BENIFITS ASSOCIATED WITH DATA MINING - PowerPoint PPT Presentation
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BENIFITS ASSOCIATED WITH DATA MINING
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We may define data mining as modeling of hidden patterns and discovering data from large volumes of data.It is important to note that data mining is very different from other retrospective technologies because it involves the creation of models. By using this technology the user can discover patterns and use them to build models without even understanding what you are after. – PowerPoint PPT presentation
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Title: BENIFITS ASSOCIATED WITH DATA MINING
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Welcome To Loginworks Softwares
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6 BENEFITS ASSOCIATED WITH DATA MINING
- Data has been used from time immemorial by
various companies to manage their operations.Data
is needed by various organizations strategically
aimed at expanding their business operations,
reduction of costs, improve their marketing force
and above all improve profitability. Data mining
is aimed at the creation of information assets
and uses them to leverage their objectives. - In this article, we discuss some of the common
questions asked about the data mining technology.
Some of the questions we have addressed include - How can we define data mining?
- How can data mining affect my organization?
- How can my business get started with data mining?
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In this article, we discuss some of the common
questions asked about the data mining technology.
Some of the questions we have addressed include
1. How can we define data mining?
2. How can data mining affect my organization?
3. How can my business get started with data
mining?
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Data Mining Defined
- Data mining can be regarded as a new concept in
the enterprise decision support system, usually
abbreviated as DSS. It does more than
complementing and interlocking with the DSS
capabilities that may involve reporting and
query. It can also be used in on-line analytical
processing (OLAP), traditional statistical
analysis and data visualization. The technology
comes up with tables, graphs, and reports of the
past business history. - We may define data mining as modeling of hidden
patterns and discovering data from large volumes
of data.It is important to note that data mining
is very different from other retrospective
technologies because it involves the creation of
models. By using this technology, the user can
discover patterns and use them to build models
without even understanding what you are after. It
gives an explanation why the past events happened
and even predicting what is likely to happen. - Some of the information technologies that can be
linked to data mining include neural networks,
fuzzy logic, rule induction and genetic
algorithms. In this article, we do not cover
those technologies but focus on how data mining
can be used to meet your business needs and you
can translate the solutions thereafter into
dollars.
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Setting Your Business Solutions and Profits
- One of the common questions asked about this
technology is what role can data mining play for
my organization? At the start of this article, we
described some of the opportunities that can be
associated with the use of data. Some of those
benefits include cost reduction, business
expansion, sales and marketing, and
profitability. In the following paragraphs, we
look into some of the situations where companies
have used data mining to their advantage.
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Business Expansion
- Equity Financial Limited wanted to expand their
customer base and also attract new customers.
They used the Loan Check offer to meet their
objectives. Initiating the loan, a customer had
to go to any branch of Equity branch and just
cash the loan. Equity introduced a 6000
LoanCheck by just mailing the promotion to their
existing customers. The equity database was able
to track about 400 characteristics of every
customer. The characteristics were about loan
history of the customer, their active credit
cards, current balance on the credit cards and if
they could respond to the loan offer. Equity used
data mining to shift through 400 customer
features and also finding the significant ones.
They used the data and build a model based on the
response to the Loan Check offer. They then
integrated this model to 500,000 potential
customers from a credit bureau. They then
selectively mailed the most potential customers
that were determined by the data mining model. At
the end of the process, they were able to
generate a total of 2.1M in extra net income
from 15,000 new customers.
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Reduction of Operating Costs
- Empire is one of the largest insurance companies
in the country. In order to compete with other
insurance companies, it has to offer quality
services and at the same time reducing
costs.Therefore it has to attack costs that may
in form of fraud and abuse. This demands a
considerable investigation skills and use of data
management technology. The latter calls for data
mining application that can profile every
physician in their network based on claims
records of every patient in their data warehouse.
The application is able to detect subtle
deviations on the physician behavior that are
linked to her/her peer group. The deviations are
then reported to the intelligence and fraud
investigators as suspicion index. With this
effort derived from data mining, the company was
able to save 31M, 37M, and 41M in the first
three years respectively from frauds.
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Sales Effectiveness and Profitability
- In this case, we look into pharmaceutical sector.
Their sales representatives have a wide range of
assortment tools they use in promoting various
products to physicians. Some of the tools include
product samples, clinical literature, dinner
meetings, golf outings, teleconferences and many
more. Therefore getting to know the promotions
methods that are ideal for a particular physician
is of valuable importance and it is likely to
cost the company a lot of dollars in sales call
and thereby more lost revenue. Through data
mining, a drug maker was able to link eight
months of promotional activity based on
corresponding sales found in their database. They
then used this information to build a predictive
model for each physician.The model revealed that
for the six promotional alternatives, only three
had a significant impact. Then they used the
knowledge found in the data mining models and
thereby customizing the ROI. - Looking at those two case studies, then ask
yourself, was data mining necessary?
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Getting Started
- All the cases presented above have revealed how
data mining was used to yield results to the
various businesses. Some of the results led to
increased revenue and increased customer base.
Others can be regarded as bottom-line
improvements that impacted on cost savings and
also improved productivity.In the next few
paragraphs we try to answer the question how can
my company get started and start realizing the
benefits of data mining. - The right time to start your data mining project
is now. With the emergence of specialized data
mining companies, starting the process has been
simplified and the costs greatly reduced. Data
mining project can offer important insights into
the field and also aggregate the idea of creating
a data warehouse. - In this article, we have addressed some of the
common questions regarding data mining, what are
the benefits associated with the process and how
a company can get started. Now, with this
knowledge your company should start with a pilot
project and then continue building a data mining
capability in your company to improve
profitability, market your products more
effectively, expand your business and also reduce
costs
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