It’s pretty common to see companies sit on loads of customer data and do nothing with it. The truth is that customer data can be a gold mine of sorts. Correctly using customer data can reduce client churn, unlock hidden profitability and increase customer loyalty. Data mining refers to the process of sifting through data to find relevant information. In this case, data mining can help companies to predict future customer behaviour.
However, many business owners are still not aware of the role data mining can play, especially when it comes to the cut-throat competition that exists today. The following few points will highlight the role played by data mining in a competitive business environment and will prove why it’s necessary to go for data mining services.
Sales forecasting dives right into when customers purchase a particular good or service and try to predict when they will do so again. Data mining helps in forecasting sales by segregating the data for creating three cash flow projections: realistic, pessimistic, and optimistic. It allows top management to have a plan in place to endure the worst situation possible if sales do not go according to plan. This type of analysis can also be used to determine the strategy of planned obsolescence for the company.
Companies can get an idea of which products will sell well simply by looking at existing customer purchasing patterns. They can use data mining to look at demographics and psychographics of existing customers to build profiles. For a marketer to get any value out of a database, it has to be expanded and updated frequently. Data mining can help in this regard, by accurately feeding information to build on an existing database.
Role In Manufacturing
Manufacturers can detect faulty equipment and determine optimal control parameters if they apply data mining in operational engineering data. Data mining can be applied to determine the range of control parameters needed for the manufacture of different goods. It provides information in a way that the companies can avoid overstocking or overproduction, which could lead to substantial losses.
Positive Customer Acquisition
If the company is aware of what customers want and possesses the means to deliver them, it makes sense for them to develop a stronger customer base with loyal relationships. This can easily occur by using data mining. It provides the necessary insights to know the audience better than they know themselves. Using this data as a tool to target greater audiences can be the key for a business to thrive.
Providing More Oversight
Data mining helps to keep the information flowing. This means that companies can put the data to use almost instantly. The insights are generated in real-time keeping the top management up to date. This allows them to make adjustments on the fly to influence how a campaign works and produces results.
Data mining can be the tool to make use of the myriad of data that most businesses possess. Data mining can thus fit into any comprehensive business intelligence strategy provided it is done with the utmost priority to quality and deliverability.