Today’s consumers share more personal information than any other generation, and as a result, expect an equally personal shopping experience. As many studies have shown, including the recent Accenture Technology Vision 2016 report, consumers would be more inclined to use a retailer or service if it offers a personalized experience. And while an increase in customer loyalty is a clear reason for turning toward personalization, what are some other benefits?
For the consumer, personalization often means customized shopping experiences that foster a relationship with the business, and it’s easy to discern its value. Whether it be going to a retailer’s website or mobile application and seeing a personalized interface or receiving recommendations based on past purchases, consumers want convenience, a feeling of empowerment, and both time and money savings. But the value may not always be as obvious to the business selling the product. To keep you from guessing, here are the top four benefits, and therefore, the top four reasons, to jump on the personalization bandwagon:
As we mentioned above, personalization results in increased customer loyalty. Demonstrating that you understand a customer’s preferences will result in the customer returning to you for additional purchases. At the same time, they will be more likely to share their appreciation online via social media or by word of mouth, and also share more information in the future, giving you deeper consumer insight.
You might be surprised to learn that personalization is more profitable to your bottom line than lead and demand generation. How come? Customers who receive personalized services are typically more loyal than those who do not. In fact, a recent McKinsey survey found that a 5% reduction in customer defection rate can increase profits by 25% to 80%. In the same vein, consumers are much more receptive to advertising that has personalized content. In fact, a recent survey by Adlucent, a digital advertising and analytics agency, found that 46% of consumers believe personalized ads reduce irrelevant content and 25% said it helps them discover new products.
Personalization is the first step to Pervasive Commerce where every interaction with a consumer in the physical world or online is an opportunity to buy or sell products and services. In just a few years, product offerings will be customized for a particular person, instance, and time. Nobody will see an irrelevant ad ever again, saving precious advertising dollars and giving consumers a better experience at the same time.
At TechCrunch Disrupt SF 2016, a new ecommerce recommendation engine called Brenify was launched. Their algorithm provide recommendations based on not only past purchases but also the user’s social media activity and browsing behavior on the retailer’s site. This is an indication of the direction that personalization is heading in.
Personalization eliminates repetitive tasks and can help you more easily recognize habits, such as how frequently a customer purchases a specific product. As a result, you decrease the amount of time spent on repeating tasks such as sending irrelevant promotion emails to customers. Also, think about how you can harness the data you collect to better plan future product offerings and go-to-market processes. Getting deep insights into consumer behavior is an invaluable asset for your success in every way.
So what do you need in order to reap the benefits of creating personalized experiences for your customers? Retailers and brands today face unprecedented challenges when it comes to personalization, including retaining customers in an increasingly digital world. More social networks, mobile devices, and online communities may result in more customer touch points, but it also results in a lot more data that can be confusing, unstructured, and difficult to draw insights from.
The important thing to remember is that technology has already enabled us to provide a more personalized experience, and it’s only going to get better. Big data and machine learning will make personalization a whole lot easier over the next few years. Just be sure to be mindful of data privacy concerns. Combining product information with consumer shopping and behavior insights will lead to a truly personalized experience, but it’s still important to understand whether the consumer is sharing that information willingly. To bolster their trust and confidence, ensure you will protect their data like it’s your own, and soon you’ll be on your way to delivering the right product offer to the right person, at the right time, and through the right channel.
Also published on Medium.