Data Mining: You know very well that knowing the customer is essential to create effective strategies for your business, don’t you? Have you considered using data mining to do this? The feature can generate valuable insights for your brand.
Most companies have realized that storing consumer data is essential – registration information, sales records, relationship history, etc. However, more than just maintaining a database is required.
It is necessary to interpret all this information to transform these elements into strategic knowledge. But doing this analysis manually is an almost impossible mission. That’s where data mining comes in to cross information and identify market threats and opportunities.
Want to understand better how technology works? Read on to see the benefits of data mining and learn how to use it to extract customer data.
What Is Data Mining?
Data mining — is a process that transforms data into strategic information. The system analyzes structured data, identifies relationships between them, finds anomalies, recognizes behavior patterns and predicts outcomes.
This tactical knowledge can improve the Customer Experience (CX), strengthen relationships, identify bottlenecks, reduce risk, cut costs and guide decision-making. This process ensures more accurate deliberations. After all, the solution is based on sound information, not just guesswork.
With the technological revolution, every consumer step is monitored. Websites visited, interests, check-ins, searches on search engines (Google, Bing, etc.) and various other actions generate data. This explosion of data is known as big data. The term is related to the high volume of structured and unstructured elements obtained daily.
The purpose of mining is to convert this data into useful knowledge. While big data gathers more complex data, data mining analyzes the structured information in spreadsheets and dimensional and relational databases.
Why Use This Technology?
That old saying said: who knows has everything! It’s right there. Data mining makes diagnoses and issues recommendations that are essential to making strategic business decisions.
To manage efficiently, companies use databases and various types of reports, but they can only sometimes transform this data into relevant information.
For example, the data of a telephone company contains a high volume of elements: registration information, number of calls, abandonment rate, active customers, new customers, and churn rate, among others. Analyzing these facts separately has its value.
However, mining this data makes it possible to identify behavior patterns. For example, a call to cancel the service may be preceded by contacts complaining about the instability of the signal.
So that’s the goal of data mining: to take this structured data, process it and turn it into valuable knowledge. See some benefits of doing data mining.
Add Knowledge About Customers
This is one of the basic rules for the success of any business: knowing the customer. Data mining can act on data generated by management software such as CRM, ERP, digital marketing, and Google Analytics.
By the way, data mining is an important tool for Customer Intelligence (CI). Data mining analyzes information about consumers, and based on this knowledge, the company can improve customer relationships and experience.
Decreases Risks
Imagine a financial institution that is having problems with customer defaults. Consumers are classified into three groups: those who pay on time, those who pay late and those who do not pay.
Data mining allows it to analyze the entire history of actions and identify similar customer characteristics in the same set. With this information, risk diagnosis when granting a loan, for example, is more accurate.
Even the Federal Revenue uses data mining to guarantee the payment of due taxes. In the private sector, the technology can be used to carry out credit analysis, determine card limits, and stipulate insurance values.
Do you know when the credit card company denies an online purchase transaction? This happens because by exploring the customer’s transaction history, mining identifies unusual movements and prevents possible fraud. Therefore, the technology guarantees security for the financial institution and the consumer.
Identifies Patterns Of Behavior
Just as habits can signal risks, they can also signal opportunities. Often, company databases contain hidden knowledge.
See the example of e-commerce: by analyzing consumer purchase data, it is possible to recognize products normally purchased together, such as a table and chair, pants and belts, and keyboard and mouse, among others.
The same reasoning can be applied to businesses in various sectors. With this information in hand, it is feasible to change the positioning of products on the shelves of physical or virtual stores and define strategies to stimulate the sale of complementary items.
Helps In Decision Making
Based on all the knowledge generated by mining, making more precise plans for both business and integrated communication is possible. Furthermore, the information is essential to efficiently deliberate about inventory control, product or service pricing, customer classification, quality control, etc.
Also Read: Big Data Analytics Its Impact On Digital Transformation
