Segmenting Customers with Machine Learning

With the rising availability of data on customer characteristics and behaviors, it has become more accessible to approach customers with more informed insights. From analyzing the drivers behind customer engagements that we discussed in Chapter 3 to understanding which specific products that individual customers may like, which we touched on in Chapter 7, the assumptions behind these approaches were based on the fact that there are certain groups of similar customers that behave in similar fashions.

Targeted marketing approaches are proven to work significantly better than mass marketing, due to which customer segmentation has been a frequently discussed topic in this domain. Also, with the upcoming cookieless world, first-party data is expected to play an even more critical role. Consequently, targeted strategies based on customer segments, such as geographic segments, demographic segments, or interest topic segments that will still...