Journal of Computational Social Dynamics

Evaluating the Effectiveness of AI-Driven Customer Segmentation in Enhancing Targeted Marketing Strategies

Aya Tarek Ahmed Hossam

Department of Business administration, Port Said University, Port Said, Egypt

Abstract

The integration of Artificial Intelligence (AI) in customer segmentation represents a transformative approach in the realm of targeted marketing strategies. This paper explores the multifaceted impact of AI-driven customer segmentation, emphasizing its role in enhancing the precision, adaptability, and effectiveness of marketing initiatives. The primary focus is on the improved accuracy and granularity of customer identification. AI algorithms excel in dissecting large datasets, revealing intricate patterns and subtle customer groups that often elude traditional segmentation methods. This heightened accuracy fosters more finely-tuned marketing strategies. A critical aspect of AI-driven segmentation is its dynamic nature. Traditional segmentation methods are static, whereas AI models continuously evolve, adapting to changing customer behaviors and market conditions. This dynamic segmentation ensures the sustained relevance of marketing strategies in a fluctuating market landscape. Additionally, AI's predictive analytics capabilities allow for the anticipation of future customer behaviors and preferences, paving the way for proactive strategy formulation. Personalization is another cornerstone of AI segmentation. The capacity to craft highly personalized marketing messages for distinct segments escalates customer engagement and response rates, a feat challenging to achieve with conventional segmentation approaches. AI-driven segmentation also streamlines cost efficiency by automating complex analytical processes, thereby conserving resources and optimizing marketing expenditure. The integration of diverse data sources is yet another advantage, where AI systems assimilate varied data types, including transactional histories, social media interactions, and demographic information, to construct comprehensive customer profiles. This holistic approach enhances customer experience, fostering satisfaction and loyalty while supporting data-driven decision-making, thus reducing reliance on speculative judgments. Real-time insights are a hallmark of AI segmentation, offering immediate understanding of customer behavior and segment shifts, enabling rapid strategic adjustments. The culmination of these advantages is evident in the significantly increased Return on Investment (ROI) for marketing campaigns. This paper argues that AI-driven customer segmentation is not merely an enhancement to targeted marketing strategies but a necessary evolution, essential for businesses aiming to thrive in the modern digital marketplace.