April 26, 2007

Basic Data Mining Definitions

I am often asked to define some of the commonly used analytics terms. I have heard "data mining" used to refer to things from screening, to sorting names in excel, to querying from data marts. Below are a handful of some very common terms and how I define them.

A broad set of mathematical tools used to reveal trends and patterns and harvest additional value from existing data. Analytics departments generally have the following services:
  • Descriptive Analytics: Analyzing constituencies to understand core segments according to behaviors and demographics. Also, analyzing programs to understand performance and the key factors and metrics impacting this performance.
  • Predictive Analytics: Using internal and/or external data to predict behaviors and segment constituents according to probabilities.
  • Decision logic / Decision Support: Metrics-based forecasting and simulation studies to determine database potential, capacity or philanthropic potential of constituent segments, and investment priorities.

Data Mining
Finding useful information by identifying patterns and trends within data--typically in large databases. Often this statistical pattern recognition is married with predictive analytics to produce predictive models.

Predictive Modeling
An outcome of predictive analytics, predictive models are formulas producing probability scores predicting future behaviors. Typically, these are built using statistical tools such as regression analysis, decision trees, and neural networks.