EARLY DRAFT 1 Discovering Important Relationships for Effective Target Marketing Kok-Leong Ong Centre for Advanced Information Systems Wee-Keong Ng Nanyang Technological University Ee-Peng Lim Chinese University of Hong Kong Abstract The ubiquity of data acquisition technologies has amazed huge amount of customer profiles for many modern organiza- tions. While the notion of “information is power” motivates the storage of such data, the competitive advantage is only realized with the ability to analyze and use the insights obtained. As such, data mining becomes an important technology that affects business strategies. However, the current trend in data mining focuses on the analysis of customer transactions rather than their profiles. In this chapter, we introduce CrystalBall – a novel application that data mine customer profiles to discover important business relationships. The discovery of such relationships is useful under various business settings such as target marketing to reaching new customers. This chapter discusses the development of CrystalBall using XML and Microsoft’s .NET technology. In addition, we have successfully deployed a customized version of CrystalBall with a management consultancy firm. User evaluations on the tool showed promising results in enhancing their business operations. Keywords Business Intelligence, Competitive Advantage, CRM, Data Mining, Microsoft .NET, XML _______________________________________________ usinesses are facing more competition then ever. Beyond the brick and mortar, the infor- mation economy has brought about revolu- tions to the way business is conducted. In the early era of the digital age, databases generate reports for man- agers to make critical decisions. This was the 1980s where “information is power”, and motivated the stor- age of customer transactions and profiles. With the Internet and the ubiquity of electronic commerce in the recent years, an organization can virtually collect data of each individual down to micro-level details (e.g., their navigation behavior on a Website). Together with emerging technologies like the .NET passports, .NET My Services, and software agents, consumer data are increasingly available. However, the ability to produce information from data is no longer sufficient to give any organizations the competitive advantage to survive in the global set- ting. The pace of business and the amount of informa- tion is increasing rapidly. As a result, managers have less time to digest information and turn them into use- ful decisions. With manual analysis becoming an im- possible task, how then can we obtain business intelli- gence in a timely manner? From the technological per- spective, data mining is the solution. Data mining [4] is the automated analysis of data to produce insightful knowledge or intelligence about the data in highly summarized form. Unlike information, which is usually a summary of the data, the results of data mining can be directly used for making manage- ment decisions. For example, a bank may discover dif- ferent categories of clients (through clustering tech- nology) and uses the knowledge for target marketing. While the technology continues to be an emerging one, it has produced impressive results to be hailed, by MIT Technology Review [6], as one of the ten most important technologies in the future. An interesting observation that we made on the current state of the art of data mining is the use of past transaction records. In the context of target marketing, the results produced are based on the assumption that the behavior repeats in the future on a potential cus- tomer. This approach works well on transaction-based business such as the supermarket or a book store. In cases where a history of transactions is lacking or a changing business landscape exists, data mining seems to fail in reaching out to potential customers. Such business includes consultancy, subscription based ser- vices, multi-level marketing, and insurance. At the Centre for Advanced Information Systems at the Nanyang Technological University, the CrystalBall project was initiated to investigate this aspect of target marketing. We asked if there is data in such businesses where data mining can help to enhance their ability to reach out to potential B