Unravelling the Data Mining Mystery - The Key to Dramatically Higher Profits
Data mining is the art of extracting nuggets of gold from a set of seeminngly meaningless and random data. For the web, this data can be in the form of your server hit log, a database of visitors to your website or customers that have actually purchased from your web site at one time or another.
Today, we will look at how examining customer purchases can give you big clues to revising/improving your product selection, offering style and packaging of products for much greater profits from both your existing customers and an increased visitor to customer ratio.
To get a feel for this, lets take a look at John, a seller of vitamins and nutritional products on the internet. He has been online for two years and has made a fairly good living at selling vitamins and such online but knows he can do better but isn't sure how.
John was smart enough to keep all customer sales data in a database which was a good idea because it is now available for analysis. The first step is for John to run several reports from his database.
In this instance, these reports include: repeat customers, repeat customer frequency, most popular items, least popular items, item groups, item popularity by season, item popularity by geographic region and repeat orders for the same products. Lets take a brief look at each report and how it could guide John to greater profits.
As you can see, each of these elements gives very valuable information that can help shape the future of this business and how it conducts itself on the web. It will dictate what new tools are needed, how data should be presented, whether or not a personal experience is justified (i.e. one that remembers you and presents itself based on your past interactions), how and when special sales should be run, what are good loss leaders, etc.
Although it can be quite a bit of work, data mining is a truly powerful way to dramatically increase your profit without incurring the cost of capturing new customers. The cost of being more responsive to an existing customer, making that customer feel welcome and selling that customer more product more often is far less costly than the cost of constantly getting new customers in a haphazard fashion.
Even applying the basic principles shared in this article, you will see a dramatic increase in your profits this coming year. And if you don't have good records, perhaps this is the time to start a system to track all this information. After all, you really don't want to be throwing all that extra money away, do you?
About The Author
Steven Chabotte is president of Big-Web Development Corp, specializing in the development of email productivity and marketing tools for the web. Steven can be reached at email@example.com or you can visit our websites at http://www.maxsponder.com or http://www.maxsvc.com
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