DATA MINING

Kapil Ravi

Data mining ( knowledge discovery in database) Extraction of interesting (non-trivial, implicit, previously unknown and

potentially useful) Information or patterns from data in large databases.

Alternative Names A misnomer

Knowledge discovery database (KDD)

what is not Data Mining Query process

Expert systems or small statistical programs

WHAT IS DATA MINING

Database analysis and decision support Market analysis and management

Target marketing, Customer relationship Management, market basket analysis, cross selling, market segmentation

Risk analysis and Management Forecasting , customer Retention, improve underwriting, quality control,

competitive analysis

Other applicationsText mining

Stream data miningWeb mining

DNA data analysis

WHY DATA MINING ?

DATA MINING MODELS AND TASKS

DATA MINING FLOW CHART

DATA MINING DEVELOPMENT

•Relational Data Model•SQL•Association Rule Algorithms•Data Warehousing•Scalability Techniques

•Neural Networks•Decision Tree Algorithms

•Algorithm Design Techniques•Algorithm Analysis•Data Structures

•Similarity Measures•Hierarchical Clustering•IR Systems•Imprecise Queries•Textual Data•Web Search Engines

•Bayes Theorem•Regression Analysis•EM Algorithm•K-Means Clustering•Time Series Analysis

DATA MINING

Privacy

Profiling

Unauthorized use

SOCIAL IMPLICATIONS OF DM

Usefulness

Return on Investment (ROI)

Accuracy

Space/Time

DATA MINING METRICS

Scalability

Real World Data

Updates

Easy of Use

DATABASE PERSPECTIVE ON DATA MINING

Accenture

IBM

Tata Consultancy services

Infosys

Google

DATA MINING SOLUTION COMPANIES

CASE STUDY

Airline Industry

In the competitive travel industry, customer satisfaction no longer guarantees customer loyalty . Deregulation, increased parity of products , the availability of new and diverse direct distribution channels, industry alliances, and many other factors have combined to force operators in the airline industry to focus on new differentiators in order to maintain current and develop greater market share . In response to the new environment, travel providers are undertaking initiatives centered on identifying, developing and retaining high value profitable customers, under the overall banner of customer relationship management or CRM.

CRM is a business strategy designed to optimize profitability, revenue and customer satisfaction

To achieve this integration of people, processes and technologies is required in a collective effort to:

1. Acquire new customers through effective marketing campaigns and marketing analysis

2. Grow existing customer base through expanded service offerings that target untapped travel opportunities

3. Retain most valuable customers by understanding and proactively addressing individual values and preferences.

WHAT IS CRM

Today , more and more airlines are using the Internet to implement e-business applications and CRM strategy. These applications can be very resource

intensive. e-CRM is interest intensified in managing customer relationship through the Internet.

Establishing and strengthening long-term relationships with airline's customers is the key to success. It's the focus of a well-structured and coordinated process

of customer relationship management.

e-CRM involves far more than automating processes in sales, marketing, and service and then increasing the efficiency of these processes. It involves

conducting interactions with customers on a more informed basis and individually tailoring them to customers' needs

E-CRM IN AIRLINE

There are three primary reasons why CRM has taken hold as rapidly as it has:

1. Competition is fierce;2. The economics of customer retention are unequivocal;

3. Technology allows airlines to do this more effectively and profitably today.

WHY CRM

Planning and implementing business processes across airlines and CRM applications ensures customers are handled in the most efficient and effective fashion from the beginning to the end of the interaction based on their real-time value to airlines.

Implementing CRM applications may simultaneously lower the cost of design, implementation, installation, training, ownership and administration. It also reduces

the risk of re-engineering systems at a later date.

Consistent and dynamic processes are built up-front for the customer. This forces the airline to consider each element in the process design including the network, switch,

multi-media management, and the CRM - ensuring streamlined processes are in place before the customer makes contact.

Create and leverage detailed statistics/metrics and cradle-to-grave reports.

SPECIFIC BENEFITS TO

IMPLEMENTING A CRM

STRATEGY

Individual traveler

The travelers company

The person or entity paying for the ticket

The person choosing the airline

The travel agent

Corporate customers

Cargo brokers

WHO IS THE CUSTOMER?

The E-mail was responded to immediately, with personalized, valuable information.

Web self-service allowed customer to take immediate action to resolve issue.

Personalization enabled promotion tailored to customer profile - enhancing one-to-one marketing.

The "callback" option was easy to use, enabling the customer to quickly request live support.

The intelligent interaction routing engine immediately connected the customer to the right CSR.

The customer information provided by the CRM application enabled the CSR to provide efficient, personalized service

BENEFITS FOR THE CUSTOMER

Lack of buy-in across the business

Department customer data silos

Unwilling to share

Business processes not mature /clear

Couldn’t reach all touch points

- sales reservations), check in, in-flight were particular problem

OBSTACLES TO CRM

In the airline industry , data analysis and data mining are a prerequisite to push customer relationship management ahead.

Application of data mining in airline business is to work for developing a monitoring system , which is able to identify trends within customer segments, to discover outliers and to control the quality of the segmentation model.

Data mining customer value can be improved while considering operational costs in assessing a flight segment. There is an accounting system, where all kinds of costs are gathered. This information is available for each single flight. Its task is to find strategies to bundle information about flight activities of all customers

TOOLS AND TECHNIQUES USED IN AIRLINE CRM

CRM ARCHITECTURE FOR AIRLINE

• Provides an understanding of customer behavior and enables airlines to measure results of marketing and merchandising changes.

• Supports more effective promotions through integration of data between marketing and merchandising users.

• Provides a single view of customers across the enterprise and across contact points.

• Gives airlines the ability to respond more dynamically and quickly to market demands.

Significance derived from airline e-CRM implementation will allow for new e-business model, based on the wide availability of information and its direct

distribution to end-customers.

CONT…

• Directly connect airlines and passengers.

• Support fully digital information exchange between airlines and customers, reduced cost of a customer contact.

• Suppress time and place limits.

• Support interactivity and therefore can dynamically adapt to customer behaviors.

• To be able to satisfy customers' need, build customer confidence and retention.

• Can be updated in real-time, therefore always up-to-date.

• Enhance airlines competitive advantages over its rivals.

• Profitable and sustainable revenue growth.

CONT…

Targeted promotions & campaigns

Leverage existing modules(distressed inventory, dynamic pricing )for acquisition & retention

Availability bias based on existing Revenue Management system

Performance measures to provide feedback

Link to operations- pre- removal & re-accommodation for overbooked flights

CRM : SHORT TERM GOALS

Business intelligence module to provide passenger valuation

Revenue management optimization models to consider maximizing expected “value”

Nonlinear programming problem with modified objective function

Stochastic dynamic programming problem

Tracking passenger utility

Pricing and inventory control decisions should consider changes to passenger utility

CRM : LONG TERM GOALS

5 membership tiers –

Platinum

Gold

Silver

Blue plus

Blue

The Dynamic tier ( DTR) system:

DTR evaluates a member Tier based on Tier points and tier JP miles gram of Jet Airways: Jet Privilege

"JET PRIVILEGE"- CUSTOMER LOYALTY PROGRAM

Facility:

Tele check-in

Web check in

Priority tagging

Additional baggage allowance

Guaranteed reservations upto 24 hrs prior to departure

Special partner benefits etc.

THE LOYALTY PROGRAM OF JET AIRWAYS---

Airlines realize that an integrated e-CRM strategy will allow them to manage customer relationships more effectively than ever before,

allowing them to build long-term customer relationships, brand loyalty and repeat sales that result in increased, sustained profitability. The

challenge is how to overcome hurdles, minimize the risk and guarantee results..

The end result is a better bottom line-successful e-CRM can mean millions of dollars in incremental revenue from increased customer

retention, greater revenue per customer, the ability to cross-sell and up-sell customers, better customer loyalty and greater customer satisfaction.

CONCLUSION

THANK YOU