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Probing Customer Data for Bigger Profits

When customers buy something from you, change an order, request information, provide an email address or take other action, they create critical clues about who they are, what they want and how your business can better serve them.

Small businesses that capture and analyze such information – also called data or metrics – can use it to spot trends and patterns that can help avoid potholes and pump up profits. In the big business world, this is known as “data mining.”  But small business owners can do it with a simple spreadsheet, a data-mining add-in for Microsoft Office or with sales management tools for QuickBooks.

If you have the information, the goal of data mining is to dig into it for the nuggets of wisdom that can guide your decision making. That often means looking at things in a different way.

According to data mining experts at Microsoft, one reason businesses use the technique is to get better insight into their customers so they can improve their marketing.  The idea is to step back and look for connections that were probably always there, but previously invisible to you.

Information you already have, for example, might tell you that most of your customers live in a certain part of town, or come from certain cities or areas. But not until you delve into the data do you see that they’re mostly over 65, own a small dog, prefer the color red, and do most of their buying on weekends.

That’s helpful because if you know your ideal customer is 65 and is a dog owner, you can target exactly that in your marketing. You could establish stores or offices in areas where the population is largely over 65. You could make the print larger on your product. You could build partnerships with other companies that cater to dog owners and an older demographic. Knowing the information is essential, but so is acting on it.

Most business owners and entrepreneurs think only about “top level” data such as revenue, profit margins and accounts receivable. Data mining goes deeper. It’s a way of thinking that successful businesses use to coax out hidden relationships between the different data points.

Consider for example.  When you view a potential purchase on Amazon, the site automatically mines its data to instantly display related products that people like you also bought. You can do the same.  You can determine that people who bought one particular item also bought another.  Or you might note that customers who purchase directly from your website spend less time with you, but buy more often.

As you dig into your data and begin to recognize patterns and links, you may also discover new cross-selling opportunities and ways you hadn’t thought of to improve customer satisfaction and retention.  Data mining can also help with the important task of identifying your most (and least) profitable customers.

Even if your business isn’t yet collecting customer data, now’s a good time to start. Keep in mind that each “touch point” you have with customers and prospects – in person or online – represents a data-gathering opportunity.

The information you gather doesn’t have to be highly sophisticated.  Start with basics such as name, address (or at least a Zip Code), email, buying habits (when, how often and what they buy), how they found you and if possible, age and general income level. If you sell business-to-business, you can adapt these categories to companies instead of people.

If you plan to dig for data mining gold, remember it’s not just an exercise. The goal is to “connect the dots” – to recognize and act on new opportunities that were hidden in plain sight.

Microsoft offers extensive help and information about data mining on its website, including white papers and webcasts, as well as details on its data mining add-ins for Office. Go to and enter “data mining” in the search box.

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