According to Statista, global revenue from software solutions for personalizing customer experience will be around $10 billion by the end of 2024. This indicates the growing number of marketers abandoning the quantitative approach of the past in favour of delivering quality messages to potential customers. As competition in various fields becomes increasingly fierce, understanding your customers is a necessity rather than an advantage.
The results of a study published on ResearchGate show that a properly implemented personalized approach can increase customer engagement, boost customer loyalty, markedly increase conversion rates and even turn clients into brand advocates. This article answers what personalization in marketing is, what tools and strategies work most effectively today, and how to measure the success of using personalized marketing methods.
The ability to provide your customers with exactly what they need at the right time and in a way that is convenient for them is the essence of personalized marketing. For example, the success of such giants as Amazon and Netflix is driven by the ability of their platforms to anticipate users' desires. However, in today's reality, marketing personalisation requires a deep understanding of the behavioural characteristics of potential customers, as well as their preferences and even emotions.
So, now that you have an idea of what is personalized marketing, let's go a step further and get acquainted with customer intimacy. In simple words, it is the ability of a brand to provide its user not just a product, but a solution that fully meets their unique needs.
Let's consider the example of the most popular coffee chain Starbucks. The company launched its online app capable of not only remembering the favourite drinks of customers but also offering promotions and discounts taking into account their habits and behaviour. Starbucks customers get the impression that the company cares about them, and this contributes not only to the growth of sales but also to the increase of loyalty. Thus, the customer intimacy approach helps your business to be closer to your audience and to form long-term relationships based on trust.
Personalisation is a marketing term that hides a variety of methods and approaches to create a unique experience for each customer. Below, you will find the key aspects of personalization enabling your business to stand out in today's highly competitive business environment.
Usually, marketers talk about personalisation as something unified. However, there are two types of personalisation: authentic and synthetic. Below, you will find a table showing the differences between these two approaches.
Online brands are using content - text articles, videos, infographics, pop-ups, push notifications, and more - as the primary tool for engaging with customers. Recently, marketers have been using the following methods of web content personalisation:
· Dynamically tailoring content to a specific website user. For example, modern e-commerce platforms analyze user behaviour and search activity to display relevant products based on previous views.
· Personalized recommendations and notifications tailored to users' interests. A good example is Spotify offering music tracks based on subscribers' preferences.
· Contextual personalization based on various data about users including their location, current time, device type and others. For example, when booking a table at a restaurant for the evening, the service can generate a dinner menu for you.
Thanks to website personalisation, you can achieve higher conversion rates and increased engagement, as visitors get exactly what they are really interested in.
Marketers call the entire path from the very introduction to a brand to ordering a customer journey. It involves several stages, with each needing a personalized approach to improve customer interaction:
· Displaying personalized ads (e.g., targeting advertising) during the awareness phase.
· Sending personalized emails or online chat messages providing information relevant to the potential customer's needs at the choice stage.
· Offering special promotions and discounts based on the customer's choice at the purchase stage.
· Introducing customized loyalty schemes to create a sense of exclusivity at the user retention stage.
By using personalization at every point of customer interaction, you increase the chance of forming a lasting relationship when they return again and again to you.
The days when personalization was something of a nice-to-have addition that provided your competitive advantage are long gone. According to Ecommerce Bonsai, a brand is 80% more likely to purchase from a brand if it provides its customers with a tailored experience. In addition, two-thirds of today's consumers expect companies to understand their unique needs.
How much does this approach to user engagement help businesses grow? The answer can be found in successful implementations of the strategy:
· According to a McKinsey study, more than a third of Amazon's sales are driven by the use of AI-based algorithms suggesting products to users based on their previous actions with the platform.
· According to Statista, about 14% of Spotify users share their song selections as part of a Spotify Wrapped campaign, thereby expanding the service's audience reach. Although 49% of respondents said they do not use Spotify Wrapped, this approach still provides an influx of new customers for the company.
· With Coca-Cola's “Share a Coke” campaign, where customers could choose a bottle with their name on it, the company was able to achieve a 7% increase in sales in Australia (where the campaign originated).
So, personalisation is much more than just another marketing strategy. By establishing a stronger connection with customers, brands not only increase sales but also build large bases of loyal customers ready to recommend products to their friends and acquaintances.
User behaviour, as well as preferences, change in the blink of an eye. Therefore, to keep your business afloat and competitive, you must learn how to build deeper and longer-lasting relationships with your customers today. Let's take a look at the key trends influencing the future of personalized marketing.
Given the huge volumes of traffic and the complexity of modern platforms, manual analysis is no longer possible for marketers. Effective solutions based on artificial intelligence and machine learning technologies can process huge data sets, identify user behaviour patterns and predict user needs on the fly.
Currently, many online platforms are already using AI-based recommendation systems that are able to offer content that users are likely to be interested in. In addition, modern solutions help brands adapt content, offers and advertising right when interacting with customers and make suggestions to reduce customer churn.
Today's brands can no longer imagine how to promote products without using social media. They create profiles on Facebook, Instagram and TikTok to leverage their powerful tools enabling them to customize ads based on users' interests, behaviors and demographics. Many companies distribute personalized content to their audiences through social platforms and engage in close conversations with potential and existing customers through surveys, comments and direct messages available on social media today.
There is no doubt that a personalized approach to customer experience brings huge benefits to businesses. However, there are many technical and other challenges to implementing personalized marketing strategies that need to be overcome to reap maximum benefits.
To provide the best personalization, you need to know literally everything about your customers. However, privacy is one of the most important values today, making it increasingly difficult for brands to stay ethical.
First, you must not violate laws regarding data collection, processing and storage such as GDPR in Europe or CCPA in California. Secondly, you must be honest with your users about how you will use the information they provide to you and adhere to ethical data-gathering rules. For example, by introducing a feature that allows users to control data collection by apps, Apple has greatly enhanced its credibility and increased customer loyalty.
Without ensuring that personalization is implemented correctly, you won't succeed even if you employ the most advanced technological innovations. Here are three key mistakes marketers should avoid:
· Over-personalization (hyper-personalization). Put yourself in the shoes of the average user. You are likely to feel uncomfortable and suspicious that a brand knows too much about you. Try not to violate your customers' personal space to reduce churn.
· Irrelevant offers. If soft solutions are not working properly, customers may receive offers that are not relevant to their interests.
· Inconsistency across channels. You should provide an identical style of communication with potential and existing customers - and make the same offers - on the official website, social media other channels to avoid arousing suspicion or doubts.
Practice shows that if your personalized offers on the app do not match the promotions on the main website, sales can drop significantly.
Once you realize the importance of a personalized approach, you'll likely want to implement it into your business processes. Below, you'll find three important steps you can take to form your own personalized marketing strategy.
Every business is unique in its own way, so you must develop a personalization strategy tailored to it. Here are some important steps:
· Use website and social platform analytics tools and run surveys to understand your target audience's interests, preferences, and behaviours.
· Segment your audience based on different criteria to deliver more accurate offers.
· Automate personalization processes by using CRM systems, email marketing platforms, and AI-based tools.
Create personalization strategies tailored to your unique goals. For example, a personalization approach to increase engagement may be different from one aimed at reducing customer churn.
As mentioned above, over-personalization or a misconfigured suggestion-generation mechanism can backfire. To achieve meaningful success, your personalized marketing must be memorable and relevant. To do this, learn how to create emotionally relevant messages, try not to be intrusive, and avoid discontinuities in the experience - that is, stay consistent at every point of customer interaction.
It is unsustainable, to say the least, to invest money and time in implementing a personalization strategy without measuring the results you get. Track and analyze the following metrics to understand how effective your strategy is:
· Engagement rate, i.e., time spent on the site, ad clicks, email opens and other activities.
· Conversion rate - find out how a personalized approach affects the number of targeted actions taken by potential customers.
· Customer retention. How many customers have made a repeat purchase on your platform?
· Customer churn. Has the number of users leaving your platform decreased?
By providing relevant experiences and constantly measuring the effectiveness of your personalization strategy, you'll get closer to your audience and help your business stay competitive in even the most oversaturated niche.
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