Personalization at scale is the holy grail of marketing, and McKinsey & Co predicts that within five years personalization will be a key driver of marketing success. According to Harvard Business Review, personalization can reduce acquisition costs by as much as 50%, lift revenues by 5 to 15%, and increase the efficiency of marketing spend by 10 to 30%.
We’ve had a taste of the potential of personalization, but advances in technology, data, and analytics will allow marketers to create more personal and “human” experiences at scale.
In order to be ready to capture the personalization opportunity, businesses need to proactively prepare by building up the necessary skills and capabilities. There are main shifts in personalization that businesses will need to be prepared for.
1. Physical spaces will be “digitized”
- Offline person-to-person experiences will be part of the next wave of personalization.
- Fewer than 10% of the companies surveyed currently deploy personalization beyond digital channels in a systematic way.
- 44% of CMOs say that frontline employees will rely on insights from advanced analytics to provide a personalized offering.
- 40% say that personal shoppers will use AI-enabled tools to improve service.
- 37% say that facial recognition, location recognition, and biometric sensors will become more widely used.
- Macy’s, Starbucks, and Sephora are using GPS technology and company apps to trigger relevant in-app offers when customers near a store. One retailer found that a similar app generated a 10% lift in incremental sales and a 5% increase in transaction-size growth.
2. Empathy will scale
Empathy is the foundation of strong relationships and understanding social cues, and adapting to them is how people build trust. Machine learning is getting much better at reading and reacting to emotional cues. More sophisticated algorithms are allowing programs to interpret new kinds of data (visual, auditory) and extrapolate emotions much more effectively than in the past.
3. Brands will use ecosystems to personalize journeys end to end
Today different providers jointly own the customer experience. Expanding partner ecosystems allow brands to provide more seamless and consistent consumer experiences across all stages of their decision journeys. While the share of global sales that move through the ecosystems is still less than 10%, we predict it will grow to nearly 30% by 2025.
So how do you turn the future of personalization into a reality?
- Invest in customer data and analytics. Personalization isn’t possible if marketers don’t have the means to understand the needs and desires of consumers.
- Find and train translators and advanced tech talent. In addition to data scientists and engineers, marketing organizations will need analytics translators who can communicate business goals to tech stakeholders and data-driven outcomes to the business.
- Build up agile capabilities. Personalization requires a commitment to agile management, including cross-functional teams dedicated to specific customer segments or journeys with the ability to execute rapidly.
- Get started. Most companies have more than enough data and people to get value right away. The first step is to determine which use cases to focus on.
Read more about the future of personalization at McKinsey.
Photo: Fabio via Unsplash