When the time comes that you have to make a big decision—one that could have some significant impact on your business, for instance—what does your thought process look like? Do you rely on data, or do you rely on what your gut tells you?
If it’s the latter, you’re literally relying on your least accurate information and hoping that you get the most beneficial outcome. Instead, why not rely on the other, quantitative and confirmed data your business has collected over the years and pair it with the analytical prowess of AI tools?
As much as we all want to trust our own intuition, there are just too many biases and influences that it can be (and usually is) swayed by.
Let’s walk through an example. Let’s say you decide to put out some marketing pushing Product Q, simply because your sales reports indicate that it is a very popular item amongst customers… especially recently. Your gut tells you that this is a good move.
Unfortunately, there are several issues with this approach.
First of all, you’re operating based on a very specific data set… your sales reports. This dataset is triggering recency bias, a phenomenon where only recent events are taken into consideration. This recency bias is amplified by availability bias (reliance on those things that come to mind first, such as recent successes) and our own inherent bias towards the outcome we want to be true.
Second, your sales reports aren’t giving you all the data you need in the first place. Sure, at first glance, Product Q is extremely successful based on your sales reports. However, there’s a lot of information that your sales reports don’t tell you. For instance, how often is Product Q returned after it is sold? Even if it is kept by your customer, what if it generates the lowest profit margins you offer? What if the only people who buy it are those who have determined a strategy to get it at a steep discount, and as such, only buy it once? All of this data would significantly change Product Q’s story, but by only focusing on your sales reports and your intuition, you miss out on this critical information.
Let’s face it: you have a lot of data at your disposal, but relying on gut instinct means you’re ignoring all the value it has to offer.
Don’t worry: we aren’t saying you need to review massive spreadsheets. Instead, empower your tools to help you make connections and see correlations between your data points that you simply can’t. After all, you can’t cross-reference and compare thousands of stats and figures simultaneously. AI can.
While the “gut” answer might be whoever has made the largest individual purchase, AI will look at the bigger picture and identify which customer has accumulated the highest LTV (lifetime value). A buyer’s behavior determines LTV, such as how often they make a purchase or others they’ve referred to you, and how rarely they return a purchase or take advantage of a discount.
Of course, you could manually crunch these numbers and find these figures. That said, AI can do it so much faster, creating a profile that matches your most valuable customer so you can more effectively target similar organizations.
The nerves you feel in your gut as you look at your business’ bank account may have been the warning sign you’ve relied on for years. Hopefully, you can already appreciate that the data-fueled responses of AI will give you a much more accurate prediction of trends by analyzing assorted data points, but the opportunity this offers is particularly significant.
By referencing a wide range of historical data, artificial intelligence can predictively extrapolate likelihoods and give you prior warning of upcoming events. Perhaps your sales tend to bottom out in the middle of each season, but you haven’t noticed because of all the variables that obfuscate the data. Artificial intelligence helps you catch patterns you’ve missed and enables you to respond appropriately.
Burgers and fries. Peanut butter and jelly. Milk and cereal. There are plenty of items that just make sense to buy together, and you’ve likely made similar associations within your own offerings. While your observations may be accurate, AI can give you far more specific insights that can help you make truly optimized decisions to help you increase the value you see from your offerings.
With AI's higher specificity on your side, you can more effectively target your audience with tailored communications or more relevant offers, boosting your opportunities over time.
If you’re sick of dealing with today’s problems and would rather shift to a more proactive strategy, using AI can be something to consider. Pick just one of the questions above and reach out to us for help in using your technology to accomplish more.
Our managed services are designed around the very concept of proactivity, and we’re happy to lend our expertise to those we work with. Reach out to us at (571) 470-5594 to learn more!
