What is personalization?

Personalization is the practice of showing relevant content. One size fits all is no longer a viable digital marketing approach. Consumers expect a personalized experience, whether that’s on a website, in an email message, or on social media.

It is about creating a unique experience tailored to individual customer needs. The goal is to improve the relevancy of an offering. Instead of targeting an activity to a broad demographic, it is instead tailored to what is known about each specific individual. Immediate surfacing of relevant content to web/app visitors increases user engagement, leading to less drop-off. 

Personalization has four pillars. The list includes user segmentation, lifecycle mapping, workflow building, and dynamic content. Here, the rules aren't always collected. Sometimes they are defined by the practitioner, sometimes by ML or AI. For example, Google's algorithm understands what location you're in and shows you the local news, places to visit, etc., based on your interests.

Overall, it helps improve website performance through higher conversions, clicks, and lower drop-offs. Two main types of personalization: 

1. Rule-based personalization: Rule-based personalization involves using predefined criteria, like demographics or past behavior, to tailor content or experiences for users. It relies on set rules or conditions to determine what each user sees or experiences.
2. Machine learning driven personalization: Machine learning-driven personalization uses algorithms and data analysis to dynamically adapt content or experiences based on real-time user behavior. It continuously learns from user interactions to refine and optimize the personalized experience.

By offering a personalized experience, you can hope to more personally connect to your customers – and increase customer loyalty.

Why is personalization important?

According to Gartner Research, organizations using personalized messaging see 16% more impact on commercial outcomes. Here are more reasons why personalization matters: 

Customers expect it

In today’s world, personalization is a norm, not an exception. Consider your own experiences as a consumer. When you log into Amazon, you’re presented with products recommended just for you. When you log into Netflix, you see a list of recommended movies and TV shows. When you open your email, you see pitches tailored to your specific needs.

These are all personalized experiences that make your shopping or viewing that much easier. According to a RedPoint Global survey, 63% of consumers say that personalization is the standard of service today.

If you don’t offer a personalized experience, customers will shift their loyalty to a competitor that does. Improved understanding of the customer leads to proper segmentation, yielding better personalization and subsequently higher customer satisfaction. 

It provides a better customer experience

Personalization immerses the customers in an experience and makes them feel more comfortable with what is being offered. Surfacing the right content to customers results in a drop in customer service calls and improved thought leadership and brand awareness. That drives customer engagement, conversions and sales, and long-term customer loyalty. 

Customers don’t want an experience that feels generic. They want retailers and ecommerce websites to provide them with an experience tailored to their personal needs. They want to feel as if they have your sole attention, not as if they’re just part of a mass mailing or visiting some website designed from a standard template. The more special you can make your customers feel, the more likely they’ll buy from you today and in the future.

Your competitors offer it

If you want customers to purchase what you offer, you must offer a customer journey that surpasses what they get elsewhere. And, don’t deceive yourself – your competitors are working hard to provide personalized experiences of their own.

An Accenture survey found that almost half (48%) of all consumers have abandoned a company’s website and made a purchase elsewhere because they had a poor experience on the site. What you offer, in terms of both product and marketing, must meet or exceed that offered by your competition.

The better you can personalize the customer experience, the more likely it is that you’ll attract and retain the customers you target.

It’s good for business

The bottom line is that personalization is good for your business. Focusing on the customers’ needs and experiences is smart marketing and will put you ahead of competitors offering a more generic experience.

The reality is that customers are more likely to purchase from companies that they know and trust. You can establish that relationship by leveraging what you know about your customers and using that to provide uniquely personalized experiences.

For example, right now, marketing campaigns are focused on email marketing and building email lists where readers feel part of the community. This way they’re likely to buy from someone’s personalized emails whose content they regularly read on their email.

Every digital experience should focus on taking a visitor to the buying moment. 

Personalization vs. customization

Personalization is similar to but subtly different from customization. While both approaches focus on tailoring experiences according to consumers’ interests, they initiate from different places.

Personalization is initiated by a company for the consumer. Customization is initiated by the consumer for their own benefit.

As an example, a website that tracks the user’s past visits and displays new content based on those visits is practicing personalization. A website that enables users to select specific content or background colors enables customization by the user.

In short, companies personalize experiences for customers. Consumers customize their experiences for themselves.

The four pillars of personalization

In marketing, personalization is a strategy for offering highly individual experiences based on each consumer’s known characteristics. It involves analyzing consumer behavior and then using this information to design made-to-order experiences that more fully engage the customer.

There are four essential pillars of the personalization process: 

1. User segmentation based on individual customer data
2. Lifecycle mapping builds dynamic customer profiles that track the customer lifecycle through activation, nurturing, and re-activation
3. Workflow building that enables the design of personalized user experiences
4. Dynamic content that is tailored for each consumer

Each of these pillars represents an important step in the process of personalization. Each pillar builds on the previous activity and leads to the next stage, culminating in the dynamic content that creates a personalized consumer experience.

Benefits and challenges of personalization 

The advantages of personalization include:

• Enhanced user engagement: Tailored experiences captivate users more effectively.
• Improved conversion rates: Personalized approaches lead to better conversion outcomes.
• Increased customer satisfaction: Meeting individual needs heightens overall satisfaction.

Challenges in personalization include:

• Data privacy and ethics: Balancing personalized experiences with user privacy and ethical boundaries.
• Maintenance and scalability: Sustaining and expanding personalized systems across platforms and user bases efficiently.

AI in personalization 

Yes, everyone’s talking about AI. But, simply adding AI to your existing customer experience isn't the solution. Here's how to incorporate AI into your personalization program by taking the right steps:

• Start slow. Start small. Gradually introduce tailored content based on your customer's actions to avoid overwhelming them with too much at once.
• Test everything. Continuously test AI-enhanced personalization strategies and collect feedback, then make adjustments based on how your customers respond.
• Add a human touch. While the recommendations may be algorithmically generated, ensuring that there's a human factor in interactions can make the experience more personal.

At Optimizely, we help brands take this journey through marketing automation. Alaska Airlines registered an 18% increase in loyalty program signups using Stats Accelerator.

Ready to offer your customers a personalized experience

To grow your business, you need to offer a truly compelling personalized customer experience.

Optimizely One builds on real-time user data and insights to provide personalized content, campaigns, products, and website layouts. You can take the guesswork out of personalization for your customer base and provide lifetime value for different customer segments.

To make it easier for you, we have Opal. The AI assistant is there for you through every step of the personalization lifecycle. Get started in seconds, right here.