Data mining- What you need to know

3 news, 24 June 2011- by 3 news

New Zealand Post’s 2011 Lifestyle Survey has raised concerns about ‘data mining’ this week as concerns raised after their 2009 survey once again have New Zealanders concerned about the sale of their personal information for marketing purposes.

Data mining is the process of finding patterns in large amounts of data, and allows businesses to target their product at a certain market and connect better with their existing clients.
Once information has been collected, data analysis identifies specific groups of society which share characteristics – for example similar income, location, ethnicity or marital status – and finds common habits inside the group.

The NZ Post lifestyle survey includes questions about preferred fast food, supermarket, and how often people travel internationally.
Once a group has been identified as having a common trait - for example, enjoying regular overseas travel - this information can be rented to companies who will use it for marketing purposes.

Access to the information would enable a travel company to send their latest offers and specials to people whose characteristics match the group, allowing the company to avoid wasting time and money contacting people who are less likely to be interested. The travel company can also examine their own database to identify any existing customers who fit the same group, and focus on offering them more international and fewer domestic travel deals.

Data analysis also benefits customers, who are more likely to receive offers they are interested in, and products and services that are better tailored to their needs.

Data mining is a common industry practice – competitions, surveys and information given to social media sites such as Facebook all allow companies to analyse their customers and target their marketing accordingly – but the idea of having personal information rented out for business purposes isn’t a popular one.

So do New Zealanders need to be concerned about the security of their personal information?

Mike Parsons, managing director of New Zealand’s leading data mining company Datamine, says data analysis has significant benefits for companies and consumers, and revealing individual details isn’t the point of the research.
“We are extraordinarily careful about all the data we touch, and we make sure that we don’t identify individuals,” he says.

Most data collected “anonymises the user”, he says, with analysis finding trends across groups rather than passing on individual details.
“We don’t ever report to a company and say this is what this person in particular does, we always roll it up into a group of people,” he says.

Data mining is important as it’s difficult for businesses to find out information about their customers and survey responses are traditionally low, with researchers being “really lucky” if 20 percent of people surveyed reply, Mr Parsons says.
He says companies primarily use data mining and data analysis to “gain a little more insight” into what their customers want and offer a more appealing product.

“The more the companies know, the more satisfied customers are with the service and products that are being offered,” he says.
“As long as it’s clear that this sort of thing is optional, the data that’s collected and used can be used in a lot of good ways.
“If people are happy to give out their information to help companies understand people better... everyone wins.”

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