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While artificial intelligence (AI) may sound like the thing of science fiction movies, it is actually very real, and it’s taking over many aspects of the way the world operates today, from healthcare to education to banking. One of the newest types of AI is called machine learning, and it will almost certainly end up revolutionizing the field of market research.
So, What Is Machine Learning?
Machine learning is a type of artificial intelligence that, as its name suggests, actually allows machines to learn. With machine learning, computers and computer programs can improve their own operation when they are exposed to new data, without being explicitly reprogrammed by a human.
How Will Machine Learning Improve Market Research?
With machine learning, computer programs can actually make themselves smarter and more functional — but how does that relate to market research? In the future, tech experts predict that machine learning will help companies better understand consumers and conduct market research, making advertising and promotion less of a nuanced art or guessing game, and more of an exact science. Here’s how.
Predictive Market Segmentation
Before a company can start marketing something they want to sell, they need to figure out who they are marketing to, as well as how those people best receive their message. While human marketers can do their best to deduce which customers will respond to advertising, a computer program can analyze multiple datasets regarding previous customer behavior (geographic location, previous purchases, demographics, etc.) and better identify which customers will actually respond to certain marketing tactics. This means that machine learning algorithms can help ensure that you’re showing the right types of ads to the right types of consumers. Researchers recently helped an Asian mobile phone service provider utilize machine learning to improve the success of a marketing promotion. When company marketers advertised to the customers they simply believed would take advantage of the promotion, they saw a .5 percent conversion rate. When a machine learning algorithm was used, the company saw a 6.42 percent conversion rate — which is nearly 13 times better.
Rapid Big Data Analysis
Big data — extremely large data sets about consumers and their habits — can be immensely helpful to marketers trying to determine best practices, but it can also be time-consuming to process and analyze. Machine learning algorithms can quickly analyze big datasets and derive meaningful information from them. Because machine learning algorithms can process these datasets quickly, they allow marketers to provide more timely, relevant marketing materials (seasonal ads, promotions related to a current event, etc.) that will actually drive sales.
A company’s churn rate is how quickly their customers are leaving the business. Machine learning can help marketers better predict which customers are most likely to abandon the company at some point, then offer special promotions or undertake special efforts to keep the most valuable customers with the company. This means that machine learning can be key for understanding how to retain customers and boost current customer loyalty. Moz, a company that sells marketing tools online, recently leveraged machine learning in order to predict their customer churn and help with customer retention. The model they use has helped reduce the number of customers who leave either voluntarily and involuntarily.
Marketing has long been the realm of creative minds, but machines today are helping advertisers create the most successful promotions possible. Thanks to machine learning, market research will be able to help companies go to market more effectively than ever before.