Personalization

What is personalization?

Personalization is the process of creating a unique digital experience for each individual user based on existing customer data and real-time behavior.

Some examples of personalization include:

• Product recommendations: Customers are shown relevant products on an ecommerce site based on similar customer behavior and purchase history

• Content recommendations: Websites surface related and relevant content to users on web sites and mobile apps based on content they’ve interacted with.

• Omnichannel consistency: Successful personalization will yield symmetric experiences and messaging across all devices, social media channels, and any other touchpoints.

• Personalized marketing: Brands will use data that has either been collected or analyzed in real time to create a dynamic experience unique to the individual user. Instead of targeting an activity to a broad demographic, it is instead tailored to what is known about each specific individual user. Immediate surfacing of relevant content to web/app visitors increases user engagement, leading to less drop-off. 

Overall, it lifts all performance metrics through higher conversions, clicks, and lower drop-offs.

Why is personalization important?

Looking at lessons learned from 127,000 experiments, personalization generates a 41% higher impact compared to general experiences.

Instead of targeting an activity to a broad demographic, personalization instead caters to what is known about each specific individual user. Immediate surfacing of relevant content to web/app visitors increases user engagement, leading to less drop-off. 

According to Gartner Research, organizations using personalized messaging see 16% more impact on commercial outcomes.

Here are more reasons why personalization matters: 

1. Customers expect it 

   In today’s world, personalization is a norm, not an exception. In fact, over 75% of consumers are more likely to consider buying products from brands that deliver a personalized experience. In that same survey, respondents noted that not only do they expect a personalized experience, they become frustrated when they don’t get one.

   Consider your individual needs as a consumer. When you log into Amazon, you probably expect to see relevant product recommendations based on what you already purchased or what people similar to you purchased. When you log into Netflix, you see a list of recommended movies and TV shows. When you open your email, you see pitches tailored to your specific needs.

   These are all personalized experiences that make your shopping or viewing that much easier. According to a RedPoint Global survey, 63% of consumers say that personalization is the standard of service today.

   If you don’t offer a personalized experience, customers will shift their loyalty to a competitor that does. Improved understanding of the customer leads to proper segmentation, yielding better personalization and subsequently higher customer satisfaction. 

2. It provides a better customer experience 

   Personalization immerses the customers in an experience and makes them feel more comfortable with what is being offered. Surfacing the right content to customers results in improved customer satisfaction. That drives customer engagement, conversions and sales, and long-term customer loyalty.

   Customers don’t want an experience that feels generic. They want retailers and ecommerce websites to provide them with an experience tailored to their personal needs. They want to feel as if they have your sole attention, not as if they’re just part of a mass mailing or visiting some website designed from a standard template. The more special you can make your customers feel, the more likely they’ll buy from you today and in the future.

3. Your competitors offer it 

   If you want customers to purchase what you offer, you must offer a customer journey that surpasses what they get elsewhere. And, don’t deceive yourself – your competitors are working hard to provide personalized experiences of their own.

   An Accenture survey found that almost half (48%) of all consumers have abandoned a company’s website and made a purchase elsewhere because they had a poor experience on the site. What you offer, in terms of both product and marketing, must meet or exceed that offered by your competition.

   The better you can personalize the customer experience, the more likely it is that you’ll attract and retain the customers you target.

    

4. It’s good for business 

   Personalization leads to better business outcomes, from customer retention to improved conversion rates. Focusing on the customers’ needs and experiences is smart marketing and will put you ahead of competitors offering a more generic experience.

   The reality is that customers are more likely to purchase from companies that they know and trust. You can establish that relationship by leveraging what you know about your customers and using that to provide uniquely personalized experiences.

   For example, right now, marketing campaigns are focused on email marketing and building email lists where readers feel part of the community. This way they’re likely to buy from someone’s personalized emails whose content they regularly read on their email.

   Every digital experience should focus on taking a visitor to the buying moment. 

Personalization vs. customization

Personalization is similar to but subtly different from customization. While both approaches focus on tailoring experiences according to consumers’ interests, they initiate from different places.

Personalization is initiated by a company for the consumer. Customization is initiated by the consumer for their own benefit.

As an example, a website that tracks the user’s past visits and displays new content based on those visits is practicing personalization. A website that enables users to select specific content or background colors enables customization by the user.

In short, companies personalize experiences for customers. Consumers customize their experiences for themselves.

The four pillars of personalization

In marketing and product experimentation , personalization is a strategy for offering highly individual experiences based on each consumer’s known characteristics. It involves analyzing consumer behavior and then using this information to design made-to-order experiences that more fully engage the customer.

There are four essential pillars of the personalization process: 

Source: Optimizely

1. Planning: Personalization requires careful coordination between multiple different departments across an organization. Before doing anything, you’ll need to ensure you have a shared workspace that allows for collaboration and effective communication between teams.
2. Creating: Once you have your planning strategy in place, you can incorporate your data infrastructure and customer profiles to guide the personalization workflow process. From behind the scenes, you can use different techniques to create personalized experiences from individual customer data. You can leverage either rule-based personalization or AI personalization (more on those below).
3. Delivering: This is what is actually surfaced and brought to the customers. This could be product and content recommendations, banners, pop-ups, deals, adjusted pricing, custom user experiences, localization, or any other type of variable that is relevant to business outcomes.
4. Analyzing: Measuring the success of your personalization requires an integrated data platform and a system for testing, experimenting, and iteration.

Each of these pillars represents an important step in the process of personalization. Each pillar builds on the previous activity and leads to the next stage, culminating in the dynamic content that creates a personalized consumer experience.

What are the types of personalization?

While personalization implementation can take on many forms, there are two main types of personalization:

1. Rule-based personalization: Rule-based personalization involves using predefined criteria, like demographics or past behavior, to tailor content or experiences for users. It relies on set rules or conditions to determine what each user sees or experiences.

2. Machine learning driven personalization: Machine learning-driven personalization uses algorithms and data analysis to dynamically adapt content or experiences based on real-time user behavior. It continuously learns from user interactions to refine and optimize the personalized experience.

By offering a personalized experience, you can hope to more personally connect to your customers – and increase customer loyalty.

What are the challenges of personalization?

When Optimizely conducted a survey of top executives in the marketing industry worldwide, here’s where the respondents noted the biggest challenge areas were when it came to ramping up their personalization efforts:  

• 44% say complicated or fragmented data is a top challenge

• 43% say a lack of effective analytics holds them up

• 40% say they have difficulty scaling their program

• 39% say they struggle to implement the program in real time

• 36% say disjointed workflows are holding them back

When companies decide to invest in personalization, they need to ensure they have a solid personalization strategy in place. Here some of the most common challenges

• Defining personalization: In the aforementioned Optimizely study only 26% of marketing, ecommerce, and IT executives executives reported having a unified definition of personalization throughout their organization. 

• Scale In order to provide a personalized experience that leverages content and product recommendations, you need a large library of content and inventory of products to pull from.

• Data privacy and management: Users are more wary than ever of brands exploiting their data for nefarious reasons. Although 78% of consumers cite they are likely to engage with a personalized offer tailored to their interests, 77% of consumers also cited that data privacy policies are important to maintaining brand loyalty.

AI in personalization

Yes, everyone’s talking about AI. But, simply adding AI to your existing customer experience isn't the solution. Here's how to incorporate AI into your personalization program by taking the right steps:

Start slow. Start small: Gradually introduce tailored content based on your customer's actions to avoid overwhelming them with too much at once.

Test everything: Continuously test AI-enhanced personalization strategies and collect feedback, then make adjustments based on how your customers respond.

Add a human touch: While the recommendations may be algorithmically generated, ensuring that there's a human factor in interactions can make the experience more personal.

AtOptimizely, we help brands take this journey through marketing automation. Alaska Airlines registeredan 18% increase in loyalty program signups using Stats Accelerator.

Ready to offer your customers a personalized experience

To grow your business, you need to offer a truly compelling personalized customer experience.

Optimizely One builds on real-time user data and insights to provide personalized content, campaigns, products, and website layouts. You can take the guesswork out of personalization for your customer base and provide lifetime value for different customer segments.

To make it easier for you, we have Opal. The AI assistant is there for you through every step of the personalization lifecycle.