What Do Beer and Diapers Have In Common?

Not much, you’d think, unless your infant has a taste for Budweiser.  But thanks to a new business research tool called Data Mining a grocery store chain is making more money by placing the diapers closer to the beer.

Here’s why: men who run out to the store to pick up diapers for their children often take advantage of the opportunity to buy beer.  No one’s sure why.  Perhaps they’re rewarding themselves for taking on this parental responsibility.  Or maybe it’s one of the few times are in a store without their wives (who might frown upon an impulse beer purchase).

But the important lesson for the store owners is that positioning beer close to diapers brings higher sales of brew.  And it’s a lesson that would never have been learned without Data Mining.

Data Mining works by using computers to investigate mounds of information, looking for patterns and correlations that could escape the naked eye.  Data Mining reveals observations based on disparate facts and figures that normally wouldn’t seem to have a relationship with each other (who would think about relating beer to diapers?).

In today’s highly competitive marketplace, businesses that focus on cutting costs, raising productivity, and making the most of what they’ve got, are the ones that succeed. Thanks to the advent of computers, over the past decade or so, businesses have amassed exponentially growing amounts of data in large databases. These stockpiles contain hundreds of gigabytes of customer data. But the data’s hidden value, the potential to predict business trends and customer behavior, has largely gone untapped.  Do you want to glimpse into the minds of your customers?  No more powerful business tool has ever been invented.

That’s where Data Mining comes in.  It can find the answers to questions like these: who are my most loyal customers? · What needs of theirs can I better fulfill? · Where can I find new customers? · Where am I losing money to fraud or inefficiency? · What customers will default on their payments?  You probably have the answers to such questions at your fingertips in your computer’s database, but without Data Mining you probably won’t be able to find them.

How Does Data Mining Work?

Data Mining harnesses the power of the computer using specialized software to discover the possible correlations in your company’s data and then through complex statistical analysis verify which of these correlations are valid to come up with these hidden gems like the beer and diaper example above.  It can help you to literally predict future actions of your customer.  By putting the Data Mining program to work on your company’s wealth of information you can not only find the answers you need, you will also be able to answer other questions you never thought to ask!

Think of it as a “corporate stealth weapon” that can uncover patterns or trends in the data you already collect and own. These nuggets can help you create individual business relationships with your customers — leading to a gold mine of new information for tapping into new revenue sources, decreasing costs, increasing overall profits, and improving your competitive position.

There’s no question that Data Mining is the wave of the future in competitive business environments.  Virtually all businesses will be affected by it.  The only question is whether you’ll benefit from it or be hurt by it when a competitor uses it first.

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