In the last decade alone, the way we use products and services, the devices that we use, and even our preferences have changed exponentially. The practice of using analytics and data to make advertising messages and product experiences feel unique to each customer has become more common. Personalized marketing is much more than just inserting the customer name in a marketing email or letter that goes to all customers. It’s about reaching the right person with the right and relevant message at the right moment with the right suggestions.
As technology advances and people become increasingly dependent on digital services for their daily lives, it’s inevitable that personalization will be the prime driver of marketing success within the next five years.
What is personalized marketing?
What is personalized marketing?
Personalized marketing is a strategy that uses data to create a personalized customer experience. By analyzing customer data, businesses can identify patterns in order to properly target and communicate with potential customers.
The core of personalized marketing is accurate customer targeting. Therefore, it allows businesses to reach more potential customers more effectively without exhausting your budget or wasting your effort on targeting the wrong customers.
Let’s look into why personalization is increasingly favoured by marketers today.
Demand for personalization is increasing
The rise in personalized marketing didn’t just start recently. Propelled by technological advances and the global pandemic, personalized marketing has become increasingly important for today’s customers.
In fact, compared to 2021 when nearly 20% of customers said they would lose loyalty to a brand if they were not personalized, this number now stands at 62%.
On the other hand, businesses are also extremely positive about implementing personalized experiences throughout their whole customer journey. Because when done right, both businesses and customers win. Some of the personalized marketing’s main benefits include:
- While businesses that deliver poor personalization marketing efforts can lose up to 38% of their customers, the businesses that do implement it boost their overall user experience.
- 65% of a company’s business comes from repeat customers. 78% of consumers stated that because of personalized marketing they are more likely to make repeat purchases. Nearly 80% are also more likely to refer their family and friends to these companies.
- Personalized marketing can increase sales by 10% and deliver up to 8x the ROI on what you spend on marketing.
Dive inside the trends in personalized marketing
As companies become more familiar with personalized marketing, the industry is constantly evolving and changes are being made rapidly. Here are 5 trends you need to know to win tomorrow’s personalization game.
Mobile personalization will continue to grow
As people spend more time on their mobile devices for a variety of functions, they expect a seamlessly personalized experience on their phone. Another reason is that a mobile phone is technically a personalized space for each individual.
The average person spends 3 hours and 15 minutes each day on their phone. Brands can collect enough customer data and behavior analytics to create and send personalized push notifications.
Push notifications can be beneficial for brands in several ways:
- Increase app engagement by up to 88%.
- 65% of disengaged users return to use the app within 30 days of the push notification.
Different push notifications that can do this are relevant offers, like limited-time sales, promotions, or launches and get them to spend more time browsing through the app.
With the advancements in mobile personalization technologies, it is no wonder that the global consumer mobile spending has grown to $436 billion in 2022 and it is expected to reach $728 billion by 2025.
Meet industry-leading language-learning app Duolingo
Duolingo, a leading language-learning app, knows that users tend to get distracted and side-tracked when learning a new language. That’s why they use different features that gives a customer-centric experience to keep them engaged:
- Duolingo uses gamification, personal progress bar, achievements, and motivational texts to keep users consistently engaged and motivated while playing the game.
- The app keeps track of people’s usage streaks and congratulates them for using the app for a certain number of days in a row. This feature encourages users to keep using the app.
- Duolingo keeps track of user performance and encourages them to practice certain problem areas. This personalized feature entices users to keep correcting certain mistakes and continuing to improve their language skills.
Using all of these and other tactics, Duolingo has essentially revolutionized the language-learning process for its mobile and desktop users.
Facial recognition is going to be a game-changer
Personalized marketing through facial recognition is a relatively new trend that’s gaining traction in various industries. Though new, facial recognition technology is going to be a game-changer for businesses. In fact, It has great potential for the future as experts predict that the industry will grow from $4.35 billion in 2021 to $11.53 billion by 2030.
Facial recognition allows brands the ability to scan faces and determine key attributes like age and emotions. This technology provides the essential consumer data that can create customer-centric product promotions and subsequently improve relevant product offerings.
The pioneer of facial recognition as a marketing tool
Among the pioneers of facial recognition software is Snapchat. The social media app allows marketers to use facial recognition features within their marketing strategy. Snapchat allows brands and organizations to create filters that mold to the user’s face.
Taco Bell and Gatorade are a few examples of brands that have used Snapchat’s facial-recognition software for marketing. The brand can see how many people used the filter, how many times the filter was shared, and even swipe up or view to a specific landing page.
Digital transformations driven by AI-Powered Personalization
For years, companies have been trying to maximize the potential of artificial intelligence and machine learning to provide seamless customer experiences. AI and AR technologies are predicted to be driving one of the most prominent social media trends in 2023.
As the competitive landscape continues to evolve, so does technology. This indicates that there’s so much potential in AI that is waiting to be discovered.
Here are three examples of how AI has the potential to continue revolutionizing the industry:
- AI-powered chatbots that assist customer support to enhance customer experience.
- Personalized ad targeting and product recommendations to boost ROI and overall conversion.
- Personalized messaging that reinforces the user experience.
In the next few years, more companies are likely to utilize artificial intelligence and machine learning for personalization. It is likely that organizations will find innovative ways to leverage these technologies to better serve their customers and enhance their customer relationships.
Get inspired by Spotify’s AI-powered playlists
In order to thrive in a hyper competitive industry as audio streaming, Spotify uses AI-powered personalization to create entire playlists that serve as recommendations for their users.
- The Discover Weekly playlist: Automatically AI curated playlist of new and existing music you’re likely to love based on your listening habits.
- The Home screen: Contains a variety of recommended podcasts, mixtapes and playlists based on moods, activities, and environmental factors like the day of the week or time of day.
- The GetReadyWithMusic playlist: The feature uses a simple step-by-step process to create a playlist of songs that are relevant to the colors and style you are carrying. It uses a questionnaire that determines the vibe and selects the songs based on that.
- Release Radar: Weekly recommended personalized playlist with the latest music based on the artists users follow.
Data Privacy and Cookieless Personalization movement
A total of 48% of consumers appreciate the convenience of personalization as long as their data is secure. In this current data landscape, consumers expect more control over their data and safety as well as a more personalized experience from brands with which they interact.
In response, industry leaders like Apple and Firefox have blocked third-party cookies. In order to fill the void left by third-party cookies, brands will turn to first- and zero-party data. Zero-party data comes from surveys and polls, while first-party data comes from customer web activity.
Compared to 2021, already 37% of brands exclusively use first-party data to personalize the customer experience, which is a 6% increase. This indicates that in the following years more brands will provide cookieless experiences.
First-party data collection at its finest with V Shred
Industry-leading nutrition and fitness brand V Shred uses personalized quizzes to collect valuable customer data. After completing the 5-question questionnaire, the user will be directed to a personalized video with customer-centric recommendations on improving diet and exercise for their specific circumstances.
The information gathered in this process can be reused for marketing purposes, retargeting potential customers and enhancing the user experience.
Omnichannel Personalization holds the key to the future of marketing
Although consumers use on average three devices and more than ten channels, only a few brands are ready to deliver omnichannel customer experiences that are optimized and personalized.
It is expected that this will dramatically change over the next few years. This is because mobile or web is no longer enough to connect with consumers. Brands will need presence across many touch points, so they can craft exceptional omnichannel experiences that will revolutionize the customer experience.
The market size was valued at $5.96 billion in 2021 and is expected to expand to a $17.92 billion valuation in 2030. The future of customer experience is more connected and personalized than ever.
Create hyper-personalisation with Netflix
With the use of Artificial intelligence (AI) and machine learning (ML) to collect and process customer data, Netflix is able to create a hyper-personalized experience to keep the audience engaged.
The popular streaming platform creates a seamless user experience across a variety of channels, like their website, Smart TV app, mobile app, desktop and Mac app, and even through various games consoles.
Personalized marketing strategy
Even though data-driven personalizations provide a multitude of opportunities, nearly two-thirds reported that this type of marketing is one of the most difficult strategies to execute.
Don’t let that stop you from taking advantage of this powerful tool. Here are some of the personalized marketing best practices to help you get started:
Don’t over personalize
While consumers expect personalization for a seamless user experience, they don’t want over-personalization. Consumers will be three times more likely to leave a brand that ‘over personalizes’ as opposed to one that does not personalize enough.
That means if you’re using facial recognition or AI-driven recommendations, you need to get consumer consent first. Once you have consent, any personalization methods you choose to implement should be opt-in, so that customers can choose to opt-out whenever they want.
Protect customer data
Make it easy for customers to opt-out of personalization at any point. Using data without customer consent will put both your brand reputation and customer relationships in jeopardy. In fact, using data disrespecting consumers’ data preferences will cause 68% of customers to stop purchasing.
Plan and prepare proper resources
To develop effective personalized marketing strategies, businesses need to allocate resources, front staff to funding and time, to the right tasks. Even though automation can reduce the time and labor cost of personalization, the overall strategy still needs input and planning from people.
Personalized marketing needs to be planned, targeted and tracked. Technology can handle the collection of data and information but it takes human effort to make sense of the data and how to put it to use. You have to know how willing your customers are to share their information, when to collect it, and when to send out personalized messages.
You also need to measure your marketing efforts in order to know what is working and what is not to allocate resources accordingly. Make sure your marketing team has enough resources so that you don’t overly rely on technology to handle everything. In some cases, it pays an outsource to work with a marketing agency to handle every step of the marketing process, including personalized marketing for proper strategies and implementation.
Since consumers demand more experience optimization from brands and digital data is more accessible than ever, organizations need a solution that meets these needs without compromising their user experience.
Personalized marketing has become mainstream and it’s inevitable that it will become an increasingly significant part of the businesses of the future.
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