Raphael ThysKey takeaways
- Personalization matters more than ever, with COVID-19 and the surge in digital behaviors raising the bar. Three-quarters of consumers switched to a new store, product, or buying method during the pandemic.
- Seventy-one percent of consumers expect companies to deliver personalized interactions. And seventy-six percent get frustrated when this doesn’t happen.
- Personalization drives performance and better customer outcomes. Companies that grow faster drive 40 percent more of their revenue from personalization than their slower-growing counterparts.
Personalization is not only a crucial capability, it’s one that punches above its weight, no matter whether the company is a digital native, a brick-and-mortar player, or a behind-the-scenes producer or supplier.
Consumers don’t just want personalization, they demand it. With store and product loyalty more elusive, getting it right matters. Roughly 75 percent of consumers tried a new shopping behavior in the last 18 months, and more than 80 percent of those intend to continue with new behaviors.
Furthermore, our research found that companies that excel at personalization generate 40 percent more revenue from those activities than average players. Across US industries, shifting to top-quartile performance in personalization would generate over $1 trillion in value. Players who are leaders in personalization achieve outcomes by tailoring offerings and outreach to the right individual at the right moment with the right experiences.
These seven charts show how consumer attitudes around personalization are changing and what outperforming companies are doing to grow customer lifetime value at scale.
Here are the five things outperformers can do to accelerate personalization and create value:
- They lean into data and analytics to identify opportunities. Looking across the customer life cycle, leaders build a granular view of where there is the most value. They leverage customer segments and microsegments, and factor in behavioral, transactional, and engagement trends. They use those insights to define and quantify their personalization objectives and ground their efforts in customer-centric key performance indicators (KPIs).
- They invest in rapid activation capabilities powered by advanced analytics. Leaders develop at-scale content creation and AI-driven decisioning capabilities so they can respond to customer signals in real-time. They leverage predictive analytics and models to determine what content and messages to serve which customers (for example, propensity models, or predictive next-best-action algorithms). They also establish robust measurement processes that track the impact of customer interventions and feed that information back to their systems and teams. These processes help them deliver the right content through the right channels at the right moments in a consumer’s journey.
- They invest in fit-for-purpose martech and data. Rather than letting a “thousand flowers bloom,” personalization leaders target a specific set of customer outcomes and use cases that support them. They align organizational resources around these use cases and work back from the desired outcomes to build the data and martech road map and identify the enablers and investments needed to deliver.
- They commit to an agile operating model. Businesses that succeed in scaling personalization create teams that cut across marketing, product, analytics, and technology, using a hub-and-spoke approach. Each hub owns specific elements of the personalization journey, with each spoke empowered to build underlying use cases. Together, these teams run hundreds of tests per year, enabled by advanced data analytics and test-and-learn techniques.
- They invest in talent and training to refine capabilities. Leaders bring a similarly data-driven approach to building their teams and organizational capabilities. They focus in on the skills needed to support personalization at scale (for instance, digital and e-commerce acumen, advanced analytics, product management, or performance marketing). Then they map these capabilities against their current talent base, using the results to inform hiring, training, and upskilling. This approach allows companies to anticipate the expertise and tools they need as their personalization program advances.
Personalization is a force multiplier—and business necessity—one that more than 70 percent of consumers now consider a basic expectation. Organizations able to build and activate the capability at scale can put customer lifetime value on a new trajectory—driving double-digit revenue growth, superior retention, and richer, more nurturing long-term relationships.