What Is Data Mining? Why It’s Important: Marketing 101

Picture of Phil Hughes
Phil Hughes

Have you ever wondered how a platform gives you an amazing suggestion for a product?

These platforms seem to know a lot about you. Too much sometimes.

Data mining is a way of using computers. Like cloud technology to find patterns in information. To see what the common threads are. Even find what isn’t common and why.

In this post, I’m going to explain what data mining is. And how it can be useful when it comes to marketing.

What is Data Mining?

So what is data mining?

Here’s a basic definition to help us get started.

At its core, data mining is about using computers and technology. To find patterns or important information in big, huge piles of data.

Simple Analogy

Let’s try and make sense of this.

Let’s say you got this huge tub of Lego. All different shapes, sizes and colours.

You start dipping your hands in trying to find blue pieces of Lego. They are square and have 4 “dimples” on the top.

You are “mining” for matching blocks.

This is the same with data mining. It’s a case of matching Lego blocks together.

Real World Example

Have you heard of Netflix?

Data mining is how their app, the movie suggestion feature works.

Netflix looks at your previous watch history, by looking at the ones you’ve watched to the end. It then tries to find, and match similar movies using data to suggest these to you, as a “watch next”.

How Data Mining Works

The first thing with data mining. There must be a collection of data and lots of it.

For example, Facebook collections are 50,000 pieces of data on a single person’s profile.

Now that’s a lot of information.

Once the collection of all the relevant data is together, it’s a case of writing a computer program. Know as an algorithm. To start looking at the data.

The key behind an algorithm is to find patterns.

Now, things don’t always have to match.

Many algorithms will look for things that are the same. To try and link similar data together to see if we can get any insights.

But, some may look for differences. What differences are there between the data? Again to highlight an insight or pinpoint and highlight certain data.

You can then use these patterns to make guesses or choices.

Whether that’s from a business perspective. To put the right thing in front of the right person.

Or as a consumer to find the best product for what you’re searching for.

A good example of this is the Amazon “best sellers” list.

Which toys have sold the most at Christmas for 5-6-year-old boys?

Why is Data Mining Important?

The key reason for data mining is for businesses to understand their customers.

In today’s online world, companies won’t be talking directly to customers that often. So we need other ways to find out “what they are thinking”

Going back to our Netflix example. It can lead to helpful suggestions that benefit the customer.

It’s also great for businesses to decide what products to make or services to provide.

Let’s say you own a clothing brand and trying to come up with a new range for summer. Look at last year’s sales data and demographics. This will help you decide where to focus product development.

You may already have big piles of data.

But if you don’t have a data mining strategy or software to do this.

Then the data is useless.

Data mining helps you find important information in big piles of facts and numbers. As making it easier and faster to learn from lots of information.

Examples of Data Mining

Starting with the master of data mining. Amazon.

Their ‘Suggesting Books’ system matches what you’ve read before. With other books, you may find interesting. As well as the “this person also bought this”. This is a great way to suggest book titles using data.

Many supermarkets run tests to see if they can sell more.

Have you ever noticed that tills have snack or chocolate bars next to them? And that it’s certain brands or types of snacks?

This isn’t random. They test which snacks to place there. Then look at the data to see which ones sold more.

Another great use. Is to find out how students learn best by looking at test scores.

Is there a certain teachning style. Or way of presenting data that then improves test scores?

The options are endless.

Conclusion

Data mining is a fancy word for using computers to find useful patterns in large amounts of data.

That’s it

It’s important because it helps people make smart guesses and choices. Decisions that are right for them. And in turn a business.

Next time you get a good suggestion, you’ll know data mining is behind it!

Oh, if you’d like to find out how you can use data mining in your own business and marketing. Check out our post What Is Analytic & Data-Driven Marketing.

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