IT Management: Week 49

Data Mining Models

Learn
Data mining is a process that allows computers to look for patterns in information. By analyzing transactional records of prior experiences, companies can anticipate future customer behavior and look for trends.

Unlearn
We should stop using normal excel spreadsheet to do analysis as it is slow, time consuming and as it is done manually, there is high possibilities of error. Data Mining Models can do much faster analysis and we should adopt the use of these models.

Relearn
There are a few commonly use data mining models.

Retention and Attrition Modeling
Through analysis of data, this model could be built to predict the likelihood of customer leaving or being attracted to certain sales promotions or marketing campaigns. The retention model examines the probability for a customer to be retained whereas the attrition model would predict the chances of a customer to stop buying.

Profitability Modeling
This model will calculate lifetime value (LTV) of customer and using it to segment customers. Recency-frequency-monetary (RFM) model identified how recently customer have purchased and how frequently might they buy, which will contribute towards a better understanding of customers so that sales force may communicate more effectively with customers.

Predictive Modeling
This model applied mathematical and behavioral sciences to predict better how, when and why a customer will purchase from us. These technologies can begin to predict what other products, services and information we can offer to customers that will benefit both parties.