By Helle Vad Jespersen
Reading Time: 7 minutes
As 2019 has come to an end, it is the perfect time to look at 2020 and what it has in store regarding personalization and especially why it is even more important than ever before.
Companies are realizing that personalization needs to be a key element in their marketing strategy if they want to improve their customer experience and stand out among their competitors.
But these are just two of the many reasons why personalization will become even more important.
Keep reading if you want to know why personalization is unavoidable in 2020.
The demands and expectations of customers have increased, nowadays every customer expects personalized content. The customers are used to personalized content, so if they enter a website that has no personalization, they will immediately notice the difference in the customer experience quality.
A study done by Acquia shows that consumers do have high expectations toward brands.
Some key numbers from their study show that 90% of the respondents answer that, when they engage with a brand online, they expect a convenient experience. Likewise, 60% of the surveyed consumers think that brands do a poor job using personal preferences to predict their needs.
Personalization will help companies live up to both these demands and expectations from the customers.
Improve the customer experience
Great customer experience make the customers come back and purchase from the same websites again. As all marketers know, it is much cheaper to keep an existing customer than it is to acquire a new one.
What is customer experience?
Customer experience is the customers’ perception of how your company treats them in every touchpoint and during the process of going from user to customer.
Statistics from Acquia’s study show some of the expectations from customers. If you want to deliver a great customer experience, you should fulfill these expectations.
Personalization improves the customer experience because users get the feeling that the website is tailored towards them since the products they see, are based on factors such as their previous behavior.
Customers tend to base their loyalty less on price or product. Instead, customers stay loyal to companies that give them a great customer experience.
According to a study from PwC, 73% say that customer experience is an important factor in their purchasing decisions, and 43% would pay more for greater convenience during their shopping experience.
Best of breed is superior
Specialists within their niche will continue to prove that when you fully dedicate your time to one area, the results will reflect that.
Best of Suites that offer personalization as a part of their features, rarely have the same expertise as a Best of Breed provider with personalization as its niche.
Freedom of choice is the key when choosing a Best of Breed approach. You have the freedom to put together the best tech stack for your business. A Best of Suite approach does not allow you the same freedom, because the tech stack is already chosen for you.
Therefore, you have to ask yourself, why should you choose an approach that is not specialized in any area.
Is it worth choosing a best of suite approach for the convenience of having everything gathered in one place, if this means sacrificing the results?
Read more: Best of Breed vs. Best of Suite
Basic won’t make a difference
The time where basic personalization made a difference is gone. Personalization that relies on generic personal information such as users’ first name, gender, age, and location, cannot be used to affect marketing activities in any way that will improve revenue significantly.
Can basic personalization help improve smaller metrics?
Yes, and basic personalization has its place, but it should never be the only thing you do.
Generic personalization tactics are overused, so when you use them, it won’t make a difference or make you stand out anymore.
Attention spans are getting shorter, which means that you need to catch the user’s attention from the first second.
A subscriber’s first name in the subject line of an email will increase your opening rates. However, if the content of the email is not personalized or relevant, it won’t make a difference, since subscribers will not click through to your website based on generic content.
If you want to use personalization that makes a difference, you need to start integrating artificial intelligence, machine learning, and data mining.
If you do this, you go from basic personalization to hyper-personalization, where recommendations are based on real-time and behavioral data.
Segmentation is not 1:1
It is time to stop generalizing, which often is the case when creating segments that are groups consisting of similar people.
Hyper-personalization aims to tailor products and content to the individual, not on a group level. Members of a segment might have many similar characteristics, but in spite of the similar characteristic, no one is the same.
Segments can be useful to gather insights about a larger group of users. However, this will be generalized insights, which will not have the same impact as personalization. Here each individual will be able to receive individual and tailored recommendations.
Behavioral data is way more precise, and it will allow you to get closer to one-to-one communication, which should be the goal of your marketing efforts. Each user will have an induvial customer experience tailored to their specific behavior, which will improve conversions and revenue.
The art of transforming customer data into the right recommendations is crucial to increasing marketing efficiency and being competitive. Personalization aims to utilize customer data to modify the customer experience, which only is possible if the recommendations that the users see are accurate and relevant.
The process is to collect customer data such as behavioral data and generate modules with algorithm nodes, that solve complex data processing tasks such as finding the right recommendation for each user.
How do you create the most accurate and precise recommendations?
When you use artificial intelligence (AI) and machine learning, you start to work with processes that can predict things that humans simply cannot do at the same level as machines.
AI is not new; the base of AI is that a computer does something that a human would normally do.
But AI has become better at figuring out the right match for customers, at a large scale, than we humans are.
Today companies have so much data that no human being can process it all and find the most important learnings, recognize learnings, and develop conclusions.
Machine learning is a form of AI that makes systems automatically learn and improve from previous customer data. Machines need data to manipulate and learn from to process the data and deliver the best possible recommendations.
When you include the machine learning part in AI, you can make the most accurate recommendations, which will increase revenue and conversions.
Google comments on the importance of machine learning “Machine learning can help you understand and predict intent in ways that simply aren’t possible manually”.
Personalization is the new loyalty
A lot of focus lies within attracting new customers, which there is nothing wrong with since you need to grow your customer base.
However, and you have probably heard this before, acquiring a new customer is way more expensive than keeping one. At cost five times as much to attract a new customer, than to keep an existing one.
It is also getting more and more expensive to acquire new customers since the prices for clicks are increasing – which only makes loyalty more important.
Therefore, there is a huge potential in getting your current customers to stay longer and return to your site, but what increases loyalty? As previously mentioned, the answer is great customer experiences.
The before mentioned study, from Acquia, shows that 80% of the surveyed users said that they would be more loyal to brands that show they understand their customers and what they are looking for.
As mentioned earlier, personalization increases the customer experience because users see highly relevant content and products that give them the feeling that websites are tailored towards the individual.
This is the one-to-one communication you should aim for.
Increasing customer retention by just 5% can increase profit by 25% to 95%.
Loyalty is increasingly becoming more and more important if you want to stay relevant and fight big competitors such as Amazon, Wish, Alibaba, Zalando, and eBay.
Previously in this article, we mentioned that customers are no longer loyal to price, but more so to companies that give them a great customer experience.
The big competitors are here to stay, and they will continue to grow every day, and that means you must adapt to this competition. One way you can do that is by implementing personalization into your strategy and increase your customer loyalty.
The number of touchpoints has increased
Before completing a purchase, the number of different touchpoints a user interacts with has increased. No customer journeys are the same, so forget about the one-size-fits-all approach and start thinking about the one-to-one approach.
Each interaction with your brand’s touchpoints needs to be accounted for and used. Otherwise, it will be impossible to deliver a customer experience that is truly personalized and omnichannel.
During the interaction with your touchpoints, the user is either a known or unknown user. It is not until the user gives their email permission, that you can connect the different interactions with the specific user.
Google looked at thousands of users’ data and concluded that even within the same category, customer journeys are very different.
One of Google’s key takeaways is, “People respond to a brand that understands their needs. So, it’s important to optimize your media for relevance to the consumer and lifetime value for the brand.”
To optimize your communication for relevance and lifetime value, each of your touchpoints needs to contain an element of personalization.
If you can do this, your users will experience your communication as “one-to-one” – no matter the touchpoint they are in contact with.
For example, you are likely to benefit from the effects of great customer experience, if your users recognize personalized elements across your webshop, email, and in-store experience.
Likewise, it is important to know which touchpoints lead to a purchase and which touchpoints that have not assisted in the process. Did a conversion come from an interaction with an email or paid search, etc. – If you know this, you are able to determine which channels are the most important in your customer journey.
You need to stay relevant in each touchpoint, so you don’t lose your users before they have made a purchase.
Standing out is necessary
Customer data is one of the largest competitive advantages a company can possess, but it is very few businesses that succeed in using their advantage successfully.
You need to utilize your customer data as a foundation in your marketing activities. By doing this, you will be able to stand out with the most relevant products and content to the individual user.
Your competitors can never have the same customer data as you – unless you have the same customers, that interact with you in the same way – so use this data to gain an advantage.
Every touchpoint that contains personalization will give you an advantage compared to your competitors.
Combining the customer data that only you have, with predictive analytics, will enable you to reach users at the best time with the most relevant offer.
Impeccable timing and relevance constitute great customer experiences, and that is what makes users purchase from your website instead of your competitors’.
You can’t avoid personalization in 2020
You can’t avoid personalization in 2020, simply because your customers expect it!
The increasing demand from customers means that brands that do not offer a personalization user experience will not be able to compete with brands that use personalization in their strategy.
Basic personalization and segmentation are not enough to make you stand out, and they will not make any significant difference in your performance.
There is a steady increase in the number of channels that customers interact with before they buy something from you, which makes it harder for brands to stay relevant in each customer touchpoints.
Loyalty is crucial and will be even more valuable in the future. This is due to the increase in huge competitors such as Amazon, eBay, Wish, and Alibaba. These large players will most likely continue their growth in the coming years.
The future of personalization is predictive, with AI and machine learning as key factors. Algorithms can scale personalized offers more effectively and cheaper than humans ever could.