How Brands are Using Artificial Intelligence to Improve Customer Segmentation

04/12/2024

Accurate customer segmentation is of primary importance for an effective marketing campaign. Segmenting is a key element to lead generation because it enables brands to divide prospects into groups with similar characteristics and then develop targeted content for each segmented audience. This is important because it means messaging is more relevant to the recipients, which leads to better response rates.

Typically, marketing teams will segment based on a few simple marketer-defined segments like income and location. This is a missed opportunity because the segment is too large, and likely there will be a large number of recipients in the group who are not responsive to your targeted message due to its broadness. This can lead to lower conversion rates, higher customer churn, and poor customer satisfaction.

AI-based machine learning models present an opportunity to improve marketing segmentation by looking at a much broader variety of data – like browsing history, prior purchases, demographics, and household data from third parties. Brands can gain more meaningful insights into customer behavior, allowing them to target their marketing campaigns effectively. Plus, brands can have an unlimited number and size of segments. This advanced targeting allows analysis of large amounts of customer data to foster personalized customer experience. This approach yields higher conversion rates and higher revenues, which has led to a growing number of businesses adopting AI machine learning for customer segmentation.

Brands looking to improve their marketing efforts and drive revenue growth cannot ignore the effectiveness of AI-driven customer segmentation. Maximum efficiency and greater ROI are achieved with AI along with the ability to:

Precisely Identify Customer Segments – Analyzing data from various sources, AI can hyper-target the right customer at the right time, identifying customer preferences and segmenting into meaningful groups. AI can also track each customer’s buying journey so brands can understand their customers better, create more engaging content, and drive revenue.

Create Engaging Content – Through analyzing customer data, AI can identify the content that is most likely to appeal to a specific customer segment, increasing customer engagement. AI can find hidden patterns in data that a human marketer may be unable to spot, enabling brands to act on this new data.

Identify and Track Leads – AI can help track leads and leverage new leads from existing client networks. Brands can analyze previous interactions with a specific lead to predict what products or services they’ll be most interested in.

Measure the Success of Campaigns – AI-driven insights indicate how customer segments respond to specific messages and promotions. Even more, AI can continuously monitor customer behavior to identify changes so brands know when they need to adjust their strategies to maximize efficiency and ROI.

AI-driven customer segmentation is an invaluable tool to help brands improve marketing efforts and drive revenue growth. As brands increasingly look to digital channels for engagement, AI-driven customer segmentation is being viewed as the premier option for creating better customer experiences. With its ability to provide real-time insights into customer behavior and tailor campaigns accordingly, AI-based segmentation helps brands create more engaging content that resonates with their target audience exactly where they are in the buying journey and drives sales.