Once upon a time, if a business wanted to get a good idea about its customers’ buying habits, it had to engage in market research. Companies would commission focus groups, engage in telephone surveys, send out questionnaires, and practice test marketing, all with the intention of getting into the customers’ heads in order to formulate more successful sales and marketing strategies.
These days, Big Data and data mining have muscled their way onto the scene to help businesses achieve these goals faster and with greater accuracy. Although the old ways haven’t gone away completely, it’s becoming increasingly clear that the new innovations can help small businesses prosper beyond anything the old school could deliver.
What Is Big Data And Data Mining?
Big Data is defined as large amounts of information gathered from a huge number of sources, and delivered to businesses and organizations in both structured and unstructured forms, at rapid speeds. Data gained from market research often counts as Big Data, but the terms can’t be applied interchangeably. In the article “Big Data vs. Market Research: Which Can Increase Your Business Intelligence?”, we see that market research is all about collecting data, while Big Data focuses more on how that data is used.
Data mining, on the other hand, is a newer concept. It’s defined as the process of analyzing data from various perspectives and summarizing it into information that can make a business run more efficiently, increase profits, or all of the above.
The Practical Application Of Data Mining
Let’s say a small business that sells wine, beer, and specialty foods decides to data mine its point of sale information over the course of a year. It discovers that sales of inexpensive beer spikes on the day before televised pro football games, while wine sales increase during the week before Valentine’s Day. Furthermore, the wine sale surges coincide with an increase in sales of expensive chocolates and high-end varieties of cheese. Armed with that data, the business can set up special deals to coincide with these times, or at least make sure that they’re not slashing prices during those high-demand times.
A business that rents movies can pull figures on which movies are the most popular and which genres of movies certain customers favor. With that information, the store can make personalized recommendations to its regular customers, even bundling promotions into the deals. Certain movies are popular around certain holidays, and data mining helps find the correlation between the two, especially if the movie title isn’t one that would normally be associated with the holiday in question, like Christmas and “Die Hard”, for instance.
Many establishments have frequent buyer programs or member loyalty cards. A restaurant chain could pull that transaction information and do a comparison of sales from members versus those from non-members, and see if pushing the loyalty program would be a worthwhile project, or even perhaps making the program more attractive by increasing the perks.
Or it could be something as simple as a book-seller pulling data on which authors are currently hot, and making sure that displays of their books are conspicuously set up at the front of the store.
While these examples seem like common sense, bear in mind that people who run a business are juggling a lot of tasks and processing a lot of information. They have only so much time and mindshare, and sometimes the obvious flies under the radar. Therefore, it’s helpful to have some form of data mining software to help determine patterns, associations and relationships and make them clear to the right people.
Mining For Profit
By mining the above information from large relational databases, marketing and sales professionals can create better promotions as well as determine things like inventory or even where in the store the product in question should be displayed. Although there’s no such thing as a 100% certainty, data mining in the world of Big Data will definitely help skew the odds in a business’ favor.
For more insights into Big Data’s role in small business, check out the article “What Can Big Data Do For Small Business?”.