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Data mining vs. data warehousing

What exactly is data mining and how does it help in creating an effective CRM tool? How does data mining differ from data warehousing?

Data mining is the process by which data is analyzed in an automated fashion in order to discover statistically significant predictive patterns. For example, a data mining system might process a collection of credit card records and identify purchase patterns that correspond to fraudulent transactions.

CRM tools, as a group, allow marketing organizations to manage the interactions that they have with customers and prospective customers. By combining the patterns discovered in customer data with CRM software, the basic idea is that the particular interactions can be tuned to each customer's wants and needs. Instead of simply sending a catalog to everyone on your list, you might create multiple catalogs and then let the data mining system predict which catalog will be best received by each customer.

Data warehousing (see www.thearling.com/text/hrdotcom/dw.htm) is the process by which organizations collect and manage large volumes of data. The data in a data warehouse can be used to feed data mining software systems.

For more information, check out SearchCRM's Best Web Links on Data Mining.

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