What Is Collaborative Filtering?
Collaborative filtering is a process that allows companies to customize offers, products and services offered to customers based on their membership in various kinds of classes, often created on the basis of demographics. Customers can be profiled so they can be offered options based on their membership in a particular profile class.
By and large this is a process used on the Internet because of the ability to dynamically serve different web pages to the visitor, based on either their past purchasing record, or, the past purchasing habits of people who are similar to the visitor.
CSM describes it this way:
A feature of CRM software that allows a business to provide products or services to a customer based on what other customers with similar preferences have purchased in the past. Internet retailers use collaborative filtering to recommend popular products to you.
While the term is “fancy jargon”, the concept is actually much simpler, and it’s something good sales people have been doing forever. Know your customer. Customize your approach to the customer either based on what s/he has done in the past, or your experience with similar customers. For example a car salesperson would offer a sports model to a younger driver, and perhaps an SUV to an older differently dressed customer.
There you go. It’s not that complex in principle.
