Why Customers Are Hooked on Personalized Experiences
Machine learning, data analytics, and artificial intelligence are making it possible to create those personalized experiences that customers so desire. But for it to really work, first you have to understand why.
Have you ever felt that warm glow because the neighbor’s cat will only sit on your lap despite others’ offers of treat? Or felt special because your sister’s baby can’t sleep without the fluffy hippopotamus you gifted? They’re only little details in life, but they mean a lot to us. To our sense of self and self-worth.
People crave personalized experiences, with people and animals, as well as with software and content. We want to have that little light lit in us. The one that makes us feel connected, relevant, heard, like we count.
It’s the difference between receiving a gift basket from Body Shop with a random assortment of bubble bath (when you only have a shower), and getting a rare signed first edition copy of your favorite book. Only someone who really cares could have given you that. Only someone with insight, who listened, who remembered, who took the time to make sure you got the kind of gift they feel you deserve. Because you’re special.
The gift itself becomes almost irrelevant in comparison to the warm fuzzies the thought behind it brings. So, the warm fuzzies (technical term) are among the reasons why customers love personalization—it makes them feel special. But what else?
According to a study from the University of Texas, information overload is one of the key reasons we respond so well to personalized content. It helps us cope with too much information—or at least our perception of it.
The market is, truth be told, overflowing with minor variations on a million themes, turning a quick search for a rucksack into a confusing and potentially frustrating journey through hundreds of almost identical options.
But our brains are simply not equipped to deal with the thousands of miniscule decisions we ask of them every day. In fact, according to the 2018 Accenture Interactive Personalization Pulse, 45% of potential customers have left a website because the information or number of choices presented to them was overwhelming.
A company that knows about its customers can be selective in what it presents to them, tailoring its suggestions of products specifically to their preferences and interests. Instead of listing their full catalogue of 350 bags—250 of which are completely unsuitable for this customer—they can be presenting the 25 bags they know will be of most interest.
With a data-informed personalized shortlist your customer feels like they are in a manageable framework for engagement. And by respecting their time, you show you care.
Everyone brings up retail behemoth Amazon here, because they do this excellently for 12 million products and 300 million users! And net sales of nearly $233 billion in 2018 prove it works. Maybe that’s why 47% of consumers will go to Amazon if a brand they’re shopping with doesn’t provide relevant product suggestions.
The Give and Take of Control
As with all things, there is a fine line between thoughtful and controlling.
Humans have a basic need for control. And by offering our customer a choice, in the form of a personalized shortlist, we’re giving it to them. On two levels:
- a customer presented with personalized content gets a sense of control from the fact that their content has been specifically chosen for them.
- they get to pick from your shortlist, controlling the outcome.
Though as close to an illusion of control as you can get, it still carries power. Feeling that we are in control can have a positive effect on our psyche, making us feel like we have control over our life outcomes, which tends to lead to a healthier physiology and greater success. The big irony is that for you to make the customer feel they are in control, they have to give some of it up: their data.
Companies that are transparent about the data they collect (and make it clear and easy for customers to opt out of sharing this information) create a sense of trust in the relationship and control for the customer. It’s not necessarily that they want to opt out…. They just like to know they can.
The Brain Science
We are naturally predisposed to engage with things we find interesting and relevant. You know when you’re at a party, listening to a step-by-step account of how the host made the hummus? And then you hear your name somewhere in the room? Like a switch, your attention shifts, your ears prick up.
Suddenly, you’re straining to hear a conversation a group at the other end of the room is having and wondering why they just burst out laughing… Your focus has shifted automatically to that which you consider more important or more relevant. It’s rather aptly called the “cocktail party effect”.
Your brain’s reticular activating system (RAS)—the information gateway that informs the brain what information is important and what isn’t—just instructed you to change focus. RAS-triggered selective attention (ignoring one bit of information to focus on another) means we all naturally realign our attention to that with which we connect and are interested in.
91% of consumers are more likely to shop with brands that provide relevant offers and recommendations, and 80% are more likely to purchase from them.
So, providing relevant content is not only helpful, but your customer is hardwired to pay more attention to it. By being more relevant, you can turn your competitors into hummus.
Harder Than It Looks
A common mistake is to assume you can predict future behavior purely on past behavior. True, we are creatures of habit. But we are complex, intelligent, and emotionally driven beings and our actions are constantly being influenced by a whole host of factors. Time of year, time of day, weather, news, events, change in circumstance, emotional state… the list goes on and on.
True personalization that resonates deep in the heart of the customer is that which applies psychological theory alongside analytics. Seeing how external factors might combine with the customer’s personality, expectations, and desires, are then added to real-time mindset and behavior on the site. It all plays a part in their decision to buy or not to buy. For that, my comrades, is the question. Only with this sophisticated approach to personalization can companies truly delight customers and drive sales.
Strategy for Success
Our reality is one where customer experience is about to overtake price and product as a key differentiator. Customer & User Experience Researcher, Liraz Margalit, says that humans are happiest when they feel recognized, valued as individuals, safe, and in control of their experiences.
“When companies get it right, personalization answers all of these basic human needs because it enables every customer to feel like they have their own 24/7 personal assistant who can be trusted to help them make the best possible decisions. Once customers have experienced this type of personalized assistance from a brand, they won’t settle for anything less.”
And it’s true: 80% of customers are more likely to purchase from brands that use personalization, 72% aren’t interested in marketing messages that aren’t customized, and 63% will stop buying from companies that provide poorly executed personalization.
Research by Adweek shows that personalization can cut acquisition costs by 50% and increase revenue by up to 15%, while improving marketing spend efficiency by up to 30%.
Delivering the personalized customer experience is no longer considered exceptional, but essential.
Technology that reacts with lightning speed to deliver consistent, relevant, and timely personalized content according to insightful and actionable customer data collected across all channels and devices is a must-have.
A DXP is a purpose-built all-in-one platform that brings intuitive content management, sophisticated e-commerce, and smart data-analysis tools that help you provide these unforgettable experiences. You can dig deep into your data to gain meaningful and actionable insights that help you deliver super-consistent, highly relevant, and deeply engaging personalized and life-stage-relevant content to your customers on all devices and channels.
It’s your next step. Take it.
By Yvette Hastings
Posted: Wednesday 13 November 2019