What is Data Mining?
Data mining is the process of unearthing useful patterns and relationships in large volumes of data. A sophisticated data search capability that uses statistical algorithms to uncover patterns and correlations, data mining extracts knowledge buried in corporate data warehouses.
Role of Data Mining in CRM
Although it is still a relatively new technology, businesses from all industry verticals be it healthcare, manufacturing, financial, transportation etc. have invested in it to take advantage of historical data. Data mining techniques in CRM can assist your business in finding and selecting the relevant information that may then be used to get a holistic view of the customer life-cycle which comprises of four stages: customer identification, customer attraction, customer retention and customer development. The more data there is in the database, the better the models will be created whose use will result in more business value.
Data mining typically involves the use of predictive modeling, forecasting and descriptive modelling techniques as its key elements. Using these techniques, an organization is able to manage customer retention, select the right prospects & customer segments, set optimal pricing policies, and objectively measure and rank which suppliers are best suited for their needs.
Applications of Data Mining in CRM
1. Basket Analysis
Ascertain which items customers tend to purchase together. This knowledge can improve stocking, store layout strategies and promotions.
2. Sales forecasting
Examining time-based patterns helps businesses make stocking decisions. Furthermore, it helps you in supply chain management, planning your financials and gives complete control over internal operations.
3. Database marketing
Retailers can design profiles of customers based on their demographics, tastes, preferences, buying behavior etc. It will also aid the marketing team in designing personalized marketing campaigns and promotion offers.
This will result in enhanced productivity, optimal allocation of company’s resources and bring the desired ROI.
4. Predictive life-cycle management
Data mining helps an organization predict each customer’s lifetime value and to service each segment appropriately.
5. Customer segmentation
Learn which customers are interested in purchasing your products and design your marketing campaigns and promotions keeping their tastes and preferences in mind. This will increase the efficiency and result in the desired ROI since you won’t be targeting customers who show little to no interest in your product.
6. Product Customization
Manufacturers can customize products according to the exact needs of customers. In order to do this, they must be able to predict which features should be bundled to meet the customer demand.
7. Fraud detection
By analyzing past transactions that were later determined to be fraudulent, a business can take corrective measures and stop such events from occurring in the future. Banks and other financial institutions will benefit from this feature immensely.
Manufacturers need to predict the number of customers who will submit warranty claims and the average cost of those claims. This will ensure efficient and effective management of company funds.
Rolustech is a team of award-winning CRM experts taking pride in successfully implementing CRM for more than 500 firms worldwide.