The past year and a half has proven transformative for businesses large and small. As the COVID-19 pandemic engulfed the globe, the business sector had to quickly pivot and rethink the structure of their operations. Alongside the full acceptance of the work-from-anywhere model, many businesses also took the opportunity to implement technology changes to improve efficiency, productivity, and security across their entire organization as well as in their approach to delivering unique customer experiences. At the heart of this digital business transformation is the mining of data.
What is Data Mining?
Data mining is the process of analyzing large amounts of data to find, identify, and describe patterns. It further identifies relationships and irregularities in these data sets that can be used to predict trends and events that can influence and reveal business opportunities and potential obstacles, offering businesses of all sizes a competitive edge.
These actionable insights can also be used to bring about organizational changes, including the reformation of internal systems and processes for great efficiency and productivity. Large enterprises like Amazon and Google have used data mining as part of their business intelligence strategies, allowing them to emerge as globally recognized brands while delivering unique customer experiences based on the oceans of data available to them.
However, data mining is not just for global enterprises. Small to medium-sized businesses (SMBs) also understand the value of the data inherent in their products and services to drive digital transformation, and many are willing to tap into those resources to stand out. A recent study commissioned by Cisco and conducted by IDC revealed that more than 70 percent of small businesses surveyed are accelerating the digitization of their businesses as a result of the pandemic. As these SMBs become “digitally mature”, the report anticipates that they could add $2.3 trillion to the U.S. GDP by 2024.
So, how can SMBs mine their available data to push digital transformation and deliver impactful customer engagement?
Understanding Data Mining Methods
Data mining is a powerful, predictive tool that, if used correctly, can reduce business costs and increase revenue. Unlike data analysis, which is used to test dataset models no matter the amount of available data, data mining identifies hidden patterns in large datasets. To uncover these patterns, data mining has two approaches — descriptive and predictive — that are broadly broken down into six stages:
- Anomaly detection identifies data that breaks away from the established norm.
- Associate rule learning searches for relationships among the data. For example, streaming services recommendations or marketing based on purchasing habits.
- Clustering recognizes unique clusters or structures within the data without using the known structures in the data. For example, using a person’s unique characteristics to create a marketing campaign that has also proven successful with customers with similar traits.
- Classification assigns categories to a dataset to aid in generating more accurate predictions. An everyday example of classification is weather forecasting.
- Regression is a statistical technique that uses existing datasets to predict other values. These predictive models can be adjusted as different values are introduced. For example, predicting a home’s value based on location, square footage, number of rooms, etc.
- Summarization is the presentation of the dataset in a comprehensive, compact way. This can be done through visualization and reporting. For example, a researcher presenting his findings in a report that clearly outlines key and prospective outcomes.
Benefits of Data Mining
The bottom line is that businesses want to identify and enact changes that will grow their operations and expand their customer base. As SMBs increasingly invest in game-changing technologies, including edge computing and cloud-based networks, the value of and ability to mine data emerges as a necessity.
Transforming Business Operations
For internal business operations, data mining can boost collaboration by identifying new approaches to workflows and project management. This will require educating your team on the importance of and use cases for data analytics to help highlight the challenges it can help overcome and get everyone onboard.
At the same time, the implementation of a data mining process can uncover organizational inefficiencies that can be costly to small businesses while also highlighting areas of your business that are functioning well. For example, data mining can reveal patterns in hardware and software usage that can identify where to invest more and spend less.
For SMBs already on the path to digital transformation, data mining opens the door to automating some tasks, such as payroll and customer service, that can then be scaled across the business as it grows.
Valuing Your Customers
Customer data is nearly every company’s pot of gold, and extracting insights from this flood of information has become a defining factor and driver in business digital transformation. Customers are more savvy than ever and in exchange for giving up details about their location, age, and spending habits, they expect experiences that showcase their value to your business. This means using this data to deliver meaningful, customized experiences that will inspire brand loyalty.
Data mining using tools already in your arsenal such as customer data platforms, customer relationship management (CRMs) platforms, and chatbots can pull together a wealth of insights that can inform your marketing strategy without breaking the bank.
Unlocking the Next Level
Data mining is not easy. Combining statistics, artificial intelligence, and databases, it is a process that requires a sophisticated, technical skill set that includes some business acumen and the ability to incite action based on findings. For organizations ready to harness their data and digitally transform their business, data miners can be a valuable asset in taking your operations, products, and services to the next level.