How Algorithms Actually Impact Your Business

The longer you run a small or medium-sized business, the more you get familiar with the rules: The customer is always right. You should always offer a great experience, not just products and services. Data drives the best decisions.

While you’re following those rules, however, there are machines working in the background that are paying close attention to rules of their own. Though they vary in complexity and how they are applied, they all fit the basic definition of an algorithm: rules that let technology perform an operation based on a set of calculations.

Algorithms might seem like an off-putting subject if you have an aversion to math, but you don’t need a degree in computer science to appreciate how they work, or why they matter.

In many cases, algorithms form the basis of processes that are highly automated, and which we rely on for a wide range of daily activities.

SMBs usually have multiple tools that leverage algorithms to function effectively, whether they realize it or not. In more advanced scenarios, they are the basis of what’s called machine learning, one of the many forms of artificial intelligence.

Although you may not have started a company thinking about the algorithms that would affect your business results, it’s worth taking the time to understand their impact. These are not innovations that enhance systems used by large corporations alone.

In fact, thanks to the prevalence of digital technologies, they can be harnessed by — and will change the fortunes of —businesses of all sizes. The better you recognize algorithms, the more likely you’ll be able to figure out answers to longstanding questions about key areas of business performance. Algorithms will determine:

Where your site ranks in search engines

Do you want your company name to be the first thing that comes up when someone looks for a particular category of products and services — or one of the firms on the second or third page of search results?

If you liken a search engine to a library of all the information online, an algorithm acts as a master librarian, classifying and cataloging in ways that will most likely give people what they’re looking for.

This is where search optimization (SEO) is so important for SMBs, because you discover what kinds of keyword phrases need to be in your content in order for a search engine algorithm to recognize it. These kinds of algorithms get updated regularly, so approach it as a continuous learning exercise.

How you’ll increase your share of wallet with e-commerce customers

Shopping online should not only be a convenient but helpful experience — and there’s nothing more helpful than guiding customers to the products they’ll want most.

A quick look at the largest e-commerce sites will show one feature in common: an area on each product page where recommendations for other wares instantly come up. These usually aren’t random, but are somehow associated with the product the customer came to look at, or perhaps based on the customer’s previous purchases or preferences. Algorithms are great at surfacing what’s most popular among granular segments of customers, which can help even an SMB personalize the way they offer e-commerce.

Who will see your content on social media

In the early days, most social media platforms tended to offer users a “feed” of posts that appeared in reverse chronological order. In other words, the post at the top of the feed was the one posted most recently.

Over time, though, the algorithms on these platforms changed to ensure people would be quicker to see their favourite kinds of content. This could be based on what kinds of posts they had “liked” or shared in the past, for example, or even on how many posts have been published on the platform during a given period.

SMBs should keep social algorithms in mind as they use such platforms for marketing purposes. It’s the best way to get the highest possible visibility for their content.

What you’ll use to determine your next big business decision

Although a lot of algorithms run the same kinds of processes over and over again, they also sit at the heart of where AI can provide the biggest value to SMBs.

When tools like a CRM, marketing automation or customer service applications incorporate machine learning technology, they become able to do more than analyze what happened in the past.

Instead, these more sophisticated algorithms can help identify where an SMB should be spending more of its time prospecting for new business, or which kinds of customers are likely to churn from one quarter to the next.

Algorithms in this case are not taking direct action, but are calculating the odds or likelihood of future events that will matter to SMBs.

Other algorithms will be tied to sensors on everyday objects and equipment. This allows companies to understand how best to manage resources like light and heating, or to be alerted when machinery might soon be in need of repair.

Algorithms are even seeing use internally, from helping some organizations make smarter hiring decisions to identifying potential issues of employee misuse or consumer fraud.

Final thoughts

When algorithms are well designed and applied, they seem less like an innovation and more of the expected norm.

In fact, customers get so used to machine learning applications that make their tasks faster and easier that it can come to influence which companies they do business with.

That’s all the more reason to get on top of algorithms now. What begins as a strategic differentiator quickly becomes the industry standard. If you want to stay competitive, and continue to offer the best possible experiences, an algorithm will likely be involved.

Fortunately, this won’t necessarily mean having to invest in developing a unique algorithm yourself. It’s more likely going to be a matter of choosing tools that use them in a way that helps you achieve a business outcome.

The best part is that, much like human beings, algorithms can be fine-tuned and “learn” over time to become even better at what they do. And as they get used to using them, so will SMBs.