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Data Mining’s Impact on Business
Data mining is a relatively new term within the field of
information architecture. It is essentially the process of analyzing data from multiple perspectives. Also known as data discovery or knowledge discovery, data mining helps summarize large sets of data into more manageable groups of useful and interpretable information.
Having the ability to break down large sets of raw data and elicit meaning is very important for companies in a highly competitive marketplace. Having the ability to uncover emerging trends in customer actions or finding ways to improve current protocol can be the difference that keeps an organization one step ahead of competitors.
What can data mining accomplish?
Data mining software has quickly become one of the most important tools companies use for processing and analyzing data. This software allows companies to examine information from perspectives they previously did not have access to. Data mining has allowed companies to look at existing raw data in new ways, which in turn has created new insights into how they should be doing business.
There are 5 main functions that data mining software can accomplish:
1. Full scale data analysis
2. Store and manage data in databases
3. Categorize and summarize data sets
4. Uncover relationships and correlations between data entered into relational databases
5. Present information in a logical and understandable format so it can be effectively analyzed
Where is data mining used?
Data mining is used in many different industries, however, it is widely used in retail, finance, and manufacturing because of its ability to recognize patterns in data. With the ability to uncover trends, patterns, relationships and shortcomings, data mining has helped these industries refine business protocols related to
inventory management, information storage and retrieval, logistics, and policy development.
There are four key areas that companies use data mining for:
1. Marketing: Looking at data that will suggest to companies which prospects and customers are most likely to do business
2. Market Segmentation: Identify which markets they should target based on the characteristics of the market
3. Purchase analysis: Uncovering correlations between products/services are purchases in conjunction with each other.
4. Trend forecasting: Uncovering trends in customer behaviour and habits over a specific timeline.
How data mining creates opportunities
The main function of data mining is to generate new opportunities by uncovering new insights that companies can apply to their business operations. Data mining software can create opportunities in two ways:
1. Predicting trends and behaviour patterns: The software uses the data inputted into the system and reports current and future trends.
2. Discovering new patterns or trends: The software uses the data inputted into the system and identifies relationships and emerging patterns in information.
Data mining relationships
There are four main data relationship that data mining software monitors:
• Information clusters: The software identifies logical relationships between data sets
• Information Associations: The software uncovers connections or associations between two pieces of data
• Information classes: The software finds correlations between data and classifies them accordingly
• Information patterns: The software seeks patterns and trends that can be inferred by particular actions
Data mining and CRM’s
Data mining has played a significant role in
customer relationship management (CRM). It is reduced or eliminated the guess work from prospecting and has help companies focus their efforts on prospects that are more likely close.
Companies use the information derived from data mining to refine their sales and marketing processes, customize campaigns based on specific customer groups, refine forecasting numbers, and improve the overall efficiency and effectiveness of business operations.
As data mining software applications continue improve and become more efficient and customizable for specific business practices, it is becoming a more valuable tool that companies cannot do without. Its ability to provide new insights and improve business acumen can provide companies with the information they need to stay ahead of competitors and better service new and existing customers.
Data Mining External Links:
Data Mining Video
Interested in Data Mining? Then follow this and related topics in our Free Enterprise Business Newsletter. Click on Send me Enterprise Business News for a trial.
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Thursday, September 01, 2011
How Data Mining Gave KKR A Competitive Advantage Kohlberg, Kravis and Roberts built an analytics system from the ground up using its own portfolio and industry trends
Wednesday, April 13, 2011
Jive Software buys data-mining vendor Jive is boosting its social analytics capabilities with the purchase of Proximal Labs
Wednesday, January 10, 2007
Data mining needs oversight, says U.S. Senate Dozens of government data-mining programs collect private data about Americans with few civil liberties safeguards and some violate U.S. law, Democratic members of the U.S. Senate Judiciary Committee said Wednesday.
Thursday, May 23, 2002
Data mining to stem insurance fraud down under Operating under a tight government budget in a difficult climate for insurance companies throughout Australia, WorkCover found investing in data-mining tools a “necessary business requirement” in its ongoing effort to cut down on fraud.
Monday, June 11, 2001
CRM South America: Bad data can ruin CRM Many factors can make a CRM implementation fail, such as a lack of commitment from top-level executives and poor coordination among departments, but one very important reason is often overlooked: the quality of the company's customer data, speakers said at the CRM Conference South America 2001 in Buenos Aires last week.
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