As consumers, we like seeing personally tailored recommendations on what to watch, hear, read, and buy. We want to be seen as more than just a number; we want to be recognised as individuals.
So, it's not surprising that 7 out of 10 of us expect a personalized experience from brands. At the same time, two-thirds of us get frustrated when we don't, according to a McKinsey & Co. Study.
Improving customer experiences should be at the forefront of your marketing strategy in 2023. It's more than just using your customers' first names in communication. Customizing campaigns based on audience segments or personas is no longer enough.
People want to connect with companies on an emotional level. They want brands to understand who they are and what they want. You can only achieve this through hyper-personalization. But what is hyper-personalization?
What Is Hyper-Personalization?
Hyper-personalization delivers customized and highly curated content, products, and services to individuals, providing a unique customer experience.
It uses real-time data, artificial intelligence (AI), automation, and predictive analytics to anticipate what each customer wants or needs.
Hyper-personalization is a customer-centric, data-driven, and hyper-focused marketing approach that contrasts sharply with a one-size-fits-all mass marketing strategy.
It is true one-to-one marketing, unlike segmentation, which targets groups of people, not individuals.
"Hyper-personalization is the future of global marketing. With the increasing amount of data available about consumers, businesses have the opportunity to deliver personalized experiences that are relevant, meaningful, and valuable to customers.
“By using data and technology to understand and anticipate the needs of individual customers, businesses can create marketing campaigns that are highly targeted, effective, and efficient, and that drive better business outcomes in a global market."
- Melanie Hyde, Strategy Director
Personalization vs. Hyper-Personalization: What is the Difference?
Much like hyper-personalization, personalization aims to deliver tailored content, messages and offers for each customer.
What differentiates hyper-personalization from personalization is the use of data, technology, and the level of personalization.
Let's take a more detailed look at these three core differences...
Standard personalization uses basic customer data, including names, demographics, location, and purchase history.
Hyper-personalization includes more complex and real-time data, such as browsing and search history, purchasing behavior, customer affinity, and sentiment.
Standard personalization uses marketing automation, analytics, and rules-based personalization to display and recommend tailored content, products, and offers.
Hyper-personalization uses AI, machine learning, predictive analytics, sentiment analysis, and recommendation engines to process and analyze data and deliver custom experiences.
Level of Personalization
Standard personalization delivers customized experiences based on a customer's data captured online.
Hyper-personalization takes this further by incorporating data across multiple sources, including offline customer data and customers with similar tastes and preferences.
It also integrates multiple touchpoints, including a brand's website, mobile app, chatbot, contact center, and physical stores.
This provides a unified view of each customer and a highly individualized experience throughout the customer journey.
Balancing Hyper-Personalization and Privacy
It won’t have escaped you that we’re moving towards a future free from cookies. As a result, businesses are having to think of new ways to collect the data that enables them to deliver the level of experience their customers demand and respond to.
It is this challenge that has precipitated the emergence and growth in popularity of zero-party data. That is, the gathering by brands of their own customer data - demographics, shopping preferences, pain points, and contact information.
But even this approach isn’t without its pitfalls and should be treated with caution. It’s essential from a regulatory perspective, but also a trust and loyalty perspective, to obtain consent from your customers to use their data and give them the option to rescind that permission at any time.
How Does Hyper-Personalization Improve Customer Experience?
Consumer behavior and expectations are changing. The competitive landscape has become crowded. Leaning into hyper-personalization can benefit the customer and your company in several ways.
Delivers Individual Experiences
People want a positive customer experience when interacting with brands. Product selection, promotions, loyalty programs, site speed, usability, and data protection are some elements that contribute to better customer experiences. However, these are common for all customers.
Today, consumers demand they be recognized and treated as individuals.
They are even willing to provide their data in exchange for a better experience. Companies can offer a superior customer experience by delivering highly personalized content, products, pricing, recommendations, and offers. Though, as we’ve discussed, this isn’t without its pitfalls.
The more tailored their experience, the more likely they are to buy.
Boosts Brand Loyalty
It's easy for consumers to switch brands that offer a lower price or a better experience. If customers don't get a personalized experience, 45% will take their business elsewhere.
However, you can minimize customer churn and keep customers loyal through hyper-personalization.
Consider your behavior: You tend to stick to the same coffee shop where the barista already knows your usual order or can recommend new flavors based on what they know about your preferences.
Similarly, your customers will be more loyal if they feel you know them, understand what they want, and provide a unique experience. Emotional engagement is powerful, and hyper-personalization helps create this experience.
Keeps You Ahead
Competition is everywhere. Not only do companies compete with established players, but they also have to compete with startups and global brands. Every advantage matters. And hyper-personalization provides that edge.
With so many options to choose from, customers can get overwhelmed. Providing relevant recommendations and personalized offers makes it easier for them to decide what to buy. This helps your brand stand out from competitors that offer a more generic experience.
Lowers Marketing Costs
Some brands double down on marketing by sending out more emails, running longer ad campaigns, and expanding their audience targeting. All these cost money, and most of it is wasted if customers don't think they are relevant to them, or worse, find them annoying.
You can lower your marketing expenses by using hyper-personalization.
You don't need to blow your marketing budget by increasing your campaign coverage, frequency, and duration. Instead, deliver targeted, specific, and unique offers to new and existing customers.
There are many ways you can maximize your revenue with hyper-personalization.
Recommendations help customers make purchase decisions. Cross-selling and bundling similar products together increases the average order value. Personalized CTAs convert 202% more compared to regular ones. The list goes on.
After a personalized shopping experience, 60% of consumers will likely become repeat buyers. Personalized pricing also helps convert buyers who would otherwise abandon their carts. Companies that excel in personalization generate 40% more revenue than those that don't.
Improves Brand Marketing ROI
Many surveys and studies have proven hyper-personalization's return on investment (ROI). Brands earn back $20 for every dollar invested in hyper-personalization. This is because hyper-personalization has a compound effect on revenue.
Three metrics impact ROI: conversion rate, average order value, and customer acquisition costs. Hyper-personalization can increase the first two metrics and lower the last. It also increases the return on ad spend through more efficient and relevant personalized ads.
How to Include Hyper-Personalization in Your Global Marketing Strategy
Implementing hyper-personalization in your marketing strategy requires a thoughtful and thorough process. These are the steps to make hyper-personalization happen.
1. Compile Your Data
Everything starts with data. Gather – or start gathering – all the information you have about each customer, including demographics, location, preferences, and transaction history online and in-store.
Then, merge other data from their interactions with your company, such as your website, mobile app, call center, email, social media, and chatbot. You can augment this by running polls, surveys, and focus groups to learn more about their interests.
2. Use Advanced Technologies
With a vast amount of data, the only way to provide hyper-personalization in real-time is to use advanced technology. Marketing automation, A/B testing, and analytics are the basic components of your tech stack.
To make hyper-personalization work, you must invest in AI, machine learning, and predictive analytics to process data from multiple sources, understand intent and predict preferences.
3. Personalize Content
With complete data and the right technologies in place, the next step is to work on content personalization based on each customer's interests, preferences, transaction history, and behaviors.
You can generate personalized recommendations, deliver customized content and communication, and offer individualized products and pricing. Think about how you can use the information you have to tailor the content each of your customers sees.
4. Experiment with Different Approaches
Execute your hyper-personalization marketing strategy and observe the results. You can start with standard personalization and move on to more advanced personalization as you find out which ones resonate with your customers.
Run A/B testing on what works and what doesn't in optimizing personalized experiences. Get feedback from customers on which personalization features matter to them – user testing is a particularly valuable tactic for gathering valuable insight directly from your customers.
5. Automate the Process
Move toward marketing automation across all channels. Your recommendation engine, landing pages, email sequences, and referral programs should run with little human intervention. This is the only way to scale hyper-personalization throughout your marketing strategy.
Hyper-personalization is no longer a nice-to-have feature reserved only for tech giants. Brands must and can deliver hyper-specific experiences to customers to give them what they want and anticipate their needs.
The desire for a truly personalized customer experience will only continue, so take the time this year to fine-tune your hyper-personalization strategy and reap the rewards in the near future.
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