Data Mining – Statistics

With all the data available to us and the lack for many of us of acquiring information, we should look at the branch of Mathematics called Statistics. With statistics you are able, amongst other things, to predict events or activities. It is all based on probability theory. I won’t bore you with the details of probability theory other than to say that the closer together the last two similar transaction or similar activities are the higher the probability that there will be a repeat transaction or activity in the future. And also the further apart the last two similar transactions or similar activities are the lower the probability that there will be a repeat transaction or activity in the future. This is the foundation of most inventory management system theory.

What I look forward to is the ability to do probabilistic planning for sales transactions. For instance, it is a truth that the larger the dollar value of the last transaction the higher the probability for a future sale and the lower the dollar value the lower the probability. This should help us in any number of ways. Sales call management and scheduling for instance. There are starting to be tools available to us that allows this type of data mining to determine the probabilities and start us on the path of “planning” activities in the business. This is very exciting to me as it opens a series of doors that will allow us to control our businesses better. In the end that means better customer service which means higher sales and profits. The time is now…