Back in 1993, the concept of ‘personalisation’ was hailed as ‘The One to One Future’. Indeed, Adobe still defines a personalised customer experience as a 'specific, tailored experience to each customer through messaging, offers, recommendations and more'.
But personalisation has gone far beyond a mere ‘tailored experience’. With personalisation at scale, organisations are now seeing huge business benefits that translate directly into increased revenues and faster growth. In fact, according to McKinsey research carried out just this year, personalisation can not only increase marketing ROI by 10 to 30%, but it can also see overall revenues lift by 5 to 15%. What’s more, organisations fully embracing the power of personalisation are able to reduce their customer acquisition costs by as much as 50%. And if that wasn’t enough, McKinsey also reports that companies with faster growth rates derive 40% more of their revenue from personalisation than their slower-growing counterparts.
Why is personalisation so important?
So how exactly does personalisation contribute to such impressive revenue and growth numbers? There are a number of strands to the personalisation phenomenon that it’s worth unpacking!
Companies and digital teams engaging in personalised customer experiences know the benefits are five-fold for their brands:
Enhanced customer engagement leads to better customer retention
Delivering personalised experiences fundamentally engages customers on a deeper level. When customers feel that a company understands their preferences and needs, they are more likely to continue interacting with that brand and remain loyal.
Improved customer trust
Done the right way, with proper privacy and data protection policies in place, personalisation can actually improve customer trust. This is because brands that handle personal data responsibly and transparently demonstrate a commitment to customer service that helps to improve the brand’s reputation.
Data-driven insights
The bedrock of personalisation is robust data collection and analysis, which provides valuable insights into customer behaviours and preferences. Adopting this approach helps businesses overall as they’re more able to use data and data-driven intelligence to inform product development, customer success strategies, and even overall business decisions.
Competitive advantage
Despite the popularity and obvious benefits of personalisation, not all brands do it. So companies that can crack it and offer customers a truly personalised experience will stand out.
Increased sales and revenue
It’s not difficult to track the chain of personalisation efforts back to increased sales and revenue. Just take this stat from Bluecore: Personalised emails resulted in a 139% increase in click rate compared with static, one-time sends. Then consider this stat from Econsultancy: 80% of companies report seeing an uplift in revenue since implementing personalisation. It’s clear that a personalised customer experience increases engagement and therefore sales!
Consumers are 2.1x more likely to view personalised offers as important versus unimportant (Salesforce).
Personalisation is obviously a key customer experience driver when it comes to brands that want to invest in improved customer engagement. A recent Twilio report backs this up: despite economic uncertainty, 69% of businesses are increasing their investment in personalisation.
But personalisation doesn’t just hold many benefits for your business. It’s a savvy move to actually help customers too!
Through data-driven insights and a more personalised customer experience, consumers receive:
More tailored offers and messaging.
Dynamic content is displayed to them according to their previous purchases and behaviours.
Digital products that actually address their preferences and needs.
Enhanced E-Commerce and shopping experiences.
Greater focus on data and privacy.
Convenience and time savings.
Unified cross-channel experiences.
More than 60% of customers want relevant product/service recommendations and messaging tailored to their needs (McKinsey).
And for those brands still on the fence, just consider this – consumers now expect personalisation! In fact, according to Zendesk, “76% [of survey respondents] expect personalised experiences, which could include (but is not limited to) engagement over their preferred contact method, account type or status, and product recommendations based on purchase and search history.”
Brands can no longer afford to ignore personalisation – if they do, it’s a sure-fire way to disengage and even frustrate your customer!
What are some examples of personalisation for customer engagement?
Sephora
Beauty brand Sephora leads the way when it comes to the full, omni-channel personalisation experience. In the first instance, shoppers can use a mobile app to book in-store makeovers and fashion consultations. The app then logs each product that’s used in the makeover, which is then used by the brand to send personalised recommendations back to the customer.
Sephora also cleverly use the app as a gateway to their loyalty program, offering members perks and exclusive offers. In fact, 80% of Sephora’s total transactions are from ‘members’ of the loyalty program and app, something that enables Sephora to consistently top the rankings for internet retail personalisation.
Peloton
Another brand that has mastered the art of personalisation via digital product interaction is Peloton. Specifically, the Peloton User Interface (UI) leverages the collation of user metric data to guide riders through classes of varying levels of difficulty. It then creates personalised ‘power zones’ focused on achieving specific output levels unique to each customer. This use of personalisation has put Peloton at the forefront of the digital fitness category, with a combination of hardware, software and personalised content.
Very
Very, a UK-based fashion website, is another brand that has captured the power of personalisation. The leading online retailer uses weather personalisation to recommend clothing to customers visiting the site. Based on a user’s location, Very highlights clothing items that match the local climate, such as recommending swimwear during the warm months and highlighting raincoats in an area experiencing rain.
Are there different types of personalisation?
It will come as no surprise that personalisation no longer comes in just one size! Over the years, brands and software companies have developed very different approaches to personalisation – so depending on your business type and customer base, there’s sure to be an approach to fit your brand!
The team at FT Strategies break down personalisation into 3 main types based on your brand’s maturity:
Active personalisation – when ‘users provide input that results in a personalised experience.’ For example, in return for sharing your location via an app, you’ll receive the local weather forecast.
Passive personalisation – requires no customer input, with the personalised experience being based on behavioural inferences.
Advanced personalisation, or hyper-personalisation – is based on rapid and finely-tuned content being delivered to the customer based solely on their interactions with the app or digital product.
Whether it’s Active, Passive, or Advanced personalisation that your brand is looking to engage in, there are a number of different approaches you can take. Here are the main ones:
Content personalisation
Perhaps the most common form of personalisation, which involves tailoring content to an individual’s interests, preferences and behaviours.
Product personalisation
With this approach, brands are able to offer customised or configurable products based on a customer’s preferences. For example, specific features, colours or sizes of a digital app display.
Recommendation personalisation
This is when brands typically use algorithms to suggest products, services or content based on a customer’s past behaviour. Think Netflix or Amazon!
Behavioural personalisation
Very often done in real-time, this approach involves tailoring the customer experience based on in-app behaviour, such as how a customer navigates a website, the pages they visit and the actions they take.
Geolocation personalisation
Like the very example above, this approach uses a customer’s physical location to offer personalised experiences.
Time-based personalisation
This form of personalisation takes into account the time of day, week or season, to deliver content and promotions that are relevant to that specific moment. Think Christmas-based offers or summer promotions.
Customer ‘tier’ personalisation, e.g. loyalty program member
As with the Sephora example we outlined before, this type of personalisation is based on the tier that a customer falls into within your brand’s loyalty program. This drives further personalisation of offers, rewards, discounts and incentives.
Segment-based personalisation
Marketers know the value of segmentation all too well – and it can also be used to personalise offers or content to a specific group within your customer database.
AI-powered personalisation
We couldn’t cover an article on personalisation without mentioning artificial intelligence (AI)! When looking to apply personalisation at scale, AI is the first port of call for many global brands nowadays.
Whether you’re just getting started with personalisation or are looking to take things to the next level for your brand, you’ll also want to consider the different channels that can be leveraged to personalise your offers, content and experiences. The ultimate goal is, of course, that seamless omni-channel experience, but at a channel level, here are the main ones to take into account:
Advertising
Social media
Email
Chat
SMS / Text
What are the best practices for adopting and implementing personalisation?
There are a number of key steps you’ll want to cover when getting started with personalisation. Many of these hark back to digital strategy fundamentals – get these right and you can’t go wrong with your personalisation efforts!
Start with the customer – as with so many digital initiatives, start by identifying who your customers are, what they want and what their journey is.
Get your data sorted – personalisation is built on data so it’s crucially important that you establish if you have the right data (and data foundations) available.
Organise your resources – personalisation is a cross-functional effort, so it’s critical that you put in place the right team, processes and tech stack to deliver on it.
Start small and test – as with so many digital projects nowadays, it’s best to start with a small pilot project and scale from there.
Collect feedback – as you test, make sure you’re also gathering feedback, measuring key KPIs and optimising them continually.
Scale and expand – as you optimise, you’ll naturally start scaling your efforts as your team grows in confidence and your customers start reaping the rewards.
In terms of best practices, here are some of the top ones we’ve seen work best for leading Enterprise brands:
Provide relevant content – this may sound obvious but as your personalisation efforts scale, you may quickly lose sight of the original goals. Always check back that what you’re delivering to your customers is relevant.
Ensure robust data capture, processing and security – your personalisation initiatives will live or die by this! Read more on this from experts Zendesk.
Allow customers to self-personalise – a clever way of running your feedback process is by allowing customers to self-personalise. This way, you can gather richer insights to drive even more personalised experiences.
Avoid being ‘creepy’ – it’s a fine balance with personalisation so avoid overstepping that mark!
Deliver an omni-channel experience – the ultimate goal with personalisation is to make sure you’re doing it across all your customer experience and marketing channels. Start small but aim big!
If you’re looking to get started with personalisation or are interested in stepping up your personalisation game with more best practices and expert advice, then get in touch with the Adrenalin team.
And if you’d like to learn more about how to develop customer-centric digital products and apps, then be sure to subscribe to our monthly newsletter.
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