection and prevent criminal behavior. As cybersecurity becomes a growing concern, high-performance behavioral analytics examines all actions on a network in real time to spot abnormalities that may indicate fraud, zero-day vulnerabilities and advanced persistent threats. Optimizing marketing campaigns. Predictive analytics are used to determine customer responses or purchases, as well as promote cross-sell opportunities. Predictive models help businesses attract, retain and grow their most profitable customers. Improving operations. Many companies use predictive models to forecast inventory and manage resources. Airlines use predictive analytics to set ticket prices. Hotels try to predict the number of guests for any given night to maximize occupancy and increase revenue. Predictive analytics enables organizations to function more efficiently. Reducing risk. Credit scores are used to assess a buyer’s likelihood of default for purchases and are a well-known example of predictive analytics. A credit score is a number generated by a predictive model that incorporates all data relevant to a person’s creditworthiness. Other risk-related uses include insurance claims and collections.
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