Data mining—searching stores of data to uncover patterns and trends that go much deeper than simple analysis—isn’t just for the big guys any longer. And while it’s not realistic for many, if not most, small business owners to mine data on a large scale, every small business owner should know that basic data analysis can be done relatively inexpensively through open source or free tools.
You might be tempted to see data mining as just another buzzword, another passing business fad to chase. But experts say you should, in fact, be paying attention: Data mining can yield some concrete benefits for your business, like understanding your customers better, seeing ahead to emerging trends, and even identifying potential fraud. Of course, it’s not perfect; nothing is. But all in all, data mining will help you make better business decisions…decisions that are guided—informed—by data.
The National Federation of Independent Business gets right to it in their recent article, ‘Your Small Business Still Isn’t Data Mining?’ They tap data experts who suggest focusing your initial data mining efforts in two areas—operations and marketing—and who offer six steps to getting started:
Identify the questions you want to answer regarding your customers’ behavior.
Do an audit of your current data situation.
Evaluate your skills internally—do you need to hire a consultant?
Do a quick data analytics pilot.
Measure efficiency over time (operations and marketing).
Identify patterns and trends. Make recommendations based on those.
If you’re still thinking that data mining sounds a lot like what we’ve always called research, you’re definitely not alone. But there are real differences, and research analyst Shane Hall lays out some examples of data mining vs. traditional marketing research. The patterns and correlations that emerge from data mining, he says, will enable much more effective marketing efforts.
Microsoft Business explores the hows and whys of making better decisions through data mining. Take, for example, your customer transactions. Every transaction reveals critical information about their decisions and who they are. Information may be captured but often isn’t used. In fact, data mining can reveal important, insightful information that’s scattered throughout systems and departments. It enables you to pull out almost any information you want, as long as the data’s been captured in the database. Data can be extracted, re-purposed and looked at in entirely new ways. For example, a business owner could look at the true cost of goods sold by pulling together information from the manufacturing system, the time billing system and the CRM system.
But the number one use for data mining has got to be getting better insight into customers so that marketing approaches can be more finely tuned and tailored to them. The data you’re capturing likely holds a number of connections and patterns that you can’t see. Data mining will pull those together and show you a robust and in-depth picture of your customers and their behaviors that you didn’t have before. And there’s no disagreement on any front that the more you know about your customers, the better.
In today’s world, business conducted on any scale is more and more about data-driven decision-making, to help focus business resources for the best possible outcomes and adjust them along the way. For small business owners, there are plenty of software packages and programs to help you get started—great data mining tools designed specifically for you, including Microsoft Access, FileMaker Pro, Lotus Approach, Corel Paradox and MyDatabase.
Image courtesy of renjith krishnan / FreeDigitalPhotos.net
Are you data mining? Has it helped your marketing and/or operations decisions?