6 min read
The buying behavior of customers is changing, and so are their expectations of companies. Customers want to be understood and regarded as individuals. For companies, this means responding to their wishes and preferences and creating personalized experiences. In this blog article, we will explain how this works and why it is so important.
- What is personalization in marketing?
- Advantages of personalization
- Technical foundations
- Practical personalization examples
- Conclusion: Personalization is a must-have
What is personalization in marketing?
Personalization describes a data-driven approach that focuses on the needs of customers. The goal is to adapt content as precisely as possible to individual preferences and interests - and to do so at the right time via the right channel. This way, content and messages are perceived as up-to-date and context-related and contribute to a positive experience (also: customer experience).
To be able to do this, different data sources are used and analyzed and evaluated using algorithms.
Advantages of personalization
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According to a study by Accenture, 91% of consumers prefer to buy from companies that recognize their customers and offer them relevant offers and recommendations.
Personalization increases customer engagement
Consumers want to actively communicate with brands. They want their wishes, concerns and preferences to be heard and understood by companies. When implemented correctly, personalization offers numerous opportunities to address these expectations and communicate with customers on a personal level. Studies show that personalized content leads to higher engagement and increased conversions.
Strengthening customer loyalty
With personally relevant content, companies give their customers the feeling that they are being seen as individuals. This creates trust - the foundation of a long-term customer relationship. Additionally, customers are much more willing to share their own data if it provides them with a more personalized experience and more relevant information - this is true for B2B as well as B2C. 83% of customers are willing to share their data to enable a personalized experience. In return, however, companies should also be transparent about how they collect and use the data (Accenture).
Read how Nestlé Infant Nutrition provided personal journeys for parents with helpful messaging and ongoing support.
According to a study by Qubit and PWC, personalized marketing activities are up to three times more effective. Personalized marketing activities generate between 6% and 10% more revenue. Acquisition costs can be reduced by 50%. As a result, companies can optimize their marketing campaign budget while achieving better performance.
With personalized experiences, companies can differentiate themselves from their competitors. Even if the product range and prices are similar, customers shop where they feel understood and most comfortable. The product or service has long since ceased to be the sole basis for decision-making. Personalization therefore creates unique experiences. This not only optimizes the customer journey, but also significantly improves the performance and efficiency of marketing measures.
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In order to integrate personalization into marketing, companies need a comprehensive understanding of their own customers. This is gained by using various data sources and collecting information about buying behavior, preferences, website interactions, devices used, locations, etc. The collected data is then automatically processed by marketing systems. The collected data is automatically processed and analyzed via algorithms. Basically, the more (relevant) data is available, the more targeted the customer approach can be.
However, data collection and data analysis alone are not enough. The correct automation and integration of the data in various communication channels such as email, web store, app, etc. ultimately determine the success of the personalization strategy.
Incidentally, it is also important to maintain a balance between personalized and encroaching. According to Accenture's Pulse Check (PDF), customers love a personalized approach, but shy away from personalization that can be read as "intrusive."
Almost three out of four customers already had negative experiences with personalization. For companies, it is therefore important to pay attention to how even completely legally acquired data is used. A relevant product recommendation is one thing. But as the case of the Target supermarket chain shows, some information needs to be handled more sensitively. In this example, artificial intelligence based on the purchasing behavior of customers was used to make predictions about a potential pregnancy, which triggered marketing emails. This was not received very well by various customers and made it into the (negative) headlines (source: Forbes).
Practical personalization examples
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Emails can be individually tailored to the user and even personalized in terms of sending time - and frequency. Dynamic content can also be used to vary emails for different customer groups with different information. The same newsletter then displays plant tips for hobby gardeners and carving instructions for hobby builders.
Individual banners can be displayed based on past online usage behavior. This can be particularly useful for retargeting. If a user has read up on a product on various pages or has already seen an ad from your company, this user can be shown suitable ads or content based on your previous ad on other pages by tracking cookies.
If data from the purchase history or from other buyers is available, complementary or further similar products can be recommended. A well-known example of this is Amazon. In fact, customers react very positively to product recommendations if they have been purchased by similar customer profiles. Recommendation systems help customers in their decision-making and have a positive effect on the user experience - in most cases, this is accompanied by an increased willingness to buy.
Starbucks offers a good example that combines digital and analog experiences. The franchise company offers its customers a personalized shopping experience at the checkout. Through the rewards program and the mobile app, a lot of information is collected about coffee buying habits of each individual user. The in-store POS system (Point of Sale) is able to identify the customer via smartphone and communicate their preferred order. Based on previous order preferences, new products are also suggested to the customer. Recommendations are adjusted depending on the weather, holiday or day of the week, and where the customer is located.
Dynamic website content
In addition to dynamic email content, web pages can also be customized to suit specific customer characteristics and profiles, allowing them to see other information, CTAs, or images that are more specific to their interests. In online stores, product assortments can also be displayed individually so that - based on purchasing behavior - the product types and details that are more likely to appeal to customers are displayed first.
Chatbots, automated marketing and even direct customer contact stand and fall with the quality of the customer experience. While most people talk about chatbots when it comes to conversational marketing, it's really about engaging with customers in casual conversation, giving them feedback opportunities, and building a relationship as a result. This can be done through live chat, social media communication, but also through chatbots with predefined conversation paths. The latter in particular is likely to change enormously in the next few years with the development of natural language processing and machine learning, because the more interactions AI has with customers, the more it can learn from them and provide relevant interactions.
Conclusion: Personalization is a must-have
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Companies must approach customers more individually, because this is not just a nice-to-have but an expected standard of a positive customer experience. Because of the global market and the enormous amount of information that customers are exposed to every day, relationships are becoming increasingly important, even in the B2C sector. And relationships can only be built if people get to know each other. While marketing has never had a problem introducing customers to the company and its products and services, conversely, there has often been little emphasis on learning what makes customers tick and what they expect from a positive experience. In short, the dialog was often neglected on the marketing journey. You can read more about the "how" in our blog article on Customer Centricity.
What can seem overwhelming at first glance pays off: the performance and efficiency of marketing activities increase significantly. With the right strategy, personalization represents a profitable opportunity for companies in all industries and lays the foundation for long-term customer relationships.
Hyper personalization is the newest trend to create truly unique experience with a smart data use. Stream the presentation of our experts and find out how it works.