3 Ways Machine Learning Can Transform Business
While big data has been the holy grail for competitive differentiation for the past few years, many experts believe 2016 will be the year that businesses will turn to machine learning to take advantage of the massive amounts of data at their disposal. In fact, Gartner has identified Advanced Machine Learning as one of the top 10 strategic technology trend for 2016. Here are three ways machine learning can improve business in the coming years.
- Personalization and targeting
Machine-learning algorithms offer more personalized experiences to users, increasing the effectiveness of marketing strategies and enhancing the value of platforms. Machine learning takes the guesswork out of personalization strategies, taking advantage of available customer data to determine the best product to deliver to each customer at the right time. These tools also unveil new target markets and segments that would have been hard for business owners to identify without the help of algorithms.
The increase in personalized experiences will also lead to growth in personal assistants like Apple’s Siri. For instance, Facebook recently released M, the social network’s own answer to Siri, to a small number of West Coast users, Wired reported. These services will help consumers work more effectively by performing certain tasks on their behalf, such as suggesting and booking restaurants, or even selecting a gift for your spouse. Machine-learning algorithms will make operations more effective on both the customer and business side, leading to increased efficiencies.
- Pricing and inventory
Determining the best pricing for products has always been a challenge for business owners. As variables like demand and economic environment change, product pricing often needs to change with it to achieve the most successful balance. However, machine-learning algorithms could give companies some help with this task. As Econsultancy pointed out, machine-learning tools can adapt to consumer behavior and help you understand what elements drive purchase decisions. This is especially useful when introducing new products.
Just as important as pricing is determining the appropriate amount of product to have on hand. After all, it’s hard to take advantage of optimum pricing if you sell out too quickly. Together, using machine-learning to do the heavy lifting of calculating these necessities will lead to time savings and cost reductions in the business landscape.
- Security and risk
Enhanced security is one of the greatest benefits of machine learning. According to Lexis Nexis, merchants lost 1.32 percent of revenue to fraud in 2015, up from 0.68 percent in 2014, and these numbers are trending upward. Many security platforms are designed around the ways hackers have operated in the past, but as fraudsters become more sophisticated, it’s crucial to have tools that can learn their behavior and predict attacks before they happen. In addition, machine-learning fraud prevention tools can learn user patterns and behavior to alert businesses when something unusual is going on.
For a quick introduction on machine learning for fraud prevention, download this primer here.
In the future, machine-learning will likely be a crucial part of business success, whether that means helping companies target the right customers, price their products or protect themselves from fraud.