Data Mining and Customer Relationship Management

Customer relationship management (CRM) is a process that manages the interactions between a company and its customers. The primary users of CRM software applications are database marketers who are looking to automate the process of interacting with customers.

To be successful, database marketers must first identify market segments containing customers or prospects with high-profit potential. They then build and execute campaigns that favorably impact the behavior of these individuals.

The first task, identifying market segments, requires significant data about prospective customers and their buying behaviors. In theory, the more data the better. In practice, however, massive data stores often impede marketers, who struggle to sift through the minutiae to find the nuggets of valuable information.

Recently, marketers have added a new class of software to their targeting arsenal. Data mining applications automate the process of searching the mountains of data to find patterns that are good predictors of purchasing behaviors.

After mining the data, marketers must feed the results into campaign management software that, as the name implies, manages the campaign directed at the defined market segments.

In the past, the link between data mining and campaign management software was mostly manual. In the worst cases, it involved "sneaker net," creating a physical file on tape or disk, which someone then carried to another computer and loaded into the marketing database.

This separation of the data mining and campaign management software introduces considerable inefficiency and opens the door for human errors. Tightly integrating the two disciplines presents an opportunity for companies to gain competitive advantage.