Why is data mining so important?

Data mining is the process of gathering information from sets of data. Some professionals say that data mining is the procedure of extracting knowledge from data, and it is an important part of the knowledge discovery process. It is applied in business environment and other fields like medicine, transportation, government, insurance or forecast. Data mining is used by companies that are focused on their customers, like the ones from communication, marketing, finance or retail. If they have a data mining software, they can use it to determine what the relationship between internal factors and external ones is. When companies determine this relationship they are able to analyse what is the clients satisfaction, the impact on sales or other such important aspects.

The process of data mining

Data mining offers companies the possibility of making a link between analytical systems and separate transactions. The role of a data mining software is to analyse the patterns in transactions based on data and on the relationships that exist between them. Companies can choose between several types of software: neural network, statistical, and machine learning. A software is seeking one of the following relationships: clusters, classes, associations or sequential patterns. The process of data mining implies five elements. The first element extracts and transforms data, the second one stores and manages it, the third one allows analysts and technology professionals to access the data, the fourth one analyses it and the last one presents it in a useful format. Depending on the company that uses it, a certain infrastructure is required. Data mining applications are created to fit any domain, and this is the reason why they are designed in different size systems. The power of the system varies, depending on the size of the database and the query complexity.

Why companies use data mining

Data mining offers companies from multiple domains a wide range of benefits. In marketing, it is used to increase customer’s satisfaction, improve conversions and create advertising campaigns. Some companies from this domain use it to analyse the needs of the market and to create new products. In banking and finance domain, it is used to create detailed models for mortgages and loans. Some companies use it to detect fraudulent transactions. Tax governing bodies use it also to detect fraudulent transactions, and to discover suspicious tax returns. Retail stores often use this system to optimize their services according to clients’ feedback. Their main gaol is to increase profit and improve customers’ satisfaction. Manufacturing companies find data mining very useful, because it helps them to improve the comfort, safety and usability of their products. Companies from all domains have a common purpose when they use data mining, and this is to earn more money. They can achieve their goal, because this process helps them to see what products have purchased customers in the past or what projects represented and attraction for donors. Once companies know what customers and donors want, they easily find the way to increase their profit.