How companies personalize (without being a tech company)

The three characteristics on the basis of which can be personalized

What really matters to customers today is a personalized customer experience. Tech companies like Netflix are leading the way, but traditional companies shouldn’t let that scare them away. Every company has the opportunity to personalize and start where it is conceptually, communicatively and technically. Because at the core of personalization are three information characteristics.

What is personalization?

Remember when having your name in the subject line of an email or as a salutation was an almost revolutionary advance in personalized targeting?

Today’s customers are better informed than ever and no longer want off-the-shelf products or services. They are more likely to turn to brands that speak to them individually and that they feel listen to them, understand them and respond to their specific wants and needs.

To remain competitive in crowded and increasingly complex markets, companies need a much more robust and strategic approach that delivers personalized experiences to their customers and differentiates them from the competition.

“91% of consumers prefer to shop with brands they recognize, remember, and provide with relevant offers and recommendations.”
Accenture survey, 2018

Customers expect hyper-personalization!

According to a PWC survey, 86% of customers are willing to pay more for a better customer experience. In the digital world, this means offering customers the exact experiences that match their interests. Adapting entire pages to the user’s preferences and addressing them at the right time, in the right place, with exactly the right measures is no longer just a wish, but a reality today.

The new stage of evolution – called hyper-personalization – uses Artificial Intelligence (AI) and real-time data across multiple interaction channels (such as cell phones, laptops, or other wearable tech devices) to gather a wealth of information about their customers’ lifestyles, behaviors, and desires. (Multi-channel, Omni-channel or Personalization – What is it?)

AI makes customer approach more effective

Companies must align themselves to establish one-to-one communication (rather than one-to-many communication) with the customer. This is because each customer is an individual with specific needs and expectations of the products and services they buy.

This needs to happen automatically, and AI algorithms help play out tailored messages in real time for each customer and at the ideal time, resulting in more sales and higher ROI.

Tech companies like Amazon, Google, Spotify, and Netflix are leading the way: Each customer gets a different view of the content provided, which adapts to their interests and can help broaden their interests over time.

Personalization is a fundamental value proposition in Netflix’s case, and thus core to its business model. Every experience is personalized across many dimensions.

Good personalization requires a conceptual, communication and technical solution. But traditional companies should not be deterred by this.

At the core of personalization are three categories of information

Characteristics or data that can be used to perform personalization can be divided into the following three categories:

Personal interests, as indicated by past purchases, current shopping carts, products clicked on or viewed.

Technical information, such as the marketing channel through which the visitor arrived at the web store (Google search, for example), the type of device used (mobile device, tablet, desktop), its brand, the operating system or browser used, and their versions.

Contextual information, such as the month, day of the week, time of day, or the fact that the economy is currently in recession. In addition, third-party providers provide location information on IP addresses, which can be used to derive information such as local purchasing power or vacation times, as well as behavior on social networks, creditworthiness and more.

The more characteristics used, the more precise personalization can be achieved with sufficient amounts of customer data. From websites that are personalized based on simple customer segments to a truly individual user experience.

Companies should start as a first step by building a repository of data including data management, governance, access and use.  Starting with the data that is already there, the data treasure can gradually grow. As the data treasure grows, the algorithms can become more granular and better.

Today’s personalization options can range from simple to complex

In summary, every company has the opportunity to personalize and start where they are conceptually, communicatively and technically:

  • Personalization based on the context (for example, the location) of the visitor.
  • Personalization based on visitor behavior (for example, analysis of which content was previously viewed)
  • Personalization based on similar content, products and offers
  • Personalization based on known customer data (such as recent orders)
  • Personalization based on collaborative filtering of customers (for example, recommending products that similar customers have purchased)
Britta Daffner ist seit über einem Jahrzehnt in der Technologie- und Daten-Industrie zu Hause. Ihr Credo: Innovation und Digitalisierung von Unternehmen vorantreiben – durch Technologie und moderne Führung. Dafür befähigt sie als Practice Leader Data & Technology Transformation in IBM Firmen dabei, das volle Potential aus Daten zu nutzen und unterstützt als Coach Macher*innen, die in der Konzern- und Wirtschaftswelt etwas verändern wollen. 2021 erschien zudem ihr Buch „Die Disruptions-DNA“ (www.disruptionsdna.de), das dazu inspiriert, die Digitale Transformation aktiv mitzugestalten.

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