ACCA Applied Knowledge · Business and Technology · The impact of advances in technology
A telecom company analyses historical customer records to identify which customers are most likely to cancel their contracts next quarter, so it can offer them incentives. Which type of data analytics is this?
This is predictive analytics. The company uses historical customer data to forecast which customers are likely to cancel in future. Descriptive analytics would merely summarise past cancellations, while diagnostic analytics would explain why they happened, and prescriptive analytics would recommend the best action to take.
- ADescriptive analytics
- BDiagnostic analytics
- CPredictive analyticsCorrect
- DPrescriptive analytics
Explanation
Predictive analytics uses historical data to forecast likely future outcomes, here customer cancellation. Descriptive analytics only summarises what happened, and diagnostic analytics explains why. Prescriptive analytics recommends actions, which is a further step beyond identifying likely churners.
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