Home » insights » Recommendation Engines: Benefits, Examples, and Pitfalls

Recommendation Engines: Benefits, Examples, and Pitfalls

Data Science

The amount of data generated by the internet continues to grow at an exponential rate. Because of this, it has become increasingly difficult for users to find the information they need. That’s where recommendation engines come in. These engines use data to analyze user behavior and make personalized recommendations. In this article, we’ll take a closer look at recommendation engines: what they are, how they work, and their potential use cases and pitfalls.

What is a recommendation engine and why is it important?

A recommendation engine is a type of software that uses machine learning algorithms to provide personalized recommendations to users. These recommendations can be for products, services, or other types of content. They are designed to help users find what they are looking for more quickly and efficiently. The goal of a recommendation engine is to provide relevant recommendations based on the user’s interests and behaviors. At the same time, the goal is also to help them discover new items they might not have otherwise found.

One of the main reasons that recommendation engines are so important is that they can help increase customer satisfaction and loyalty. By providing personalized recommendations, these engines can help users find the products and services that best meet their needs. In return, this can lead to higher customer retention rates and increased revenue. Additionally, by helping users discover new items they might not have otherwise found, recommendation engines can help companies expand their product lines and reach new audiences.

For example, Amazon’s recommendation engine is known for providing personalized product recommendations to users based on their browsing and purchase history. This not only helps users find products that they are likely to be interested in, but it also increases the chances that they will make a purchase.

How to build a recommendation engine and its different phases?

The process of creating recommendations involves four key phases:

1. Collection – This phase involves gathering data about the user’s behavior and preferences. The data can be explicit, such as ratings and comments on products. The data can also be implicit, such as page views in GA4, order history, return history, and cart events.

2. Storing – The type of data you use to create recommendations can help you decide the kind of storage you should use, such as BigQuery, a standard SQL database, or object storage.

3. Analyzing – The recommendation engine analyzes the collected data and identifies items with similar user engagement data. This is done by filtering data using different analysis methods such as batch analysis, real-time analysis, or near-real-time system analysis. Typical algorithms include Matrix Factorization, Factorization Machines or Two Towers. These can be written in python or R.

4. Filtering – The final step is to filter the data to extract the relevant information required to provide recommendations to the user. Choosing an algorithm suitable for the recommendation engine from the list of algorithms explained in the next section is essential for enabling this.

What are the different types of recommendation engines?

Collaborative Filtering: 

The collaborative filtering approach is based on collecting and analyzing information about user behavior, activities, or preferences. The idea is to predict what a user will like based on the similarity with other users. The prediction is made using various predictive maintenance machine learning techniques.   For instance, if user X likes tennis, badminton, and golf while user Y likes tennis, badminton, and hockey, they have similar interests. Therefore, there is a high probability that X would like hockey, and Y would enjoy golf. This is how collaborative filtering works.   There are two types of collaborative filtering techniques: user-user collaborative filtering and item-item collaborative filtering. One of the main advantages of the collaborative filtering approach is that it can recommend complex items accurately, such as movies, without requiring an understanding of the item itself as it does not depend on machine analyzable content.

Content-Based Filtering: 

Content-based filtering methods are mainly based on the description of an item and a profile of the user’s preferred choices. In content-based filtering, keywords are used to describe the items. Meanwhile, a user profile is built to state the type of item this user likes.   For example, if a user likes to watch movies such as Mission Impossible, then the recommender system recommends movies of the action genre or movies of Tom Cruise.   The key premise of content-based filtering is that if you like an item, you will also like a similar item. This approach has its roots mainly in information retrieval and information filtering research.

Hybrid Recommendation Systems: 

Hybrid recommendation engines are essentially the combination of diverse rating and sorting algorithms. For instance, a hybrid recommendation engine could use collaborative filtering and product-based filtering in tandem to recommend a broader range of products to customers with accurate precision.   Netflix is an excellent example of a hybrid recommendation system as they make recommendations by:

Comparing the watching and searching habits of users and finding similar users on that platform, thus making use of collaborative filtering

– Recommending such shows/movies that share common characteristics with the ones rated highly by the user. It is how they make use of content-based filtering.

– Compared to pure collaborative and content-based methods, hybrid methods can provide more accurate recommendations. They can also overcome the common issues in recommendation systems such as cold start and the data paucity troubles.

What are examples and benefits of a recommendation engine?

Recommendation engines are used in a variety of applications and industries, including:

1. E-commerce: provide personalized product recommendations to users based on their browsing and purchase history.

2. Media and Entertainment: suggest movies, TV shows, and other content based on user preferences and viewing habits.

3. Social Media: suggest content and friends based on user behavior and preferences.

4. Education: suggest learning resources and courses based on a student’s learning style and past performance.

5. Healthcare: provide personalized treatment recommendations based on a patient’s medical history and symptoms.

What are the possible pitfalls for each of the recommendation engines?

While recommendation engines can provide significant benefits, there are also potential pitfalls to be aware of. Here are some common pitfalls for each type of recommendation engine:

Content-based filtering: 

Content-based filtering can struggle when there is little data available or when item attributes are not well-defined. Additionally, content-based filtering can result in “filter bubbles,” where users are only recommended items that align with their existing preferences, limiting their exposure to new content.

Collaborative filtering:

Collaborative filtering can struggle when there are few users or when users have unique preferences. Additionally, collaborative filtering can result in “echo chambers,” where users are only recommended items that align with the preferences of a small subset of users, limiting their exposure to diverse content.

Hybrid recommendation engines: 

Hybrid recommendation engines can be complex to build and maintain, and require significant data engineering and machine learning expertise. Additionally, hybrid recommendation engines can still suffer from the same pitfalls as their component recommendation techniques, such as filter bubbles and echo chambers.   Recommendation engines are powerful tools for providing personalized recommendations to users in a wide range of industries. By leveraging machine learning techniques such as content-based filtering, collaborative filtering, and hybrid recommendation engines, businesses can increase customer satisfaction, engagement, and revenue.

Do you want to learn more about recommendation engines? 

Contact us or follow Indaru on linkedin! https://www.linkedin.com/company/indaru/ Image by rawpixel.com on Freepik

Last insights

Hair care report

With developed markets having more than 40% of purchases happening online, analyzing data and decision-making need to keep up with the faster-paced transactions. Upgrade data-tracking with dashboards that can track results in real-time.   In Europe, 40% of hair...

Auto industry report

Surprisingly, consumers in the automotive industry are not loyal and even a handful of satisfied customers are willing to change brands. Learn more about your consumers by establishing your 1st party data strategy and leveraging your current customers. Improve...