Increasing Sales And Decreasing Cost Using Current Business Data

Featured Article by Robert Cordray, Independant Technology Author

In today’s business world, most use computerized cash registers and systems that record sales information, keep track of inventory and show income patterns for their businesses. These records make monthly reporting easier, help address issues with individual purchases, and tell business owners which products are selling well.

This information can also serve to help businesses improve sales, reduce operational cost, and tell business owners what products and services are bought during a particular time frame. In return, this makes it easier to have those items or services available and enough staff to handle a larger volume of business.

For example, most companies have an email list that helps them manage and reach out to their customers with offers and updates. This is nearly impossible unless companies have a formal email sender. These massive email blaster will be collecting data as it sends email like open and click-through rates. There’s data mining.

Data mining offers businesses this knowledge by organizing their data into facts about past sales which allow them to predict future purchasing patterns. By putting this information into different categories, shopper or customer information, effect of the economy or competition on customer and shopper behavior, and the effect of prices, staff skills and store location on purchasing can all be seen in an easy to understand format. You have all this knowledge in your hands already and only need to put it to use to improve your business, sales, and customer satisfaction through data mining.

What Does Data Mining Offer?

Data mining allows businesses to process the information they have to tell them about relationship, patterns and trends, and gain insight into buying behavior, sales and marketing, and business operations. Data mining techniques and software sort information into classes, clusters, associations, decision tree and sequential patterns. Data can display patterns to help in predicting likely outcomes, suggest actions to be taken in response to the knowledge gained, and turn your large collection of information into easy to read and understand displays.

Data Analysis Techniques

Association or relationship data mining can identify sets of products that are often purchased together in one transaction. Classification data mining can take advantage of many mathematical techniques, such as decision trees, statistics, neural network, or linear programming, to group items or products. Consumers, items or products can be grouped by historical data into predefined sets or classes. Clustering groups customers, items or products by them possessing similar characteristics rather than predefined classes. Sequential patterns analysis identifies similar patterns and regular trends and events from data over a period of times. Historical transaction data, although risky to store long-term, tells businesses what set of items customers usually buy at a certain time of year. Businesses can then recommend that the customers buy these items during sales or when the prices are more favorable, thereby building customer satisfaction and loyalty. Decision tree data mining techniques are an easy to understand way to make the best decision about an event. The root of the decision tree is a question or condition with multiple answers possible.

These answers lead to further questions to identifying possible conditions surrounding the event. These possible conditions and relating data are used to make the best possible decisions.

Some Benefits of Data Mining

Using data mining, data can be stored and managed by programing automatic sorting as soon as it enters the database. This information becomes immediately available for decision making and action. Your program can analyze and present your data in an easy to read format such as graphs and tables. Data mining makes all this happen quickly and easily but it is up to the business owner or system user to understand the information and assess its value to improving their business process. This is especially valuable for IT professionals who are monitoring server alerts and trying to find ways to prevent future problems.

Data mining allows basket analysis to be made to improve layout of products and recommend the purchase of related product and services to customers. Companies attempt to use purchases and preference to predict future buying behavior. Looking at what was purchased and when can help businesses be prepared for repeat purchases and sale related products, as well, through sales forecasting. Looking at buying patterns by certain demographic information can help businesses to understand what products customers are looking for and how much they will need to meet the demand. Deciding what products and how much is needed can help a business perform merchandise planning. Data mining can help businesses market their credit cards better by identifying customers and using their data to create programs that help maintain them, attract new customers, and create new products for their targeted customer base. Even customer service calls can be used in data mining to build customer profiles and maximize profits by creating a pricing structure. Demographic information used to categorize customers by age, gender, occupation and income level can give valuable insight into marketing strategies and purchasing behavior.

The fact that data is constantly changing should be taken under consideration when deciding the best data mining technique to use. In 1995, Barnes and Noble could not accurately predict future sales because it could not predict that Amazon would open an internet book store or the impact that online purchasing would have on their business. The use of data mining has literally changed career paths and left late adopters in the dust (sorry Barnes and Noble).

Still, data mining is effective at improving business processes, increasing sales, and cutting the cost of operations by presenting information in a format that allows business owners to gain new knowledge.