Business Intelligence Lowdown: Data Mining Helps Database Marketing

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February 11, 2006

Data Mining Helps Database Marketing

With growing emphasis on the need for maintaining the quality and integrity of data, organizations are spending their time, resources and money in cleaning up their databases. This cleanup process involves replacing outdated data and consolidating data from various sources. But in enterprises that employ database marketing, the purging process can often be leveraged to segment the market in such a way that the most-likely-to-purchase customers can be targeted to help increase profits.

Data mining can be used to the company's advantage if combined with effective market segmentation techniques. Instead of the brute force approach in which all customers are targeted in a marketing campaign, segmentation techniques identify those clients who will perform the best, and thus ensure profitable returns on the campaign. Market segmentation intelligence should be applied to the database to add value to each of the customer records, which can then be used to prioritize customers and rank them according to their order of importance.

Some organizations use a segmentation technique that links multiple customer and prospect databases in a relational manner. These test segments or "cubes" are then tested using discriminating identifiers to decide which segments are of most value to the enterprise. Market segmenting intelligence thus gained can be utilized to build future marketing programs for bigger databases, which in turn will lead to higher returns for the organization, within the given marketing budgets. The bottom line is that sales increase in a timely manner at a lower cost.

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February 11, 2006 in Data Mining | Permalink