Why use Data Mining Services for your online business
Posted by Carmen Zanfir
November 08, 2016

Data Mining services are used in online and offline businesses, but we will focus on how to improve your online business by using Data Mining Services. 

 

Online is not anymore something that you barely heard of. In online, businesses are growing up so fast and that is because your prospects and customers are here in the Internet world. So that, is more profitable to think about starting an online business –  a store, a company that delivers services or something else.

 

Data Mining is that service that help you get in touch with your prospects and clients fast and easily. Data Mining is that service that supports you to find out data and information about your clients just to make more easy for you to build an offer for them.

Data Mining sounds pretty out of reach, that’s why I am going to explain to you what exactly is this service we provide and what it does and why it is so good for your online business.

 

So let’s start our Data Mining journey!

 

data mining

 

What Data Mining means?

 

Data Mining is an interdisciplinary subfield of computer science. Generally, Data Mining is the process of analyzing data from different perspectives and summarizing it into useful information. The information can be used to increase revenue, cut costs, or both of them.

 

Data mining software is that one tool that helps Data Mining services to analyze data from many different dimensions or angles. It categorize it, and summarize the relationship identified.

Technically, Data Mining is the process of finding correlations or patterns among dozens of fields in large relational databases.

 

These patterns, associations or relationships among all this data can provide information.

If you ask me, I would tell you that Data Mining is that one guy that knows everything about your prospects and clients and is capable to show you how to act to get your customers attention, in a good way.

 

What Data means?

 

If we are clear about what Data Mining is, but we don’t know what Data means, let me tell something about it: Data means information. In Data there is a gold mine of insights. These insights can increase customer loyalty, unlock hidden profitability and reduce client churn.

Data means any facts, number or text that can be processed by a computer.

 

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What are the Data Mining tasks?

 

There are two categories of functions involved in Data Mining services:

  • Descriptive;
  • Classification and Prediction.

 

1. Descriptive function

Descriptive Function deals with the general properties of data in the database. There is a list of descriptive functions:

 

  • Class or Concept Description;
  • Mining of Frequent Patterns;
  • Mining of Associations;
  • Mining of Correlations;
  • Mining of Clusters.

 

2. Classification and Prediction

Classification is the process of finding a model that describes the data classes or concepts. The purpose is to be able to use this model to predict a class of objects whose class label is unknown.

 

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How does Data Mining work?

 

Data Mining has four directions to focus on:

 

1. Classes – stored data is used to locate data in predetermining groups.

Example: a restaurant chain could mine customer purchase data to determine when they visit and what they typically order. This information could be used to increase traffic by having daily specials.

 

2. Clusters – data items are grouped according to logical relationships or consumer preferences. For example, data can be mined to identify market segments or consumer affinites.

Example: data can be mined to identify market segments or consumers affinities.

 

3. Associations – data can be mined to identify associations.

4. Sequential patterns – data is mined to anticipate behaviour patterns and trends.

Example: an outdoor equipment retailer could predict the likelihood of backpack being purchased based on consumer’s purchase of sleeping bags and hiking shoes.

 

Now that we talked about what exactly means Data Mining and what are its tasks, you may ask where you could use it?

 

The process of Data Mining could be used in eight ways:

 

A. Basket Analysis

 

Basket analysis could be similar to affinity analysis. Basket Analysis looks at the items that a customer both, which could help brick-and-motar stores improve their layouts or online companies like amazon recommend related products.

 

In other words, Basket Analysis refers to what customers have in their shopping basket when they are shopping.

Basket Analysis way of Data Mining it is based on the assumption that you can predict your future purchased product depending on your customer behavior.

 

data mining

 

B. Sales Forecasting

 

This manner to use data mining services it comes when customers bought a product and then they try to predict when they will buy again.

By Sales Forecasting you could determine a strategy of planned obsolescence or figure out complimentary products to sell.

 

Also, Sales Forecasting in Data Mining Services looks at the number of customers in your market and predicts how many will actually buy.

 

You should know something very important when it comes to forecasting sales: you should create three cash flow projections:

  • Realistic;
  • Optimistic;
  • Pessimistic.

 

C. Database Marketing

 

You can use Data Mining Services in database marketing in order to build profiles. After you manage to build a profile of your customers and prospects, you can build a product that will sell itself. How you can do that?

By examining customer purchasing patterns and looking at the demographics and psychographics of customers.

 

In other word, you should know your target very well.

 

If you don’t manage to know your target, you won’t create a product that defines the needs of your customers.

 

D. Merchandise Planning

Merchandise planning lend itself to online and offline market, but as I said, we are talking about online market because this is the future in business.

Online merchandise planning can help you determine stocking options and inventory warehousing.

 

If you do this well enough, it can lead you to answers that can help you decide what you would do if:

  • Inventory is getting old?

A: Merchandising planning can be updated.

 

  • You don’t know what product you should select?

A: Mining your database will help you determining what your customer want, so then you should know what products to offer to your clients Also, you will find out information about your competitors.

 

  • You don’t know how to obtain the right balance of your stock?

A: Not too much, not too little, but an amount that won’t force you at some time to tell your customer to wait days, or to come back when you will find out. You should always know what’s the balance of your stock and you will do it by Data Mining services.

 

  • You don’t know what price you should set for a product?

A: Database Mining helps you determine the best price of your products depending on your customer sensitivity.

 

Customer sensitivity is the consciousness of the customer to cost windows or range within they make dealings.

 

E. Card Marketing

You can analyze your customer buying patterns based on their credit cards habits. Data Mining in card marketing will give you insights into their behavior. That can lead to promotions and programs that will result in higher revenues and better customer loyalty.

 

F. Customer Loyalty

We leave in a world where price is important. So important that you will get customers jumping ship every time a competitor offers lower prices than you. So your aim is to keep your customers closer.

 

Social media is the best way you can do that. Social media is the best tool in the world in which you can keep the customer in your boat.

 

Don’t let them jump!

 

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G. Market Segmentation

One of the best uses of Data Mining services is to segment your customers. In other words, set the target!

 

H. Product Production

Data Mining is also perfect for creating custom products designed for market segments. You can predict which features users may want.

 

Truly innovative products are created when you look at the data from your customer and spot the holes that are demanded by them. Then, you fill the holes and you create the perfect product for your customers.

 

In which fields you can apply Data Mining services?

 

Market Analysis and Management

1. Customer Profiling

Data Mining help you get information about what kind of people buy some products.

2. Identifying Customer Requirements

Data Mining identify the best products for your target.

3. Cross Market Analysis

Data Mining performs associations or correlations between the products sales.

4. Target Marketing

Data Mining helps you to find clusters of model customers who share the same characteristics – interests, habits, income and spendings.

5. Determining customer purchasing pattern

Corporate Analysis and Risk Management

 

1. Finance planning and Asset Evaluation

It involves cash flow analysis and prediction.

2. Resource Planning

It involves summarizing and comparing the resources and the spendings.

3. Competition

It involves monitoring competitors and market directions.

4. Fraud Detection

Data Mining services are also used in the fields of credit cards services and telecommunication to detect frauds.

Conclusion

 

As you see, Data Mining services are very important for your online business.

As a conclusion, we can resume the important things you should know about Data Mining just to know why you need these services.

To know better about markets and how to start a business, I suggest you to read our article about Entering New Markets. 

 

Data Mining – the process of analyzing data from different perspectives and summarizing it into useful information. The information can be used to increase revenue, cut costs, or both of them.

 

Data Mining services can be used in:

1. Basket Analysis;

2. Sales Forecasting;

3. Database Marketing;

4. Merchandise Planning;

5. Card Marketing;

6. Customer Loyalty;

7. Market Segmentation;

8. Product Production. 

The fields in which you can use Data Mining services are:

1. Market Analysis and Management;

2. Corporate Analysis and Risk Management;

3. Fraud Detection.

The four directions in which Data Mining services work:

1. Classes;

2. Clusters;

3. Associations;

4. Sequential patterns.

To know better about markets and how to start a business, I suggest you to read our article about Entering New Markets.

 

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