How Brands are Using Artificial Intelligence in Customer Segmentation

February 6, 2018

by Mitch Duckler

With another year of rapid advances, artificial intelligence (AI) was the marketing technology buzzword in 2017. And in 2018, AI and machine learning will become even more accessible to brands. AI will pave the way for marketers to laser focus on target market segments and reach customers, while attracting new prospects and leads, with highly-personalized messaging delivered at the optimal time for conversion.

Artificial intelligence is defined broadly as computers’ ability to mimic human thinking and logic. Machine learning, a subset of AI, focuses on how computers can learn from data without being programmed using algorithms that adapt to change; in other words, they can ‘learn’ continuously in response to new data. Machine learning can identify data patterns and make predictions based on the, often complex, patterns to answer questions and help resolve business issues. In short, machine learning helps analyze data and identify trends.

Hyper-segmented Content Distribution

In today’s digitally connected world, customers are demanding authentic brand experiences when they want them, on the channels they prefer, or they’ll disengage. Marketers must become more granular in their customer segmentation strategy, and AI is helping us do that.

It’s no secret that personalization is king when it comes to content distribution. Marketers have found personalized outreaches to be 14 percent more effective. Consumer demand for personalized outreach makes accurate segmentation an imperative for marketers, or they risk damaging their brand and losing business to competitors.

Putting a customer in segment X will no longer be enough—we need a ‘segment-of-one’ approach. With AI algorithms, we’re able to look at and analyze one individual user—the habits, likes and dislikes, and previous activity of existing customers and leads—and draw conclusions quickly to engage with them on a personal level.

Target Market Segmentation: Finding the Right Customers at the Right Time with the Right Message 

Targeting the right customers at the right moment with the best offer is probably the most common marketing application for predictive analytics because it’s one of the easiest and most straightforward ways to optimize a marketing campaign and realize a better ROI.

Innovative brands have already put AI backed solutions into use to enhance customer experiences through advanced segmentation and predictive modeling technologies. Best practices dictate using historical data on the behavior of existing customers to segment and target and using it to create personalized messages. When armed with high-quality data, the ability for AI to reach audience increases dramatically, and not just in traditional ways; AI is opening doors for new conversations with customers like never before.

Digital consultancy SapientRazorfish recently partnered with Microsoft to help global cosmetics retailer Sephora integrate AI into its marketing systems to create more intelligent and personalized customer experiences and build more effective marketing campaigns.

SapientRazorfish’s COSMOS platform gleans information about a customer’s profile history and purchasing history. Sephora can then notify customers either by email, direct mail or SMS when their favorite products are in stock, or on sale, and even when customers are near one of their retail stores.

In a 2016 study by Demand Metric, 80 percent of marketers agreed that personalized content is more effective than ‘impersonal’ content. Sending personalized content to a customer not only increases the probability of a purchase, it also ensures customers feel appreciated and valued and reinforces brand loyalty. With the help of AI, marketers can optimize campaigns, select desired segments and send the appropriate content, at the right cadence, across all channels.

AI is the marketing partner helping deliver the right message at the right time. Thanks to an abundance of data and the power of AI, brands now know precisely what we want, when we want it, and how we want it delivered.

This post first appeared on the Full Surge blog.

Photo credit: Pixaby

About Mitch Duckler

Mitch Duckler is managing partner of FullSurge. He brings over 25 years of line management and strategy consulting experience in leading complex engagements and overseeing client relationships. His areas of expertise include brand strategy, customer and consumer insights, and innovation. Read more at www.FullSurge.com.