Worldwide, organizations of all types are achieving measurable payoffs from this technology. A good model is a useful guide to understanding your business and making decisions. Predictive models can be used to forecast explicit values, based on patterns determined from known results. For example, from a database of customers who have already responded to a particular offer, a model can be built that predicts which prospects are likeliest to respond to the same offer. Descriptive models describe patterns in existing data, and are generally used to create meaningful subgroups such as demographic clusters.
Data mining is only one step in the knowledge discovery process.
Other steps include identifying the problem to be solved, collecting and preparing the right data, interpreting and deploying models, and monitoring the results. The real key to success, however, is to have a thorough understanding of your data and of your business. Algorithms can provide meaningful results only when sensibly directed. The potential payoffs are enormous. Innovative organizations are already using data mining to locate and appeal to higher-value customers, reconfigure their product offerings to increase sales, and minimize losses due to error or fraud.