How Machine Learning Algorithms are Changing How We Market to Consumers
For year, artificial intelligence (AI) has been the main subject of many sci-fi films and books. The creative minds of writers have transformed the idea of AI into machines trying to take over the world, becoming the love interests of future-thinking youth. Now, the once imaginary concept of AI is now making waves in the world of marketing and automated sales processes.
AI is a pre-programmed collection database that can perform tasks in numerous industries and businesses, including diagnosing diseases in medical diagnostics devices, translating languages, creating transcripts, and streamlining customer journeys via marketing campaigns. All of these once required human intelligence to figure out, and AI has the capability to make decisions and react like humans do. This includes those self-driving cars we’ve heard about!
In marketing, AI has become a strong asset in developing successful campaigns that not only drive sales and revenue but also improve the customer experience. Its main benefit is its ability to analyze large amounts of data, finding unique insights into customer data and spending. All of these processes would take AI’s human counterparts months to decipher, saving businesses precious time.
AI allows businesses to market to their customers while they are actively shopping on their websites, generating a unique profile to produce content for each individual in both online and offline campaigns.
So, how does it work? AI uses machine learning algorithms and predictive analytics to develop accurate data that is more aligned to individual consumers. No more guesswork here! Businesses have insight into consumer wants and needs like never before.
Machine Learning Algorithms
Deciphering Raw Data
Reviewing raw data can be like reading something in a different language. The raw data is collected in code that machine learning algorithms can translate for humans within seconds. The ability to process this data is essential to businesses, as it provides invaluable information on consumer behavior and trends, including what consumers are buying, the price points for their most frequently purchased goods, purchase frequency, channel preference, consumer demographics (gender, age, location, and etc.), and more. That data then helps the business develop consumer scoring models.
Consumer Scoring Models
Every business has a unique audience, and AI can help you learn exactly who that audience is. The algorithm finds customers who are frequent visitors, low or high frequency spenders, brand loyalists, or shoppers who only buy once or twice every few months. These models can be labeled as customer categories that help marketers make smarter decisions when coming up with personalized messaging for those particular customer groups. Each consumer category also warrants its own customer experience, which makes marketing campaigns more efficient and personal. Personalized campaigns sent to the right consumer segments at the right time have proven to have a much higher return on investment (ROI) than more generic campaigns.
AI is now allowing businesses to predict consumer behavior and purchases by analyzing data collected from previous consumer spending patterns. By understanding consumer behavior, we are able to identify purchasing habits and show similar products, or even products in the same category, in hopes that the consumer will buy more than they had initially intended.
For example, let’s say someone is shopping for a swimsuit online. AI identifies what the consumer is looking for and retargets them with ads for items that other consumers checked out when also shopping for swimwear, such as sunscreen, flip flops, towels, and beach umbrellas.
Being able to predict consumer purchases before they happen is becoming prolific in executing effective marketing campaigns, optimizing purchases, and increasing ticket sizes. For instance, Amazon’s success can be measured by how it utilizes consumer data to enhance customer experience on their website.
Today, people are looking for more of a 1:1 personal experience, and expect business to know their wants and needs, providing them with appropriate discounts and services. Through predictive analytics, we can begin to understand human buying behavior on a grand scale. Plus, consumers are now trained to look through suggested goods and services to purchase along with items they’re already searching for. This ease of access to purchase additional, higher-quality, and often higher-priced items is now at the forefront driving traffic and increasing ticket sizes online. Artificial intelligence just sped up the upselling process.
AI Benefits for Marketers
AI helps marketers understand consumer data and buying behaviors; adopting AI capabilities into marketing campaigns is the best way to get the most out of consumer data in real time. It saves your business time and money by performing tasks and gathering data that could take months to evaluate. Through taking into account the ever-changing minds of your consumers, AI can also bring a level of personalization and emotional connection to your audience. Marketing teams can now be more productive in other areas, such as building out creative messaging or building out a fully customized marketing journey. The new age of technology is here; let’s get on board!