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How Does Machine Learning Apply to My Business?

By Tim Rocke, Marketing Manager at Logojoy

Machine learning.

For the average North American, this phrase evokes thoughts of hyper-futuristic, human-like robots carrying out tasks to replace people in everyday society. But very few of us without technical degrees can explain what machine learning actually is. A Google search wont be of much use either; most of these results consist of highly-technical pieces discussing complex algorithms that many of us could not even begin to understand. And although it is true – machine learning does help technology replace some human effort – we will demystify what the term really means, and what this means for you as an entrepreneur.

What is Machine Learning?

Quite simply, machine learning is a subset of artificial intelligence that refers to a technology’s ability, through the use of algorithms, to fix or correct itself without human intervention. A mathematical model is paired with large amounts of data, often millions of inputs, to create different “patterns” that the technology is able to pick up on. However, while the software is using these trends to create outputs – often predictions for consumers or businesses – it is also continuously analyzing inputs as well. As more data is received and analyzed, outputs may change depending on the analysis of new inputs. This is the technology continuously “learning.”

Let’s discuss an example to make this clearer. An online food ordering system offers different types of pizza, wings, cheese bread, and soda. As the website goes live in the summer months, it finds that those who order pizza often choose to purchase soda as well. Therefore, those who add pizza to their cart are asked if they would like to add soda to their purchase by the ordering software, prior to checkout. However, as the winter months roll around, the pizza-soda combination becomes less popular, and wings become the chosen pairing for the cheesy delicacy. The software’s machine learning capability picks up on this, and starts offering wings to those who add pizza to their cart. While continuously operating, the ordering software was able to pick up on shifts in order pairing trends and alter it’s behavior accordingly, without the intervention of human beings to do so.

Machine Learning and Your Business

Although an extremely simplified example illustrating the power of machine learning, it illustrates the elimination of human intervention to make changes in a technological process. But why do you, a small business entrepreneur, really care?

Because of its ability to process the immense amount of data available to us in present day, machine learning allows us to find correlation that humans otherwise would not be able to find. These correlations in combination with computer “reaction” allow your business to know your customer on a one-by-one basis, and react to their behaviors in a way that is optimized to the greatest user experience for them, ultimately resulting in a greater return on investment. By anticipating your customer’s next steps before they happen, you are able to capitalize on their actions and more effectively guide them towards a sale, positively affecting your bottom line.

Imitations of Machine Learning

Of course, the world of AI does not come without it’s limitations. First, you must actually know the problem you are trying to solve, and what algorithm(s) will be able to solve it. Although this seems like a fairly simple task, companies spend countless amounts of hours and dollars trying to figure out the best possible way for the data to be collected, manipulated, analyzed and eventually acted upon, in order for their machine learning systems to actually be efficient and result in an overall increase in bottom-line figures.

Secondly, you must actually have the right data, and the correct amount, in order for machine learning to be effective. These algorithms require much more data that what human data analysts typically handle for correct correlations to be derived. The data must also be relevant to the problem at hand, as irrelevant or misleading information could act as red herrings, putting your machine learning on a course that makes your systems less effective than they should, hurting your overall investment in such a complicated system.

The world of machine learning is one of great complexity, that very few of us understand to the fullest. However, with all sectors slowly capitalizing on these systems, it is evident that investment in machine learning could have amazing results on your bottom line.

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