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<HTML>  <HEAD>    <!--SCRIPT LANGUAGE="JavaScript" SRC="http://a1835.g.akamai.net/f/1835/276/3h/www.netlibrary.com/include/js/dictionary_library.js"></SCRIPT>    <SCRIPT LANGUAGE="JavaScript">      if (!opener){document.onkeyup=parent.turnBookPage;}    </SCRIPT!-->    <META HTTP-EQUIV="Cache-Control" CONTENT="no-cache">    <META HTTP-EQUIV="Pragma" CONTENT="no-cache">    <META HTTP-EQUIV="Expires" CONTENT="-1"><META http-equiv="Content-Type" content="text/html; charset=windows-1252"><SCRIPT>var PrevPage="Page_45";var NextPage="Page_47";var CurPage="Page_46";var PageOrder="58";</SCRIPT>  <TITLE>Document</TITLE>  </HEAD>  <BODY BGCOLOR="#FFFFFF"><CENTER><TABLE BORDER=0 WIDTH=100% CELLPADDING=0><TR><TD ALIGN=CENTER>  <TABLE BORDER=0 CELLPADDING=2 CELLSPACING=0 WIDTH=100%>  <TR>  <TD ALIGN=LEFT><A HREF='Page_45.html'>Previous</A></TD>  <TD ALIGN=RIGHT><A HREF='Page_47.html'>Next</A></TD>  </TR>  </TABLE></TD></TR><TR><TD ALIGN=LEFT><P><A NAME='JUMPDEST_Page_46'/><A NAME='{1B8}'/><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH='100%'><TR><TD ALIGN=RIGHT><FONT FACE='Times New Roman, Times, Serif' SIZE=2 COLOR=#FF0000>Page 46</FONT></TD></TR></TABLE><A NAME='{1B9}'/><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0><TR>  <TD ROWSPAN=5></TD>  <TD COLSPAN=3 HEIGHT=12></TD>  <TD ROWSPAN=5></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR><TD></TD>  <TD><FONT FACE='Times New Roman, Times, Serif' SIZE=3>which identify a pattern or signature of customers who have been retained by the company. This can involve combining attributes of existing customers and new website visitors who have recently signed on with a website. Through this process a &quot;signature&quot; of potentially highly loyal and profitable new clients can be discovered. These new customers may be targeted for high incentives and special offers.</FONT></TD><TD></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR>  <TD COLSPAN=3 HEIGHT=1></TD></TR></TABLE><A NAME='{1BA}'/><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0><TR>  <TD ROWSPAN=5></TD>  <TD COLSPAN=3 HEIGHT=12></TD>  <TD ROWSPAN=5></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR><TD></TD>  <TD><FONT FACE='Times New Roman, Times, Serif' SIZE=3>The first goal of this analysis is to discover the attributes that are the most important signals in identifying those clients likely to be the most profitable: Is it the ZIP code they reside in, or maybe their establishment account date? Is it their monthly access rate, or their age or gender? Or is it a combination of factors, and if it is, which attributes?</FONT></TD><TD></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR>  <TD COLSPAN=3 HEIGHT=1></TD></TR></TABLE><A NAME='{1BB}'/><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0><TR>  <TD ROWSPAN=5></TD>  <TD COLSPAN=3 HEIGHT=12></TD>  <TD ROWSPAN=5></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR><TD></TD>  <TD><FONT FACE='Times New Roman, Times, Serif' SIZE=3>The second question that needs to be answered from the data is that of ranges or intervals. For example, after what establishment account date is a customer likely to not defect? Or what range of ZIP codes? Or what website access rate signals a &quot;highly loyal&quot; or profitable customer? Now, theoretically you could go about discovering these attributes and ranges manually; however, it would take you weeks of trial and error, rather than hours to discover the answers that can be achieved using a data mining tool incorporating a machine-learning algorithm or a neural network. Again, as the numbers of data attributes increase, so does the complexity of the problem, making data mining the clear alternative to fast and effective analysis for an electronic retailer.</FONT></TD><TD></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR>  <TD COLSPAN=3 HEIGHT=1></TD></TR></TABLE><A NAME='{1BC}'/><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0><TR>  <TD ROWSPAN=5></TD>  <TD COLSPAN=3 HEIGHT=12></TD>  <TD ROWSPAN=5></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR><TD></TD>  <TD><FONT FACE='Times New Roman, Times, Serif' SIZE=3>Measuring loyalty, however, is difficult, especially on the Web, where the complexity of data analysis is compounded by the dynamic of time. If you are in a market where it costs little for a customer to switch products or services, such as financial services, telecommunications, or retail, then you know you are in a hyper-competitive market. Likewise it is so on the Internet, where it costs little for a visitor or customer to click away from your website and over to your competitor. Data mining provides an electronic retailer many benefits in such a competitive online environment. Firms in highly saturated markets like retailing and financial services are dependent on using their data to drive their business decisions. They depend on their data to retain their customers, expand their market share, and to differentiate themselves from their rivals. Likewise this is so on the Web, where competition is fierce and loyalty is ephemeral.</FONT></TD><TD></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR>  <TD COLSPAN=3 HEIGHT=1></TD></TR></TABLE><A NAME='{1BD}'/><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0><TR>  <TD ROWSPAN=5></TD>  <TD COLSPAN=3 HEIGHT=17></TD>  <TD ROWSPAN=5></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR><TD></TD>  <TD><FONT FACE='Times New Roman, Times, Serif' SIZE=3><B>Traditional Data Mining Applications</B></FONT></TD><TD></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR>  <TD COLSPAN=3 HEIGHT=1></TD></TR></TABLE><A NAME='{1BE}'/><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0><TR>  <TD ROWSPAN=5></TD>  <TD COLSPAN=3 HEIGHT=12></TD>  <TD ROWSPAN=5></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR><TD></TD>  <TD><FONT FACE='Times New Roman, Times, Serif' SIZE=3>A recent META Group survey revealed that Fortune 500 firms were using data mining for three general purposes: 64 percent for strate-</FONT><FONT FACE='Times New Roman, Times, Serif' SIZE=3 COLOR=#FFFF00><!-- soft --></FONT></TD><TD></TD></TR><TR>  <TD COLSPAN=3></TD></TR><TR>  <TD COLSPAN=3 HEIGHT=1></TD></TR></TABLE><A NAME='{1BF}'/></FORM></P></TD></TR></TABLE><P><FONT SIZE=0 COLOR=WHITE></CENTER><A NAME="bottom">&nbsp;</A><!-- netLibrary.com Copyright Notice -->  </BODY></HTML>

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