Attention has become a precious commodity amid the digital deluge that we live in. With a plethora of options and information bombarding consumers, businesses are struggling to stand out. But in the fight for engagement, personalization has emerged as a superpower. It can create lasting customer connections.
It's more than a term. It's a game-changer.
At its core, personalization involves customizing marketing messages and product offerings to meet the preferences, behaviors and needs of customers. This approach not only enhances the customer experience but also significantly improves business performance.
According to a report by McKinsey titled, "The future of personalization—and how to get ready for it" personalized marketing has proved to reduce customer acquisition costs by up to 50%, increase revenues by 5% to 15%, and boost marketing return on investment (ROI) by 10% to 30%.
An interesting finding from Epsilon's study reveals that when brands offer personalized experiences, 80% of customers are more inclined to make a purchase.
These statistics highlight the impact of personalization on the success of businesses in this era. Personalization in marketing is certainly not a passing trend but an essential aspect, for businesses aiming to reduce customer acquisition costs while simultaneously increasing revenues and improving marketing ROI.
Decoding personalization: Beyond just segmentation
Going beyond segmentation, personalization is the art of tailoring content, products, and experiences to suit individual user preferences and behaviors. Unlike segmentation which categorizes customers based on criteria, personalization focuses on providing tailored experiences for everyone in real time.
Let’s imagine two shoppers who are both in their 40s and have an interest in travel. Segmentation would likely categorize them similarly based on these factors. However through personalization we can identify their travel preferences, shopping habits and preferred communication channels. This allows brands to customize product recommendations, content delivery methods, and exclusive offers according to their needs.
In its essence, personalization is all about delivering customized content to individual users, based on their characteristics, preferences, and behaviors.
The power of personalization
The true power of personalization lies in its ability to enhance the customer experience while driving continuous business results.
As per an article by McKinsey titled, “What Is Personalization?”, some interesting facts surfaced
- Personalized marketing has proven to be a game changer reducing customer acquisition costs by up to 50% and boosting revenues by 5 to 15% resulting in a 10 to 30% increase in marketing ROI.
- 71% of consumers expect personalized experiences and when they don't get them, 76% feel frustrated.
- Personalized marketing accounts for 40% more revenue for businesses developing more quickly than their slower-growing peers.
- Building a data foundation and employing decision-making engines are crucial for segmenting and targeting customers effectively. This understanding should then be seamlessly integrated across channels for a tailored experience.
Another article by McKinsey on “The future of personalization and how to get ready for it” sheds light on the digitization of physical spaces as an untapped frontier for customization.
Retail giants like Macy's and Sephora have embraced GPS technology along with their apps to offer in-app promotions when customers are near their stores.
Retail giants like Macy's and Sephora have embraced GPS technology along with their apps to offer in-app promotions when customers are near their stores.
This innovative approach fuses digital experiences together taking personalization beyond online interactions. By providing customers with shopping experiences that captivate them on both fronts these brands have successfully increased levels and boosted sales.
Another thought-provoking article by Ninetailed reveals how AI will reshape personalization by the year 2024. The article explores the rising trend of AI-powered personalization, where, companies will start utilizing AI and ML to offer customized experiences. This trend will go beyond product recommendations.
Beyond 2023, companies will expand their utilization of AI for personalization, which is vital for maintaining a competitive edge in the market.
Challenges in implementing personalization.
However, implementing personalization comes with its share of challenges.
Data Silos - Many organizations struggle with integrating data from sources leading to difficulties in achieving effective personalization. For personalization data must flow smoothly across departments and systems.
Privacy Concerns - Striking the balance between personalization and consumer privacy rights poses a challenge as data breaches and privacy regulations continue to make headlines. Businesses need to prioritize personalized experiences while respecting user privacy.
Resource Constraints - Finding professionals, to handle data analytics and AI has always been challenging. Personalization requires a team to handle data analytics, AI technologies, and marketing, especially in 2024. Attracting and retaining individuals will remain a big challenge for the industry.
Bringing Technology Together - Incorporating personalization often requires bringing together technologies, which can be intricate and expensive.
The future is personal.
The data clearly shows that customers value and appreciate personalized experiences, which ultimately leads to their loyalty and increased purchases. As professionals, as business owners and as e-commerce enthusiasts, it is essential for us to embrace personalization in order to remain competitive and stay relevant.
Are you prepared to embark on the path of personalization? Connect with our Personalization expert today.
About Coforge
Coforge is a global digital services and solutions provider, that leverages emerging technologies and deep domain expertise to deliver real-world business impact for its clients. A focus on very select industries, a detailed understanding of the underlying processes of those industries and partnerships with leading platforms provides us a distinct perspective. Coforge leads with its product engineering approach and leverages Cloud, Data, Integration and Automation technologies to transform client businesses into intelligent, high-growth enterprises. Coforge’s proprietary platforms power critical business processes across its core verticals. The firm has a presence in 21 countries with 26 delivery centers across nine countries.
Learn more at www.coforge.com
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