Question

1. You have an email program to 1000000 customers where the cost is $.10 per email and a direct mail program to 500000 customers at a cost of $1.00 per piece. Which program would you focus on why?
2. What process must occur concurrently with understanding the data?
3. A CEO wants to maximize revenue. Why would you advise him against the use of the data mining technique?

Answer 1

A.

Cost of reaching 1,000,000 customer using email program = $.10*1,000,000 = $100,000

Cost of reaching 500,000 customer using direct mail = $1*500,000 = $500,000

Though cost of reaching a customer using direct mail is 10 times higher as compared to email program. It is recommended when we want to have a personal contact with the customer. Thus it totally depends upon the kind of business or the product that we are selling.

If the product is a digital marketing product may be the cost effective email program is sufficient. But If a product is about a experience or other kind of where we need direct personal contact we should go with second option of direct mail.

B) With understanding the data we should also focus on understanding the business. Different data points have a different contexts in terms of business. Thus business understanding should go parallel to the data understanding.

C) Data mining is about using information to be more efficient and effective with our efforts. If CEO wants to use data mining technique to maximize revenue, he should be careful that he does not exploit or share the sensitive data of a customer. The privacy of customer should be maintained as per the laws.

Using data mining techniques to deep dive and understand customer behaviour can be very helpful in maximizing revenue.