Artificial intelligence

How can AI help you with Customer Segmentation


Often it can be advantageous to divide your customers into groups. On the scale from nothing to full-on one-to-one personalization, segmentation is somewhere in between. Even though segmentation can be a good thing for companies with only a few customers, to really benefit your company probably has a very large number of customers. In AI this is called clustering and is used to create groups of similar customers. Here are some simple example metrics you might manually group customers according to:

  • Most active last day/week/month
  • Most money spent last day/week/month
  • Income
  • Job
  • House vs apartment
  • Address
  • Bought product or service X
  • Number of employees
  • Revenue and profit

However, the really interesting groups are usually discovered by the AI when it is given a bunch of data about each customer and then has to figure out the groups itself! This is when you can unravel completely new insights about your customer base!

So now you have a number of customer segments. What can you do with it? Well, you probably want to contact them about something like:

  • New product or service offerings
  • Discounts
  • Upselling/Cross-selling offerings
  • Special event invitations

I know of companies that refer to some segments as “VIP” and flag them in the call-center support system to make sure they get the best possible support experience.

Why do this

All customers are not created equal. Some are more valuable to your business than others – these are the ones you want to keep by making sure they love you. The customer segment at the other end, well, you don’t want to keep sending discounts and rebates their way, do you?

How do I get started

To find the most interesting segments of customers you need to collect all possible data about them available to you. This could be data from your CRM (Customer Relationship Management) system, your website, your email marketing system, information about the customer location, etc. Of course you can start small with the data you can easily get your hands on, but the more the better. Then you let the AI do its magic and if you are lucky you should be able to reveal some new interesting things about your customers.

If you want to learn more about AI please visit: praktisk.ai

Torbjörn Stavenek

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