Data is the gold mine of insights in this digital age. These insights enable businesses to enhance their product, process, or personnel. It is the data mining process that empowers stakeholders to chart a course by comparing analytics and stats from the past and predict the near future.
As a fast-growing field, web data mining offers business intelligence to understand customers, help drive sales, meet mission goals, and tap new opportunities. Plus, organizations can also unlock greater profitability, reduce client churn rate, and increase customer loyalty.
Listed here are some common ways data mining helps businesses with practical advice on how to use each to maintain a competitive advantage:
1. Sales Forecasting
Sales forecasting looks at when the customers bought a product/service and try to predict when they will purchase again. This type of analysis can be used to figure out complimentary products to sell or determine a strategy for planned obsolescence.
This allows you to look at the number of customers in the market and predicts how many will actually make the purchase. Take the case in point- you have a coffee shop somewhere in Seattle, let’s say. Here are the questions you might want to ask:
- How many competitors are present in that mile?
- How many coffee store competitors are in the immediate 5 miles?
- How many households and/or businesses within a mile of your coffee store will buy your beverage?
- What is the strength of the market in 5 miles? Or, what is the number of people/households/businesses in that area?
Creating three cash flow projections that are realistic, optimistic, and pessimistic is a nice idea when it comes to forecasting sales. This way businesses can future-proof themselves by getting the right amount of capital on hand to endure the worst situation that may occur if sales don’t go as planned.
2. Card Marketing
Businesses involved in issuing credit cards can collect the information from users and identify different customer segments-then build programs that boost acquisition, improve retention, and target products to develop and design prices.
Of course, there are costs involved in issuing credit cards that many companies can’t absorb, but if you can, you must do it. Analyzing customer buying patterns according to their credit card habits provides insight into their behavior. Hence, you can create promotions and programs based on those to generate higher revenues and increase customer loyalty.
3. Call Record Analysis
Telecommunication companies can mine the incoming data to understand use patterns, build customer profiles from them, and construct a tiered pricing structure to enhance profit. Or promotions that reflect the data can also be built.
Whether it’s based upon customer service calls or mobile user data, professional data mining companies dive deep into the data available in call detail records to find ways that can improve current service, promotion opportunities, and ways to shorten time on call.
4. Market Segmentation
One of the tangible uses of data mining is to segment the customers based on their age, gender, income, occupation, etc. This works best whether you are running SEO strategies or email marketing campaigns.
Segmentation also helps understand the competition better and improve the conversion rates as businesses focus their promotions on a tight, highly-interested market. This also helps in understanding who the competitors are in each of those segments, enabling you to customize promotions and products, which satisfy the needs of that audience.
5. Product Production
Data mining insights help in creating custom products designed for specific market segments. You can predict which features users want; though truly innovative products aren’t created by offering customers what they want.
Instead, they are created when you spot holes that customers are demanding be filled. Elements that must be baked into the truly innovative product are the ones that fulfill an obvious need, offer something utterly unique, attractive design, serve a broad market, create an impulse-purchase price, can be sold in generations, and cost to make is low enough to make a profit.
The lesson learned is that the most innovative companies never start with a product, rather they start with a pain point uncovered from mining data. A minimum viable product is then built to solve that problem in a way customers never imagined.
6. Guarantee and Warranty
Data mining in financial services allows businesses to predict how many people would actually cash in on the warranty they’ve set up; the same goes for guarantees. By looking at the data of past guarantees, profits, and sales, you can easily create a successful guarantee, which is why this is one of the best ways. Doing so can lead you to guarantee a 110% money-back offer to gain an edge over the competition.
7. Merchandise Planning
It is helpful for online and offline companies. An offline company looking to expand by adding stores can evaluate the amount of merchandise it will need by looking at the exact layout of a current store. Merchandise planning can help an online business determine stocking options and inventory warehousing.
Leveraging the right approach will lead to answers for:
- Selecting Product: Mining a business database helps in determining which products customers want that should include intelligence on their competitor’s merchandise.
- Inventory getting old: Merchandising planning is as easy as stocking up-to-date accessories for products or updating a PDF blank page to be current.
- Balancing the stock: Database mining insights help you determine the right amount of stock-neither too much nor too little throughout the year as well as buying seasons.
- Strategic pricing: Data mining also helps stakeholders determine the best price for their products/services as they uncover customer sensitivity.
Ignoring this strategy can result in poor performance of production and customer experience/service. If in-store expectations aren’t met, you can’t handle typical runs on a product, or your price doesn’t match the market, users will jump ship.
Bottom Line
All in all, the more data businesses collect from the customers, the more value they can deliver to them; the more the value is delivered to them, the more revenue generated-data mining is what helps businesses get assured ROI.
So, if you are one of those organizations sitting on heaps of customer data and not doing anything with it, now is the time to make a plan. You can either do it yourself or collaborate with experienced web data mining companies, whatever it takes. Your business bottom line will thank you.
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