Think Tank: Improving Engagement With an AI-Powered Segmentation Strategy

Artificial intelligence in retail analytics is a buzzy concept because it carries the promise that it will solve perennial problems like customer churn and onetime buyers, generally making the retail world a happier place. The truth is that AI is not a silver bullet that will get the job done all on its own, but if used properly it can empower retail organizations to tackle their challenges in ways that are smarter and more effective. The amazing potential of marketing-style AI is its ability to discover customer segments that would be much more difficult and time-intensive for a human being to surface. When not using AI, people tend to segment customers based on demographics: by gender, by age, by geographic location, etc. This is information that you more or less know about customers, and it can be used to target ads and marketing content. It can be meaningful in some ways, but it also has blind spots: Michael and Wes can have very similar demographic profiles (say, both men in their 30s who live in the Northeast) but have totally different taste in clothes (maybe Michael wears sporty clothes and Wes has a preppier look). Segmenting by behavior is a much more effective

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