2023 Consumer Behavior Forecast: Personalization Takes Center Stage
Explore the latest trends and best practices for leveraging personalization to create relevant customer experiences.
Gone are the days when personalization was just a "nice-to-have" feature for businesses. In 2023, creating personalized experiences for customers has become a key differentiator for businesses looking to stand out in an increasingly competitive and crowded market.
In this article, we explore one of the most influential trends in consumer behavior today- personalization. From personalized recommendations to tailored promotions and beyond, let's look at how businesses can use data and technology to create meaningful interactions that drive customer loyalty and revenue growth.
What is personalization and how can it impact your consumer's behavior towards your brand?
Personalization is essentially a marketing strategy that involves finely-targeting and tailoring a business's messaging, experience, products and services to every individual customer's preferences. Such segmented personalization draws its basis from each consumer's behavior, interests, demographics, purchase history or any other unique-to-user attributes.
71% of consumers expect companies to deliver personalized interactions. And 76% get frustrated when this doesn’t happen. - McKinsey and Co
To put it simply, if a business creates unique and relevant experiences for their customers, they can successfully crack the code to a customer's commitment towards them. And why wouldn't a customer engage and stay loyal to a business that pays specific attention to them- a business that they makes them feel "special".
Personalization can even be called a “hygiene factor”. If a business gets it wrong, customers may depart for a competitor.
- Improved Customer Experience: Personalization can make customers believe that the business understands and values them, which in turn gives them a much promising experience. Customers are more likely to engage with a business that knows their aspirations, needs and preferences which ultimately can result in increased loyalty and advocacy.
- Increased Engagement: By providing personalized content and recommendations, customers are more likely to spend more time with the business and it's other platforms, say, their website, store or social media channels. The more time that a customer spends with a business can increase the chances of them making a purchase or taking other actions that the business desires.
- Higher Conversion Rates: By tailoring the marketing strategies like promotions, or personalized product recommendations and messaging to individual customers, businesses can increase the likelihood of conversions and purchase. According to a study by Accenture, 91% of customers are more likely to shop with brands that provide relevant offers and recommendations.
- Better Customer Retention: A study on the value of personalization conducted by Mckinsey and Company showed that 75% of customers have experimented with a new shopping behavior during the pandemic. This shift in consumer buying behavior could mean is that a customer's commitment is up for grabs! By creating a personalized experience for customers, brands can increase the chances of customers coming back to make additional or repeat purchases. This can also increase the likeliness of customers to recommend a business to their friends and family.
62% of customers worldwide said a brand would lose their loyalty if it delivered an unpersonalized experience.
What kind of personalization effort can directly influence the purchase behavior of consumers in 2023?
#1 Personalized Recommendations: Businesses can use data and their analysis of what their consumer behavior leans towards, what their browsing + purchase history shows and provide personalized product/ service recommendations accordingly. Customers prefer receiving personalized e-mails that include recommendatins for them over generic e-mails from brands!
- Leverage customer data: Use customer data such as browsing history, purchase history, and search queries to understand their preferences and make personalized recommendations.
- Collaborative filtering: Collaborative filtering is a technique that recommends products to a customer based on their similarity to other customers. It involves analyzing customer behavior and purchases to identify patterns and suggest similar products.
- Behavioral targeting: Behavioral targeting is the practice of delivering personalized content to customers based on their past behavior on a website or app. This includes tracking their clicks, searches, and purchases to provide tailored recommendations.
- Use machine learning: Machine learning algorithms can analyze large amounts of data to identify patterns and make personalized recommendations. This includes using data such as customer demographics, purchase history, and website behavior.
- Personalized emails: Use personalized emails to provide tailored product recommendations based on customer data such as purchase history, search queries, and website behavior.
- Use chatbots: Chatbots can provide personalized recommendations to customers in real-time based on their queries and preferences. This includes using natural language processing to understand customer intent and recommend relevant products.
A study by Barilliance found that personalized product recommendations can generate up to 176% higher click-through rates than generic recommendations
#2 Personalized Content: Yes, knowledge is power- especially if you know your customers enough. That way, brands can create personalized content based on a customer's interests and behavior to offer personalized content across their social media content, blog posts, e-mails etc. This increases their awareness and influences their tendency to engage with the brand. Customers love "how-tos", "tutorial" and other content that personally answers their questions.
Personalized push notifications have a 9.6% higher open rate compared to non-personalized notifications. (CleverTap, 2021)
Easy ways you curate and implement personalized content for your customers:
- Collect customer data: To create personalized content, you need to know your customers' interests, preferences, and behavior. Collect data on their purchase history, website browsing behavior, and social media interactions to gain insights into what content they might find engaging.
- Use marketing automation tools: Marketing automation tools like Hubspot, Marketo, or Pardot can help you create and deliver personalized content to your customers. These tools can segment your customer database based on their behavior and interests, and deliver personalized content via email, social media, or website content.
- Leverage AI and machine learning: AI and machine learning technologies can help you create personalized content at scale. These technologies can analyze customer data to identify patterns and preferences, and then create personalized content based on those insights. Tools like Persado and Acrolinx can help you automate the creation of personalized content.
- Create content for different buyer personas: Different customers have different needs and interests. Creating content tailored to specific buyer personas can help you deliver more personalized content. Use customer research and feedback to create buyer personas that represent your target audience and develop content that speaks directly to their needs and interests.
In a survey by Demand Metric, 80% of respondents said that personalized content was more effective at achieving business goals than non-personalized content.
#3 Personalized Products: Brands can offer personalized products, services or experiences that are curated for and tailored to individual customers. This can include customizing products with a customer's name or personalizing products based on a customer's preferences.
Here are some strategies through which you can offer personalized products and develop a deeper connection with your customers:
- Product customization: One way to offer personalized products is to allow customers to customize their orders. For example, brands can allow customers to choose the color, size, or design of their products. This approach can be especially effective for products like clothing, jewelry, or accessories.
- Personalized packaging: Brands can also personalize the packaging of their products to create a unique and memorable experience for their customers. For example, a beauty brand could include a handwritten note in each package, or a food brand could include a personalized recipe card with each order. Another example to personalize the packaging of a new customer's order is by simply adding addressing their name and welcoming them through a handwritten or printed note. Brands that personalize their packaging seem less alien and more human!
- "Build your own" offering: Another strategy for offering personalized products is to allow customers to create their own products through customization tools or online configurators. This gives customers the ability to create products that are uniquely tailored to their needs and preferences.
For example, Nike's NikeID platform allows customers to customize and personalize their own shoes and making their product exclusive to the customer placing the order.
By allowing product configurations, brands can also offer suggestions or guidance to help customers make choices that best fit their needs.
According to a study by Deloitte, 1 in 5 consumers are willing to pay 20% more for a personalized or exclusive product or service. By offering personalized products, brands can not only increase customer satisfaction and loyalty but also potentially generate more revenue through higher pricing.
#4 Personalized Promotions: By creating targeted offers and incentives, brands can encourage customers to make a purchase, return to the site, or engage with the brand on social media. Personalized promotions can take many forms, including discounts, free gifts, exclusive content, and more.
A report by Epsilon found that personalized campaigns can generate up to 6 times higher revenue than non-personalized campaigns.
There are several types of personalized promotions that brands can offer to their customers. Here are a few examples:
- Discount promotions: Brands can offer personalized discounts based on a customer's purchase history, browsing behavior, or demographic data. These targeted promotions can increase the likelihood of a purchase and improve customer loyalty.
- Free gift promotions: Brands can offer personalized free gifts to customers who make a purchase or engage with the brand (basically when a customer takes any action you desire)
- Loyalty: Through a personalized loyalty program brands can offer exclusive benefits to the customers that matter to them. This could include exclusive experiences for members, special discounts, free shipping, free samples or even early access to new products.
- Referral Programs: By running personalized referral campaigns, brands can delight the right customers, with the right rewards. With the power of data analysis, brands can tailor their referral campaign based on specific, unique-to-user attributes like behaviour, profile, demographics, traffic source or any custom user profile element. That way, they can create relevant rewards that will help in maximizing the effectiveness of the referral campaigns, and increase customer acquisition and retention.
80% of customers are more likely to provide personal information to brands they trust, in exchange for personalized offers. (Epsilon, 2020)
Tools you can check out to run personalized promotions with ease:
- Marketing automation platforms: Marketing automation platforms like Hubspot, Marketo, and Pardot allow brands to automate the delivery of personalized promotions.
- Promotion engines: By opting for a promotion engine that lets you experiment, track and run personalized and targeted promotion, you save a whole lot of time, money and effort in building a promotional system from scratch. By using a promotion engine, you can easily modify, change, pause or rev up your promotional campaigns and keep your promotions relevant, fresh and timely!
- Customer data platforms: Customer data platforms like Segment allows brands to collect and organize customer data from multiple sources, making it easier to create targeted promotions.
Do consider these before rolling out your business's personalization strategies-
While personalization can offer businesses significant benefits in terms of customer engagement, loyalty, and revenue growth, it's important to implement it in the right way to avoid negative outcomes on consumer behavior. Here are some key considerations for businesses to keep in mind when implementing personalization strategies:
- Respect customer privacy: As businesses collect more data on their customers to personalize their experiences, it's essential to respect customer privacy and comply with data protection regulations. Be transparent about what data you're collecting, how you're using it, and give customers control over their data.
- Balance personalization with relevancy: Personalization is only effective if it's relevant to the customer. Don't personalize content or recommendations just for the sake of it; make sure they align with the customer's interests and preferences.
- Ensure accuracy of data: Personalization is only effective if the data you're using is accurate. Make sure to regularly audit your data sources and ensure that you're collecting high-quality data.
- Continuously test and optimize: Personalization is an ongoing process, and businesses need to continuously test and optimize their strategies to ensure they're effective. Use A/B testing, monitor customer feedback, and analyze data to improve personalization strategies over time.
- Ensure scalability: Personalization can be resource-intensive, so it's important to ensure that your strategies are scalable. Implement automation tools and technologies to streamline personalization processes and ensure they can handle increasing volumes of customer data.
And that's it for now! In conclusion, the key is to start with the basics: what are the channels that use can use to personalize your interactions with your customers, understanding what how your consumers behave, likes and dislikes to keep up with their evolving sentiments- that way you can roll out relevant, dynamic, fresh and scalable personalized strategies!