For companies across industries, personalization is no longer a nice-to-have. Personalized customer experiences are a must for being seen as a brand of choice and driving repeat purchases and engagement. That’s why the vast majority of businesses (92%) are embracing AI-powered personalization to tailor the experiences they offer.
In this guide, we’ll define what personalized customer experiences are and what it takes to deliver the kinds of impactful personalization that benefits both brands and consumers.
A personalized customer experience is an experience brands provide — whether in person, over the phone, or via digital channels — that is tailored to meet individual customer needs, based on a deep understanding of their unique preferences, interests, and behaviors.
Effective personalization involves gathering customer data from across channels and throughout the customer journey, such as:
Brands can then harness these insights to create personalized experiences, content, services, and products that are relevant, timely, and responsive.
From addressing customers by their first name and remembering their shopping preferences (such as their usual delivery method or clothing size) to making product recommendations based on their past purchases and search history, there are many different ways brands can treat consumers as important individual customers.
According to the 2023 report, How Consumers Really Feel About Personalization, some of the types of personalization that consumers say have the greatest positive impact on their customer experience include:
Personalized experiences have the power to make customers feel valued, which in turn can enhance loyalty, sales, revenue, and your brand’s overall reputation.
By understanding customer needs and interests, businesses can deploy personalized campaigns, outreach, product recommendations, and offerings that drive brand choice. According to a 2023 Medallia Market Research survey, 82% of consumers say personalized experiences influence the brand they end up purchasing in at least half of all shopping situations.
An earlier Medallia study analyzed the performance of more than 580 organizations’ customer experience programs and found that companies with top-performing programs are two times more likely to prioritize improving personalization across interactions than laggards. At the same time, customer experience leaders are 26x more likely than laggards to report year-over-year revenue growth of 20% or more. That makes sense, given that most consumers (61%) say they’re willing to spend more with companies that customize the way they serve their needs, according to the same 2023 Medallia Market Research study cited above.
Brands that leverage best-in-class personalization tools and tactics can improve their brand image and reputation in a variety of ways. For starters, providing customer service agents and frontline personnel with valuable insights at the individual customer level can help these team members better understand and meet customer needs and communicate with empathy. In addition, companies that invest in personalization technology solutions are able to curate more relevant, customized, and engaging websites, apps, marketing campaigns, and product and service offerings.
By demonstrating greater empathy and tailoring communications, products, services, and experiences at the 1:1 level, brands should see customer service complaints decrease and overall customer sentiment improve.
While consumers are more likely to purchase from brands that offer personalized experiences, not all personalization efforts result in a positive impact. According to the most recent study from the Medallia Market Research team, more than half of consumers say they have encountered brands that have failed to deliver on the highly personalized experiences they said they would offer.
Achieving success with personalization requires investing in the right technology, having a solid customer data strategy, and leveraging real-time data analysis to orchestrate optimized, tailored experiences in the moment.
Delivering personalized customer experiences that resonate starts with investing in the right customer experience management platform. Look for a solution that allows your brand to:
At the end of the day, a company’s personalization efforts will only be as good as the data they have available about their customers. Rich, timely personalization results when businesses have (and act on) rich, timely data. That takes bringing together every piece of information your company has available about your customers from across interactions, touchpoints, and channels to create one single customer view and one source of truth that is continuously updated in real time.
The breadcrumbs customers leave as they navigate their customer journeys — the interests they express, the behaviors they exhibit, and the intent they demonstrate across channels — provide opportunities for brands to anticipate and meet customer needs before customers reach out for support or, worse, switch to the competition. By acting in the moment, businesses can orchestrate the ideal customer experience at the 1:1 level, designing next best interactions aligned to individuals’ interests, behaviors, and intent.
Adopting a test-and-learn mindset is key to establishing a solid foundation with personalization efforts. Brands can generate quick wins by starting with a specific pilot initiative and measuring the impact on important KPIs, such as revenue, customer satisfaction, and loyalty and then expand and scale across channels after demonstrating success.
Use past purchases, spending patterns, and other customer behavioral data to group like customers together and send them down the most appropriate, relevant, and customized paths.
Don’t try to boil the ocean. Look for easy wins where introducing personalization could improve the customer experience and deliver ROI. Begin by testing out one hypothesis, approach, or tactic at a time, and, as you evaluate your efforts, adapt and scale.
Instead of setting out to personalize one aspect of the customer experience — such as the digital experience, the contact center experience, or the customer loyalty member experience — brands yield maximum results when they take a holistic approach and personalize the customer journey in its entirety.
Cross-department coordination is necessary for truly achieving personalized, connected experiences. Work together with teams like the contact center, digital, operations, and marketing to have the greatest positive impact on the customer journey.
When customer experience management systems work together, brands are able to unlock a cohesive customer view and execute true experience orchestration.
Optimize promotions and messaging based on real-time customer needs to drive open rates, click-through rates, conversions, and sales.
AI-powered analytics, such as text analytics and speech analytics, make it possible for companies to instantly sift through customer feedback and signals from across surveys, online reviews, social channels, customer service interactions, digital interactions, and more, to understand how customers feel and pinpoint what they need. AI-powered experience orchestration helps businesses identify what the best experience or content will be to help them advance along their customer journey to personalize every experience at scale.
Personalize interactions with greater accuracy by capturing rich customer signals from across every channel, from direct and indirect feedback, including:
Select a customer experience management platform that treats your customer data as private and sensitive and is built with security and compliance in mind, using privacy-by-design principles.
Personalization and AI technologies are continuously evolving. Keep a pulse on customer sentiment about your company’s personalized experiences by gathering and analyzing feedback from your customers about your efforts, and stay informed about market research on personalization trends.
The rapid rise of AI adoption has been one of the biggest shifts the world of business has seen since the debut of the internet, and it’s shaping how brands personalize the customer experience. AI-powered customer experience management platforms are helping brands better understand customers, anticipate their needs, and apply these insights to craft tailored experiences.
Attend Medallia’s Experience ‘24 February 5-7, 2024 in Las Vegas, Nevada to unlock the latest best practices from top innovators who are transforming interactions with AI, machine learning, and predictive analytics. Register today to secure your spot.