In the present day business scenario, data mining is nothing but the computer aided pattern discovery of previously unknown recurrences or interrelationships across attributes, which seem unrelated at first glance, to predict behaviors, actions and outcomes. A large number of highly successful business decisions are made with the help of reliable data source and different tools and techniques are applied to validate them. The effective application of data mining is not only carried out in business environment but also in other areas which includes weather forecasting, healthcare, transportation, government, healthcare, etc. According to Big Data Vendor Revenue and Market Forecast (2013-2017), the big data market will reach around $50 billion by 2018.
Data mining forms a critical part of knowledge discovery process and is even considered as an advanced science which can be difficult to execute. Enormous sets of data can be analyzed with relative ease to get useful and hidden knowledge. Without automation, processing large amounts of data would be impossible. Data mining techniques range from basic to extremely complex with each serving a different purpose or goal. A large number of business enterprises sit on a treasure trove of customer data without realizing its importance as that very data can provide valuable insights that can increase customer loyalty and unlock hidden profitability. In essence, everyone from individuals to large business enterprises and governments can benefit from data mining.
Here are the key benefits of data mining for business enterprises:
1. Prediction of Trends and Behaviors:
The process of finding predictive information in extremely large databases is automated through data mining. Questions which previously required extensive analysis can now be answered more efficiently directly from the data. For instance, if a problem arises with regard to predicting targeted marketing, unique data mining technology and tools can easily recognize past promotional mailings that were successful and based on that it can identify targets that will most likely increase the return on investment (ROI) in future mailings. Further predictive issues such as forecasting bankruptcy forms the crux of data mining.
2. Helps with Decision Making:
Data is critical for any enterprise to make sound business decisions which affect the long term direction of the enterprise and pertains to areas such as strategy development and execution, acquisitions and mergers, organizational changes and large investments. As the world is becoming more and more data-driven, the complexity of decision making is also rapidly increasing. New modeling and computing paradigms are necessary for coping up with the increasing complexity. By applying data mining, business enterprises can carry out objective analysis of the available data to make decisions. Decisions made by executives are of a strategic nature and are usually complex and based on situations which are tough to solve by existing procedures. These kinds of situations need deep insights which can be provided by data mining.
3. Aids in Sales Forecasting:
Business enterprises have large number of repeat customers who regularly avail the product and services offered by the enterprise. Keeping a track of the customer’s purchasing behavior can help the enterprises anticipate future purchase patterns so that the best possible customer service can be provided. Data mining helps the enterprise to look at when their customers have bought and predicts when they will buy again. This type of analysis could be used to come out with complimentary products to sell or create a strategy of planned obsolescence. Here the number of customers in the market are also analyzed to predict how many of them will actually purchase.
4. Helps in Detecting Faulty Equipment:
Business enterprises indulged in manufacturing activities can suffer huge losses due to faulty equipment. Applying data mining to the operational engineering data can help them detect faulty equipment on time and come up with optimal control parameters. In the production of any item, data mining can be used to regulate the ranges of the control parameters that results in the least error during manufacturing and the highest quality of finished product.
5. Conducting Merchandise Planning:
Having the right merchandise in the right quantity is critical for any business enterprise to mitigate losses and achieve success. Data mining can help enterprises in inventory warehousing and stocking options. Business enterprises that follow the right approach can leverage data mining to decide what to do with old inventory, select the right product, balance the right amount of stock that must be available at any given time and determine the competitive pricing that will attract the maximum number of customers.
Database mining can help in determining the products that customers want and can also include intelligence on the merchandise competitors have in their inventory. The right amount of stock that must be available throughout the year and during peak buying seasons can also be determined by database mining. Business enterprises must not ignore such a database strategy as it can lead to poor performance and customer service/experience.
6. Carry out Call Detail Record Analysis:
Business enterprises that have a dedicated call center usually possess a large cache of customer data that can be mined to maximize profits. Mining the data can help the enterprise in building customer profiles to analyze purchasing and spending patterns so that a tiered pricing structure can be constructed to increase profits and also build attractive promotions that reflect the data that was mined.
An enterprise that wants to gain the maximum market share and rise above their competitors can analyze mobile user data or customer service calls which can be used to improve current service and can also be used by the marketing department to develop strategies to improve customer satisfaction and deliver quality product and services.
7. Improves Customer Loyalty:
In a competitive business world, customer service and pricing of products and services are two most important factors that customers look for in an enterprise for continued association. Customers usually prefer buying from companies where the prices are low and will not think twice before changing their preference of a company. Enterprises can minimize this churn rate by utilizing data mining especially on social media data.
Most of the available data can be utilized by business enterprises to improve customer engagement and acquisition costs, identify reasons why customers stop purchasing from a company and develop new products to achieve substantial future growth. Data from social media platforms such as Facebook, LinkedIn, Twitter and others can be used by the enterprise to improve their brand, satisfy more of their customers and increase customer loyalty.
The more data business enterprises collect from their customers, the more value they can provide to them which can result in higher revenue. Data mining is critical for enterprises to uncover patterns in the data which can be helpful in making proactive, knowledge-driven business decisions. But without the presence of accurate data, business enterprises cannot leverage it to maximum effect. For data to be entered accurately in the databases, enterprises can employ the services of a professional data entry company to achieve accuracy in data entry. Data mining tools can then take over and predict behaviors and future trends to help the enterprise make effective business decisions.