Mining for gold
"It used to be that the most important thing you could make was a product, and you went looking for customers for that product. In the Information Age, the most important thing you make is a customer. Then you find products for the customers you have," says Martha Rogers, analyst and cofounder of Peppers and Rogers Group, a US-based consulting company that specialises in customer relationship management.
The best example of this strategy comes from Amazon.com, which quickly moved from selling books to offering CDs, toys, videos, electronics, and even auctions. What Amazon is selling became less important than the fact that Amazon is the one selling it. Customers who are already comfortable buying there are likely to stick around and buy more. "The emphasis is shifting from who can sell more products to who can sell a customer more products over their lifetime," Rogers says.
The secret to Amazon's success is an old technology exploited in a new marketplace. Data mining used to mean dusty, academic algorithms that were too arcane for the world of business. But with technology and automation sweeping into every business sector, the amount of data available to individual companies has exploded.
Today companies can customise and tailor their products to improve their relationship with their customers. "It's all about customer relationships. Companies have to believe that the customer is critical," says Gary Lloyd, Business Development Manager at Sybase.
Direct mail companies have long relied on targeted marketing, using early data mining solutions to track repeat customers' transactions by way of catalogue and coupon codes. At the heart of those campaigns were highly specialised knowledge workers manipulating complex software and monolithic hardware. Today's data mining tools run on desktop PCs and are easy enough for a call-centre operator, regional marketing manager, or chief technology officer to use. The range of data mining products available is broad--from complete inventory-management packages to services that send out personalised broadcasts to handheld PCs.
For example, say you know a customer's wedding anniversary is July 12--info you gathered from an online survey. Before you can turn that fact into a sale, it may go through a half-dozen software packages: from a database like Oracle or Sybase, to a data-analysis package like the SAS Institute's Enterprise Miner to a customer relationship management (CRM) package like E.piphany E.4, and finally into a Web content management platform like Vignette StoryServer. Once it makes its way there, it could automatically launch a greeting card and sales promotion that's sent by regular mail, e-mail, pager, or even a personalised greeting on your home page. It could also trigger banner ads from other companies where people celebrating anniversaries might want to shop.
Most data mining software claims to address every one of these steps, but in fact most businesses rely on several solutions working together.
