The term data mining sounds like something dark and dangerous, but it is actually one of a group of important business intelligence tools. Data mining is the collection of data on customers when they order online, use credit cards or sign up for loyalty programs. This allows businesses to find out customer preferences, forecast future buying habits, handle inventory and keep in touch with customers. These specialized tools are very fast and can handle massive amounts of information.
Shopping Cart Data
One of the things business intelligence tools can be used for is to track what items customers purchase. When someone buys several items and then uses a credit card to pay for them, the inventory system can mark those items to be reordered. Analysts can use the information to predict future sales.
Data mining is not only useful to predict what a customer will buy, but when they will buy it. If a customer buys a bag of dog food every week, it is a good bet that as long as the animal remains healthy, that customer will continue to buy the food. With the information from data mining, the store could send the dog owner a coupon in an email, or a free sample of a dog treat.
Analyzing data is also useful for gathering demographic information on customers. This is useful because customers who are around the same age, ethnicity and socio-economic level tend to purchase similar products, and this information can be used for planning inventory and future product development.
Keeping track of how many items a business has available to sell is a common use of business intelligence software. Inventory control is an important part of any retail business, as is ordering products for the future. Business intelligence uses algorithms to predict when people will buy particular items and to make sure that they are restocked quickly.
Finally, data mining is useful for keeping in touch with customers through loyalty programs. When customers sign up for a loyalty card, the data collected can be used to alert them upcoming sales, offer them discounts and run targeted marketing campaigns. For example, some businesses give customers a free gift or a special discount for their birthday.
Businesses use software tools for activities such as data mining and use this data to offer customers discounts, analyze demographics and keep track of inventory. These tools are a powerful ally for businesses trying to increase customers and sales.