What’s Your Excuse For Not Using Data Mining?

In an earlier article I briefly described how data mining can help marketers be more efficient (read… increased marketing ROI!). These marketing analytics tools can significantly help with all direct marketing efforts (multichannel campaign management efforts using direct mail, email and call center) and some interactive marketing efforts as well. So, why aren’t all companies using it today? Well, typically it comes down to a lack of data and/or statistical expertise. Even if you don’t have data mining expertise, YOU can benefit from data mining by using a consultant. With that in mind, let’s tackle the first problem — collecting and developing the data that is useful for data mining.

The most important data to collect for data mining include:

Transaction data – For every sale, you at least need to know the product and the amount and date of the purchase.
Past campaign response data – For every campaign you’ve run, you need to identify who responded and who didn’t. You may need to use direct and indirect response attribution.
Geo-demographic data – This is optional, but you may want to append your customer file/database with consumer overlay data from companies like Acxiom.
Lifestyle data – This is also an optional append of indicators of socio-economic lifestyle that are developed by companies like Claritas. All of the above data may or may not exist in the same data source. Some companies have a single holistic view of the customer in a database and some don’t. If you don’t, you’ll have to make sure all data sources that contain customer data have the same customer ID/key. That way, all of the needed data can be brought together for data mining.
How much data do you need for data mining? You’ll hear many different answers, but I like to have at least 15,000 customer records to have confidence in my results.

Once you have the data, you need to massage it to get it ready to be “baked” by your data mining application. Some data mining applications will automatically do this for you. It’s like a bread machine where you put in all the ingredients — they automatically get mixed, the bread rises, bakes, and is ready for consumption! Some notable companies that do this include KXEN, SAS, and SPSS. Even if you take the automated approach, it’s helpful to understand what kinds of things are done to the data prior to model building.

Preparation includes:

Missing data analysis. What fields have missing values? Should you fill in the missing values? If so, what values do you use? Should the field be used at all?
Outlier detection. Is “33 children in a household” extreme? Probably – and consequently this value should be adjusted to perhaps the average or maximum number of children in your customer’s households.
Transformations and standardizations. When various fields have vastly different ranges (e.g., number of children per household and income), it’s often helpful to standardize or normalize your data to get better results. It’s also useful to transform data to get better predictive relationships. For instance, it’s common to transform monetary variables by using their natural logs.
Binning Data. Binning continuous variables is an approach that can help with noisy data. It is also required by some data mining algorithms.

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Standard Process for Data Mining?

What if you’re assigned to a new project that involved analysing large data (e.g. transaction database, market or patient data) for your organization. What you should start first? Well, there are many standard process you can begin with but there is one in specific developed for industry called The CRISP-DM project. Starting from the embryonic knowledge discovery processes used in early data mining projects and responding directly to user requirements, this project defined and validated a data mining process that is applicable in diverse industry sectors. This methodology makes large data mining projects faster, cheaper, more reliable and more manageable. Good luck with your project then.

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How Data Mining is Useful to Companies?

January 27th, 2010
Every business, organization and government bodies are collecting large amount of data for research and development. Such huge database can make them to have the information on hand when required. But most important is that it takes much time to find important information from the data. “If you want to grow rapidly, you must take quick and accurate decisions to grab timely available opportunities.”

By applying the process of data mining, you can easily extract and filter required information from data. It is a processing of refining data and extracting important information. This process is mainly divided into 3 sections; pre-processing, mining and validation. In pre-processing, large amount of relevant data are collected. The mining section includes data classification, clustering, error correction and linking information. The last but important is validate without which you can not make trust on information. In short, data mining is a process of converting data into authentic information.

Let’s have look on how data mining is useful to companies.

Fast and Feasible Decisions: To search information from huge bundle of data require more time. It also irritates a person who is doing such. With annoyed mind one can not take accurate decisions that’s for sure. By having help of data mining, one can easily get information and make fast decisions. It also helps to compare information with various factors so the decisions become more reliable. Data mining is helpful in every decision to make it quick and feasible.

Powerful Strategies: After data mining, information becomes precise and easy to understand. While making strategies, one can easily analyze information in various dimensions. This analysis helps to get real idea about the strategy implementation. Management bodies can implement powerful strategies effectively to expand business boundaries.

Competitive Advantage: Information is easily available and precise so that one can compare it with competitors’ information. It is very much required that you must compare the data otherwise you will have to suffer in business. After doing competitive analysis, one can make corrective decisions to go ahead from competitors. This way company can gain competitive advantage.

Your business can get all the benefits of data mining at cutting rates through outsourcing.

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