Mohit Sewak

.

.

.

.

.

.

Recently Farmer’s Insurance group with the help of IBM pulled 2 million policies from its database to run a pilot test using IBM’s Decision Edge software.

They found that apart from young 20 something single guys, married boomers with kids also bought sports cars. They paid same insurance surcharges but claim rates were less.  Hence they began to offer discounts in policies and lax rules for such sports car enthusiasts.

.

Many companies are using data mining to determine who are their best customers and how better to market products and services to them.

.

Only 8% of respondents in a survey currently use data mining software, while 54% plan to purchase data mining tools in the near future. Big companies like Amazon who took over Alexa internet and Yahoo which bought out Hyperparallel are trying to earn value from bits and bytes of data from Netizens.

.

Data warehouse with more than 1 Tb will increase from 19% to 30% becoming largest segment this year.

.

.

Success Stories with Data Mining:

.

Data mining led Fingerhut to discover that customers who changed their residence tripled their purchases in the 3 months after their move. Hence they developed a special ‘new mover’s catalog’ to target this segment. Clustering customers into various segments is an important objective of data mining.

.

.

Preparing data for data mining takes upto 80% of the total time according to SAS institute.

Sometimes there are hundreds of variables affecting a metric. Data mining gives you ability to sift through these potential variables to determine the most important ones.

Even though the results may be questionable sometimes, data mining is a very important tool to segment and target the customer and gain insight.

.

Data mining + people with solid knowledge of marketplace  = Building strong customer relations.

.

.

.

.

.

.

.