The amount of raw data stored in your corporate database is indeed staggering. Raw data by itself, however, does not have much value. Data Mining, although still in its infancy, is used by companies in a wide range of industries- including retail, finance, heath care, manufacturing transportation, and etc. – as a technique to take advantage of their Tera bytes of unanalyzed data.
Executives that utilize data mining are able to recognize significant facts, relationships, trends, patterns, exceptions and anomalies that might otherwise go unnoticed. This gives them the competitive edge of making knowledge-based decisions that lead their company to success.
Some examples of what data mining can provide are as follows:
- Market segmentation – Identify the common characteristics of customers who buy the same products from your company.
- Customer churn – Predict which customers are likely to leave your company and go to a competitor.
- Fraud detection – Identify which transactions are most likely to be fraudulent.
- Direct marketing – Identify which prospects should be included in a mailing list to obtain the highest response rate.
- Interactive marketing – Predict what each individual accessing a Web site is most likely interested in seeing.
- Market basket analysis – Understand what products or services are commonly purchased together; e.g., beer and diapers.
- Trend analysis – Reveal the difference between a typical customer this month and last.