Skip to content

ACCA Strategic Professional · Advanced Performance Management · Data science and analytics

Karvo Telecom builds a model using customer usage, complaints and contract data to estimate the probability that each customer will cancel in the next three months. The output is a ranked list of customers by churn probability. Which statement best describes this use of analytics?

This is predictive analytics because the model uses historical and current customer data to estimate the probability of a future event, cancellation within three months. It does not recommend specific actions or optimise decisions, so it is not prescriptive, and it goes beyond describing or explaining past events.

  1. AIt is predictive analytics, because it estimates the likelihood of a future eventCorrect
  2. BIt is descriptive analytics, because it uses customer data already held
  3. CIt is prescriptive analytics, because it ranks customers for management attention
  4. DIt is diagnostic analytics, because it uses complaints data to explain past churn

Explanation

The model forecasts a future outcome (cancellation) as a probability, which is predictive analytics. It does not itself recommend which retention offer to make or optimise decisions, so it is not prescriptive. Ranking by probability is an output of prediction, not a recommended action.

Did you get it right without looking?

One question tells you little. A timed set on Data science and analytics shows your real accuracy, how long you take and where you lose marks.

Practise Data science and analyticsFree diagnostic mock

More Data science and analytics questions