What is Customer Experience Personalization?
Customer experience personalization is tailoring customer experience to suit the needs of individual customers. Personalization can be from remembering the customer’s name to creating a brand new product exclusively for them.
According to Epsilon, 80% of consumers are more likely to make a purchase from a brand that provides personalized experiences.
E.g., Some restaurants offer customers a choice to personalize the dish by adding their desired toppings and having the dish made in their preferred level of spice.
“Personalization, once limited mainly to targeted offers, now extends to the entire customer experience. This means that customers want personalization throughout their interactions with a retailer—with multiple, personalized touchpoints that enable them to allocate their time and money according to their preferences.” - Mckinsey
This also means, offering a unique and individual experience that meets customers’ preferences and expectations by developing or altering products, services, and interactions.
Brands can’t ignore the importance of personalized experiences in this era since businesses can grow if and only if they follow an ‘empowered customer’ culture across all activities.
What is the Importance of a Personalized Customer Experience?
Since personalized products and services are staples in today’s world, companies should develop personalization strategies to gravitate customers toward them over and over.
The main reasons for adopting a personalized culture are as follows.
1. Builds loyalty
Customers tend to remember when they were treated well and valued, and the chances of purchasing at the same company increase. They will even recommend the company to their friends and family if they had a memorable experience with a brand. This not only retains customers but expands to a broader customer base.
2. Increase customer retention rate
According to the Segment’s Personalization Report, 44% of customers will return to a brand if they got a personalized shopping experience from their previous purchase. On the flip side, 70% of customers stated that they are frustrated with brands that do not initiate to offer personalized shopping experiences.
3. Understand customer expectations
Customer expectations are not only limited to the quality of products they purchase; it also includes additional and surprise actions from the brand across all touchpoints customers connect. For example, many customers expect in-store sales persons to know their online purchase history with the brand.
4. Gives businesses a competitive advantage
Offering a personalized customer experience sets a business apart from its competitor. Every company needs a unique feature or an attribute that makes it stand out from the rest of the players in the market. Providing unique customer-centric strategies, like personal chat support and email support, can give businesses an edge over others in the market.
5. Increased customer satisfaction
If customers feel they get what is required per their taste and preferences from a brand, there is no doubt that they will be completely satisfied with that brand.
6. Improved efficiency
With customers’ information at their fingertips, businesses can use advanced tools to provide each customer with a unique experience. Personalization helps resolve problems faster as companies already have all the information about the customer.
7. Increased revenue and profits
All the points above make the customer more involved with the business, which consequently increases the business’s revenue and profits.
8. A rise in order quantity
Personalized customer experience will lead customers to purchase more items from a store they are not planning to purchase when entering a store. Also, they are likely to buy more expensive products if they get a personalized environment in a store.
9. Reduced product returns
When a customer gets a personalized experience, they will be more likely to be delighted and completely satisfied with their purchase and products. This indicates a less probability of product returns.
Why Do Customers Want Personalization?
Because your customers expect it! According to an Accenture survey, 91% of customers like to do business with brands who remember, recognize, and provide valuable recommendations and offers.
To understand the requirement of personalization, the leaders in a brand must think about how it is essential for them as a customer. That is the easiest and most effective way to grasp the advantage of a personalized experience.
How would you feel when you open a website and see the content exactly you are looking for? What if they recommend the product you were searching for, and what if you see suggestions that will be the right add-ons to the product you purchased yesterday? You will feel more valued and satisfied, right?
Since digital transformation has seized different levels of customer experience, many brands have started to offer contextual and relevant experiences for individual customers. Customers are already accustomed to that trend.
So, in this era, marketers need to work around personalized marketing techniques and develop new tactics with hyper-personalized campaigns to gravitate new-age customers to their brands. At the same time, the personalization should be well executed in all touch points of the customer journey to keep your customers stuck to the brand.
Spotify’s ‘Discover Weekly’ is a perfect example of a great personalized experience with massive acceptance from many customers. The curated playlist they recommend to customers is based on the individual customer profiles, i.e., the songs they saved on Spotify. They suggest similar songs to customers that they have not yet listened to.
How to Personalize Customer Experience?
As a brand, if you are stuck on what to do and where to start to design a personalized customer experience environment, check out the 10 points:
1. Identify the Customer Base
One of the first things in providing a personalized customer experience is understanding the customer well. This includes understanding their name, age, gender, nationality, demographic, etc. To get these details, you can seek help from the marketing team since they deal with customers' demographic data. With these data, sit with the customer support and service team to get an idea of what kind of customers they deal with daily. This series of activities will help you to flush out the different groups of customer profiles, their needs, expectations, and preferences.
2. Develop a Unified Customer Experience Vision Statement
Developing a customer vision statement that covers all customer profiles' expectations, needs, and preferences will be a rich source of reference for all leaders in the organization. The leaders can cross-check the actions and results in each point with the vision statement to check if they are moving on the right track.
3. Train Front-line Employees
Front-liners who directly deal with customers play a crucial role in customers' personal experience. Leaders should train the customer support representatives on coping with different emotions of customers, especially irate and upset customers. This will help in enhancing personalized experiences.
4. Offer Multiple Channels for Customers to Connect with You
Customers always like to connect with you with the channel convenient for them. It can be face-to-face communication or by calls, SMS, live chat, and so on. So offering an omnichannel experience is essential and being there for them in any channel is necessary to ensure they get a personalized customer experience.
5. Configure Self-Service Options
Brands can provide self-service options to customers to let them solve their problems easily and quickly without reaching out to support executives and frustrated with long waiting times for solutions. To solve common issues and emergency actions for customers, brands can provide relevant FAQs, step-by-step instructions/articles, and explainer videos that customers can easily access.
6. Provide Support through Social Media Channels
Social media are great platforms where brands can track customer insights and understand how customers speak about the brand. Furthermore, many people feel comfortable connecting with a brand through social handles since they feel free to express their requirements and issues through these channels. Brands should also focus on offering a delightful and personalized experience to customers through social media platforms.
7. Use an Efficient Customer Relationship Management Systems
Nowadays, CRMs deliver exceptional customer experience assistance with their interactive voice response (IVR) options and other real-time customer data, like their personal demographic details and purchase history with your brand. These details will help front-liners to frame personalized messages and greetings for customers and trigger them through the same CRMs.
8. Harvest Customer Feedback
Collecting feedback is an efficient way to understand what customers expect to improve from your side. Using the feedback effectively will help brands to optimize and personalize their customer service. Additionally, using a robust CRM with advanced tools like post-call IVR surveys will contribute to gathering more deep customer insights.
9. Gather Employee Feedback Regularly
Being there for customers with eyes and ears, customer service executives can seamlessly track changing customer expectations and preferences trends. Those employees play a vital role in delivering personalized experiences by noticing individual customer requirements and taking the right action. Also, offering a platform to gather employees’ constructive feedback and ideas will amplify the overall personalization process.
10. Make Sure that You Stay Up to Date
Customer requirements and preferences change rapidly. Hence, you must frequently check your actions and results with customer feedback to ensure you are on the right track. Also, check customer response every time to know whether they get the personalized experience they want.
What Are The Challenges Faced by Companies in Providing a Personalized Customer Experience?
It’s not very easy to suddenly switch to a personalized customer experience culture. As mentioned above, it requires rigid planning and flawless execution. The main challenges brands may encounter while executing a personalized experience will be:
1. Data management
Gathering, integrating, and analyzing customer data is a great challenge for many companies. Insufficient budget and lack of data tools can be a hindrance.
2. Data analytics
Maintaining people with immense expertise in data analytics and science is proving hard for retailers.
3. Tools and technology enablement
Many companies admit to not having the correct tools to execute personalization at a large scale. Some say that finding the right solution is a struggle.
How to Improve Customer Experience Personalization?
Personalized customer experience is never more critical than today. Many evolving brands are on their way to achieving it. Because every human being would like to be recognized as an individual, not numbers and IDs, when it comes to a ‘customer,’ they would desire their brand to understand their unique traits and needs and deliver a curated experience.
Check the below points that will help you to improve the customer experience personalization processes.
1. Conduct a thorough analysis of the customer journey
Doing detailed research on the customer journey and gathering different touchpoints can give companies a better understanding of how customers want to be treated at other points of their journey.
2. Opt for micro-segmentation
This goes beyond segmentation, delving deeper into customers’ profiles and segregating them further to provide a more personalized customer experience.
3. Keep up to date with customers’ data
Collecting the latest data through surveys and monitoring customer behavior can help companies keep track of the changing customer needs and personalize customer experience accordingly.
How Listening to Customer Feedback Can Personalize Customer Interaction?
Customer feedback is the best source to understand customer pain points in their buying journey and in which part of the purchase they need reassurance. Using this feedback, brands can decide which products would best fit their preferences and needs.
There are three aspects to offering a personalized experience with customer feedback. They are:
1. Collecting the Right Feedback
We will not get the right response if we don’t ask the right question. Hence, brands need to develop a feedback collection strategy and fit it in the right place in the customer journey.
For example, an online clothing store can show personalized recommendations to customers by collecting their styling preferences and sizing concerns from feedback. They can also ask questions post-purchase and use the data to create new recommendation lists.
Puma utilized their customer feedback in 2020 by capturing them from their digital channels to enhance their online shopping experience. This helped them to improve their PayPal orders and 11% improvement in NPS through a personalized experience.
2. Centralize Feedback from Multiple Sources
Personalized experience also means making customers feel heard and seen. A Salesforce report revealed that many brands fail to offer this individualized experience to customers. Furthermore, 52% of customers think different departments like sales, marketing, and support service do not share the information they require.
This also leads to a fragmented experience for customers. Because many brands’ internal organizational structure is not allowing them to centralize customer data appropriately. With fragmented communications, brands can’t picture an individual customer's requirements and offer a personalized experience to them.
65% of customers stated that they needed to repeat their issues and concerns to different support executives. If there is no system to collect customer feedback and concerns in a single place from multiple sources, various departments will treat customers differently. And this will lead to inconsistent customer experience, and the brand will fail to offer a personalized experience.
3. Explore New Methods of Feedback Collection
Brands need to brainstorm to find new methods if a survey is not collecting enough customer information. For example, a cosmetic brand Shiseido used an app that allowed customers to create customized foundation colors and allowed them to order directly from Shiseido. This was a new personalized experience for customers. In addition, the app suggested other products a customer might like based on their previous purchase behavior.
Realizing the vast opportunities in personalized experiences, Shiseido incorporated IoT technology in 2019 and allowed customers to take a selfie to analyze their skincare factors to suggest products for their skin. This helped them to lift their customer experience to the next level.
How to Deliver Personalized Customer Experience by Going Omnichannel?
We are already in the phase of multichannel replaced by omnichannel experiences. While multichannel works in a siloed structure, omnichannel gathers customer data points from multiple sources to get a cohesive, chronological custom journey.
Customers connect with brands through multiple channels like calls, chats, SMS, emails, CRMs, etc. In addition, they also visit physical stores of a brand from where they shop online. Since there are multiple sources, customers connect with channels they feel comfortable with based on the moment they are in.
40% of customers say they want brands to solve their problem through the channel they prefer, irrespective of the previously connected channel.
With omnichannel, brands can track the entire customer journey and purchase history without any inconsistencies. Using these data, they can realign their strategies as and when needed.
There are three channels through which customers usually connect with a brand. They are -
1. Traditional media - email, phone calls, etc
2. Physical store visits
3. Digital channels - mobile app/website, live chat, SMS, etc
Today’s customers expect that if they choose any channel at any time, they should get continuity in their journey. Even if a customer shops for the first time from an online store and then in the next purchase, he visits the physical store, he expects the brand to know him and his purchase history and treat him accordingly. And they should get a response from the brand faster; moreover, on the first try. 47% of customers said that they would leave a brand if they couldn’t find the information they were looking for within seconds from online stores.
One brand that successfully executed this personalized experience is Lenskart, one of the top eyewear brands in India and Singapore. Their 5 million customers shop through the website and mobile app and have 500+ brick-and-mortar stores.
When a customer enters the Lenskart store, they access that customer’s profile, take the details, and understand their requirements from their previous purchases, even if they purchased online. This helps the salespeople to provide the customer with the right product like they have known the customer for a long time. This level of personalization will delight any customers without any doubt!
What is the Difference Between Localization and Personalization of Customer Experience?
Both personalization and localization are equally crucial for any business.
If personalization is used to enhance the experience and marketing campaign for an individual customer based on their preferences and purchase history, localization focuses on a specific segment of customers based on their demographic characteristics like their location, age, gender, etc.
Personalization is used mainly for recognizing a specific customer to offer a curated experience and suggestions for them. Localization is used to send the right message to the right place at the right time to the right group of people.
What is the Difference Between Personalization and Customization?
Both personalization and customization need to be tailored for a single goal, i.e., to get an experience of customers’ interests.
When personalization offers an experience based on customers’ tastes and preferences and previous purchase history, customization allows customers to modify a product or service as per their preferences.
A company offers personalization by collecting customer data and insights, while customization can be provided by allowing customers to make alterations according to their preferences.
For example, if you bought a new car, and when you start the ignition, the vehicle automatically adjusts the seat height, steering wheel height, air conditioner temperature sets as per your comfort level, and your favorite music starts to play to entertain you is an example of personalization.
If you manually adjust the seat, steering wheel height, and air conditioner temperature as per your comfort and choose the song from your playlist, that is customization.
Famous footwear company Nike has gained attention for its new campaign called “Nike by you.” Here customers can customize their sneakers using their preferred colors, designs, and materials. By allowing customization of their sneakers, Nike is embracing individuality.
Customer Experience Personalization Examples
Check the below examples of brands who successfully worked out personalization in their customer experience activities.
Coca-Cola’s Share a Coke Campaign
This Coca-Cola’s data-free personalization campaign created by Ogilvy has proven that offline personalization can also be effective!
To uplift their sales, Coca-Cola selected 150 common names in Australia, printed them on their bottle stickers and cans, and invited Australians to ‘share a coke.’
This campaign was a hit in over 80 markets and successfully ran for over 7 years. This campaign helped them regain a consumption decline they had been facing for more than 11 years, and there is a 7% increase in Coke consumption in young adults.
Grammarly Weekly Reports
Grammarly, the writing platform, creates weekly reports of deep analysis of customers writing techniques by scrutinizing all writing pieces from individual customers.
These weekly reports show how much they have improved in writing and where the customers’ writing needs improvement.
Since this report comes with many metrics, it is pretty easy for customers to understand their progress quantitatively. Customers can upgrade to premium plans to get deep insights into these weekly reports.
Very’s Weather Based Clothing Suggestions
Sometimes, even though a store works in a specific country or state, the weather will vary in different locations. Very, an online retailer brand tracks the weather conditions in the locality of individual customers and shows related contents and clothing suggestions as per the weather in their place.
For example, if it's summer and a customer's specific location is sweltering, the Very app will suggest light colors and cool clothing options for them.
Netflix’s Curated Suggestions
Netflix recommendations are one of the most famous examples of personalized customer experience worldwide. The selected list will be created based on customers’ movies or show-watching trends and their preferred genre.
With these playlists, customers do not need to search for anything to watch since their kind of watch list will be popped into the screen when they open the app. This is an excellent example of how the personalization of customer experience can yield recurring paid subscriptions.
Graze’s Personalized Goodies
Graze, the healthy snack company, adopted date-driven personalization as their business model!
In their app, customers can share their preferences, dislikes, and allergies to buy a subscription-based box of personalized goodies. Graze made 500+ products and 200 million combinations available for their large group of customers.
They prepare the snack boxes by directly gathering information from customers with nutritional factors.
What is a Customer Personalization Strategy?
A customer personalization strategy is a combined tactic of sales, marketing, and customer service to offer a highly personalized and customized experience to customers.
Personalization strategies are rigorously strategic, and to execute them, brands must leverage robust personalization methods and practices to gain a competitive advantage in the marketplace.
A well-executed customer personalization strategy can extend the personalized messages brands send to customers' inboxes to personalized advertising campaigns, advanced website and app experience, and personalized chat messages through omnichannel.
Developing a personalization strategy for your brand requires time, analysis, and testing. And as an initial step, brands need to understand customer persona by their details, including age, gender, occupation, income, etc. Then, brands can understand the needs and wants of each persona to build strategies for those personas.
Also, brands can create strategies for different customer segments. The segmentation can be done based on the audience's demographic details and send personalized messages to a specific target group of customer segments.
Hyper-Personalization: The Future of Customer Experience?
As the term indicates, 'hyper-personalization' will go an extra mile than 'personalization.'
Personalization is a set of activities you can do with products or services to meet individual customers' unique requirements and expectations. As we discussed above, brands use personal and demographic details for personalization processes and design messages and communications based on that. Since many brands are on their way to personalization, this quality will no longer be a differentiating factor.
So, the next step is hyper-personalization! Many data-driven and digitally-driven brands are adopted this hyper-personalization method to be on top of the competition.
Unlike personalization, hyper-personalization requires artificial intelligence (AI), predictive analytics, machine learning (ML), and real-time data of customers to glean each customer's needs and expectations.