What Is Personalized Marketing, Why Machine Learning and AI are Effective and How to apply it?

If you are not a tech person, it is hard to understand how Machine Learning (ML) and Artificial Intelligence (AI) play into CRM marketing. In this article, let's dive into!
Oct 17, 2023
What Is Personalized Marketing, Why Machine Learning and AI are Effective and How to apply it?
As we enter the era of machine learning, many companies are using machine learning to optimize their business operations. In particular, techniques called unsupervised machine learning are being applied to marketing, making it possible to perform multidimensional pattern-based customer segmentation analysis, recommendation systems, and customer health analysis, which were impossible in the past. Marketing efforts that previously treated everyone as a single customer have now entered an era of hyper-personalization, making the use of machine learning by e-commerce companies central to their business.
However, if you are not a tech person, it is hard to understand how Machine Learning (ML) and Artificial Intelligence (AI) play into this, and how you can apply them effectively. In this article, we will delve in!

1. What is personalized marketing?

Personalized marketing is an approach where businesses tailor their marketing and advertising efforts to individual customers based on their preferences, behaviors, and purchasing history. It’s about reaching the right person with the right message at the right time, making the entire process more relevant and effective.
In the past, personalized marketing was more of a vision than a reality due to several constraining factors. Advanced computers, which are now integral for processing vast amounts of data rapidly, were not in existence. Businesses used simple techniques, with tools like basic spreadsheets, lacking the finesse to dissect large data volumes and unveil intricate patterns. Collecting individual customer data was a challenge, often restricted to generalized surveys or direct interactions, leading to a lack of detailed insights. The idea of using sophisticated methods like machine learning for marketing wasn't even on the horizon. The prevalent marketing strategy was broad, often leveraging mass media like television, aiming to appeal to a broad audience rather than tailored segments. Any inclination towards personalization faced immense logistical challenges, making it an unfeasible dream for many. It's the recent technological advancements that have finally transformed personalized marketing from aspiration to an essential strategy in the business world.

2. Benefits of personalized marketing

The benefits of personalized marketing are numerous and impactful. Firstly, it greatly enhances the customer experience, as tailored content and offers directly resonate with individual needs and preferences. This precision not only enriches the user journey but also boosts business metrics, leading to increased sales. We have already published the benefit of the benefits of customer journey optimization and hyper-personalization email marketing. The power of relevant offerings cannot be overstated: they drive higher conversion rates and foster a sense of understanding between the brand and the consumer.
One of the great examples of the benefits of the hyper-personalization would be Netflix. Since implementing its hyper-personalized recommendation system, Netflix has experienced a notable surge in user engagement and retention. The tailored suggestions reduced users' decision-making time, streamlining their journey from logging in to watching a show, leading to increased content consumption. As viewers felt the platform was attuned to their preferences, their loyalty to Netflix strengthened.
One of our client companies, Rael, also experienced the advantages of hyper-personalized email marketing, as demonstrated by the A/B testing we conducted collaboratively. Through this test, we confirmed that the hyper-targeted message, aided by the recommendation system, increased purchase conversion by fourfold compared to sending the same email content to every customer. We organized this test with 20,000 of Rael's existing customers: 10,000 were targeted using the Retentics AI system with recommended products, while the other 10,000 customers were chosen randomly and offered the most popular product.
This hyper-personalized experience, in turn, cultivates loyalty, making customers more likely to stick with a brand for the long haul. Beyond these direct advantages to both consumers and businesses, personalized marketing presents an opportunity for better data utilization. By focusing on personalization, businesses can transform their vast reservoirs of data into actionable insights, ensuring every marketing move is both informed and impactful.

3. Challenges of personalized marketing

As businesses delve deeper into personalized marketing, they encounter a unique set of challenges. At the forefront is the issue of data privacy. In an age where data collection is extensive, there's an increased onus on businesses to handle this data responsibly. With consumers becoming more knowledgeable about their data rights, any misstep or mishandling can quickly erode trust, creating long-term repercussions for brand credibility.
Furthermore, the technical landscape of personalized marketing isn't without its complexities. As businesses use multiple platforms and data sources to gather insights, ensuring seamless integration becomes pivotal. Achieving this harmony so that different systems can effectively communicate with each other often poses a significant challenge. Lastly, the very essence of personalization — delivering relevant content — demands constant vigilance. To keep content aligned with evolving consumer preferences, businesses must frequently update and refine their strategies. This continuous evolution, while essential, can be resource-intensive, demanding both time and effort to ensure the message remains pertinent.

4. What is Machine Learning and AI

Artificial Intelligence (AI) represents machines performing tasks in ways we deem "smart," encompassing a wide range of capabilities from decision-making to predictive analysis. It's about enabling machines to mimic or even surpass human-like intelligence in specific domains.
Machine Learning (ML), a vital subset of AI, emphasizes teaching systems to learn from data. Unlike traditional programming, where tasks are explicitly defined, ML allows systems to self-improve by identifying patterns and making decisions based on data. Think of a music streaming service that fine-tunes its song recommendations based on your listening habits—that's ML in action.
In essence, AI sets the stage for "intelligent" machine behavior, while Machine Learning provides the tools, using data, to make this behavior increasingly refined and accurate.

5. How is it used in marketing?

Machine Learning (ML) and Artificial Intelligence (AI) are revolutionizing the way businesses approach marketing.

-Analyzing customer

ML and AI tools process vast data quickly, granting businesses insights into customer behavior and purchasing trends. This enables more targeted and informed marketing strategies. For instance, as mentioned above, the segmentation, customer health score, and retention status can be analyzed with AI.

-Personalized the customer experience

Modern consumers expect tailored experiences. AI algorithms allow businesses to offer content and messages uniquely suited to each individual, enhancing their connection with the brand and increasing the likelihood of conversion.

-Embrace automation

AI streamlines marketing operations. Chatbots handle 24/7 customer interactions, email automation sends relevant messages based on user behavior, and predictive analytics forecasts market trends, letting businesses adapt proactively. Among the myriad of tools available, Retentics stands out as a comprehensive solution. It not only excels in areas like customer analysis and personalizing the customer experience but also ensures that even those without a deep AI background can grasp and utilize its features.
In conclusion, ML and AI are not mere buzzwords in the marketing sphere. They are transformative tools that, when leveraged effectively, can supercharge marketing strategies, offering unparalleled insights, personalization, and efficiency.

6. Why is ML is effective in personalized marketing

In today's data-driven world, the sheer volume of information available to businesses is both a boon and a challenge. Machine Learning (ML) algorithms play a pivotal role in navigating this sea of data. They possess the capability to sift through vast datasets, rapidly identifying patterns and extracting insights that might elude human analysts.
This is where ML shines in personalized marketing. Its predictive power isn't merely about analysis; it's about proactively understanding and anticipating customer behaviors and preferences. With these insights, businesses can craft marketing campaigns that resonate deeply with individual users, enhancing the likelihood of conversion.
Furthermore, ML aids in optimizing campaigns in real-time. Instead of relying on post-campaign evaluations, marketers can adjust strategies on the fly, ensuring maximum relevance and engagement. This dynamic approach leads to more efficient ad spending, higher ROI, and, most importantly, satisfied customers who feel truly understood by the brands they interact with. In essence, ML offers a potent blend of precision, agility, and personalization, making it indispensable in modern marketing endeavors.

7. How to Apply machine learning personalized marketing

Harnessing the power of machine learning (ML) in personalized marketing isn't just about leveraging cutting-edge technology; it's about creating meaningful and impactful connections with your customers. Here's a step-by-step guide to integrating ML effectively:

-Data Integration:

Before diving into analytics, businesses must first have access to their data in a cohesive manner. Especially for small to medium-sized businesses (SMBs) that may lack dedicated technical teams, it's pivotal to integrate their existing databases seamlessly. Tools and platforms that allow smooth data integration without requiring extensive engineering skills can bridge the gap, ensuring that businesses of all sizes are on a level playing field


Once data is organized and accessible, the analytical journey begins. With ML, businesses can delve deeper into their customer data, unraveling patterns and insights that might have previously been overlooked. Key analytical pursuits like segmentation, assessing customer health scores, and mapping out customer journeys pave the way for actionable insights. This understanding is foundational, providing businesses with clear strategies to elevate their marketing campaigns.

-A/B Testing:

Action is the lifeblood of any marketing strategy, but it comes with its risks. When implementing new marketing tactics or strategies, it's essential to assess their efficacy. A/B testing allows businesses to compare the performance of new strategies against existing ones, mitigating risks and ensuring that chosen tactics truly resonate with their audience. In a world where every marketing decision can significantly impact customer engagement and ROI, A/B testing provides a safety net, ensuring optimal outcomes.


Lastly, personalization lies at the heart of modern marketing. Leveraging ML-driven recommendations can transform your CRM or in-app engagements. By offering hyper-personalized experiences, businesses can ensure that each interaction is meaningful, fostering stronger connections and loyalty among their customer base.
Incorporating machine learning into personalized marketing might seem daunting, but with a structured approach, it becomes an invaluable asset in any marketer's toolkit.

8. How Retentics ML can help your marketing

Retentics is an AI-powered SaaS product for customer retention. As its name suggests, Retentics is developed for retention analytics. However, not only the analytics for customer retention but also the most effective action items are curated.
Retentics can provide:
  • Segmentation: The process of dividing massive customers into distinct groups based on specific criteria, such as RFM, to tailor marketing efforts more effectively.
  • Cohort Analysis: A method of analyzing groups of people who share a common characteristic within a defined time span, often used to study customer behavior, such as LTV, over time.
  • Item Journey: Tracking the path or sequence that a product takes through various stages, from introduction to purchase, to understand its lifecycle and customer interactions.
  • Cross-selling: A customer's purchase pattern reveals products frequently bought together or bought sequentially at a later time, prompting the seller to recommend additional products or services related to the initial purchase.
  • Target Audience Curation: The process of identifying and refining specific target customers that a business aims to reach with its marketing campaigns, such as customers who are about to return to your brand to buy another.
  • Recommendation System: Algorithms or models that suggest products, services, or content to users based on their behavior, preferences, or other criteria.
  • CRM Campaign Analysis: Evaluating the performance and impact of the above marketing executions.
In today's data-driven world, Machine Learning and Artificial Intelligence are essential for businesses seeking a competitive edge. Retentics, an AI-powered platform, stands out by offering more than just retention analytics. It equips businesses with actionable insights for segmenting customers, understanding product journeys, maximizing cross-selling opportunities, refining target audiences, and evaluating the impact of CRM campaigns. As the marketing landscape continually evolves, tools like Retentics ensure businesses remain ahead of the curve, transforming challenges into opportunities. In this fast-paced environment, ML and AI aren't just beneficial—they're vital. With Retentics, businesses gain a powerful ally, harnessing cutting-edge AI technology to drive success.

written by. Zack Lim
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