You must know that today, data are extremely important because of their omnipresence. With the evolution of the internet, the emergence of connected objects and social networks, we have collected data for days! It is therefore essential to understand and analyze them to stay on top of the game. Companies which aren’t using these data yet, are literally sitting on a gold mine that could increase their ROI (return on investment). In this article, we will tell you how to use Data Mining to improve the working of your company! You may have a real goldmine within easy reach!
What is Data Mining?
Data Mining is an essential component of Big Data technologies and analyses. It is the source of Big Data Analytics, predictive analyses and data exploitation. The data Mining tool allows you to find original structures and informal correlations between data. It is also useful to understand the correlation between distinct phenomenons and to anticipate some trends that aren’t yet discernible.
Data Mining is an essential tool to acquire information. But before that, you must go through KNOWLEDGE, because it helps you understand phenomenons. Then, you can FORECAST, and finally DECIDE.
Traditional statistic methods were particularly used to analyze data coming from surveys and studies. On the contrary, Data Mining focuses on intern data, particularly clients datas, living in businesses’ servers. Companies using the Data Mining techniques are collecting a broad variety of online and offline data.
Who can use it?
Data Mining can be used in all industries, as long as there are enough data to work from. Historically, it was used mainly by brands focused on their customers, in retail, finance, communication, marketing and research, such as mathematics, cybernetics and genetics. The Web Mining, used in client relation gestion estate, aims to identify patterns of user behaviour out of huge quantities of data.
Industrial or operational use of this knowledge in the professional world can be helpful in solving diverse issues, from client relations management, to preventive maintenance, including fraud detection and website optimization.
How does it work?
Data Mining works in 5 steps:
1/ Identification of the problem
First, you must ask yourself the right questions: what am I really looking for? What are my goals? How broad are my data? How can they solve my issue?
2/ Data collecting
It is possible to extract, transform and change data on the model of Data Warehouse: it stocks historic and actual data in one place which helps to create analytics reports.
You may have to make sure that the quantity of data is sufficient to avoid distorted results. This collecting phase needs to be carried out carefully as it is the most important phase.
3/ Build an analysis model
Many analysis models exist:
- Artificial neural networks
It is a nonlinear predictive model which learns through training and is similar to biological neuronal networks in their structure. It constitutes, among others, an interesting alternative to traditional statistics for data treatment.
- Genetic algorithms
It designates a process similar to genetical combinaison, transfer and natural selection in a design based on natural evolution concepts.
- Data visualisation
It is the visual interpretation of complex relations in multidimensional datas. Graphic tools are used to illustrate the datas relation.
4/ Results study
It represents data analysis thanks to an application software. Depending on your analysis model (listed above), the study of your results will be done using different software. Up to you to chose the most adapted to your needs.
5/ Presentation and broadcasting
Present your data in a useful format, such as a graph or a board. Setting up Data Mining techniques means entering the virtuous circle of client awareness, because it goes through: data collecting, data analysis to extract knowledge, applying the marketing actions based on that knowledge, the observation of the results customer by customer targeted, and finally the analysis of these results.
Why does Data Mining increase the ROI?
It analyses the relation between different factors
Indeed, companies can determine the relation between intern factors such as the price, the positioning and the skills of employees, but also external factors such as economic indicators, competition or demography.
It determines the impact of these relations
Companies can then determine the impact of these relations on the sales such as the customer satisfaction and advantage of the company. Finally, these relations can be converted in information to obtain details on transactional data.
Example: customer information (email, taste, habits, demographic datas)
It optimizes these relations
The informations and knowledge coming from Data Mining optimizes the strategic and operational decisions of the company at every steps, making them more effective and efficient. Data Mining reduces uncertainty and hypotheses no matter the business sector or strategic positioning of a company.
Data Mining is an essential tool for you to increase your ROI but not only, it also improves your strategy at every steps.
Share with us your thought about this tool, and if you have already tried it, tell us if it helped you!