Personalization: the Future of the Consumer Experience

According to a 2024 Zendesk study, 76% of today’s consumers expect personalized interactions. How can organizations use the tools available today to tailor how they engage with their customers without crossing ethical lines? 

The world has become a noisy place. We’ve all become accustomed to too many emails in our inbox, too much content in our digital feeds, and exposure to too many brands, products, and services to even dream of interacting with. That’s why today’s consumers want companies to use their data to provide tailored experiences to help them achieve personal goals, with minimal fuss.  

Priscilla Batistão, Partner at Signium Brazil, says, “To cut through the noise and make their day-to-day experiences easier, consumers are looking for brand engagements that are relevant to them. Even more than that, really – they want experiences that are designed specifically for them. Business leaders must realize that success is not just about reaching target audiences anymore. It’s about full personalization of consumer interactions.”  

Data presented at the National Retail Federation (NRF) 2024 in New York confirms the importance of creating an inviting store that entices customers to leave the comforts of their homes. It’s essential for retailers to offer unforgettable, tailor-made experiences that make customers feel valued by the brand – otherwise, the logistics of maintaining a physical store may not be worthwhile. When customers choose a brand and remain loyal to it, they expect to be treated as special, receiving VIP treatment and unique offerings. Today’s consumers are eager to share their brand experiences, whether positive or negative, and they want to see and engage with products and services before discussing them. 

Three reasons why business leaders should care about personalization 

As so aptly put by Forbes contributor Avi Dan: “Personalization is not a trend; it’s a marketing tsunami.”  

Personalization has become a pivotal part of how consumers experience brands. This is largely because of major shifts in what they expect, how they behave, and the effects of digital advancements. As technologies become more capable, companies are using data-driven insights to inspire targeted offers and seamless services to create a more efficient and satisfying customer journey.  

Batistão urges organizational leaders to remain up-to-date with personalization trends: “By making this effort to cater to unique customer demands, companies not only attract new clients but also build lasting relationships with existing ones. The time and cost of personalization must be seen as an investment into growing a loyal and highly engaged customer base which, as any astute leader knows, is as good as gold in the world of business.”  

1. Customer expectations are evolving 

Consumers now want brands to recognize their personal preferences, habits, and needs. With so much information available, they prefer companies that provide tailored interactions, products, and services instead of providing one-size-fits-all solutions.  

Recent statistics from Zendesk support this notion:  

• 62% of consumers agree that personalized recommendations are better than general ones.  

• 77% of business leaders believe that deeper personalization results in higher customer retention, and 66% believe that it lowers customer acquisition costs.  

• 6 out of 10 consumers notice and appreciate when they receive personalized recommendations. 

2. Consumer behavior has changed 

Social media and online shopping have set a standard for personalized experiences. Major media platforms have mastered the art of building algorithms that apply user data to creating consumer journeys that feel relevant. Consumers now have more options than ever, and personalized experiences help simplify their choices, making it easier for them to decide what to engage with. 

According to McKinsey’s State of the Consumer 2024 report, some of the key consumer behaviors that prove the need for personalization are as follows:  

• Weakening brand loyalty  

Consumers are increasingly open to exploring new brands due to past supply chain issues and current economic pressures. Organizations that tailor their services, products, overall value, and brand messaging are more likely to stand apart from competitors. 

• Shift in sustainability priorities 

Younger consumers still value sustainability. However, economic concerns and tight budgets have led to a decrease in their willingness to pay more for sustainable products. Organizations that find a way to satisfy their consumers on both sustainability and price should be actively building this into their customer’s journey, to secure a greater portion of the market share.  

• Rise of social commerce 

Social media is now a major shopping platform, particularly among Gen Z and millennials. eCommerce via social media is expected to continue to grow significantly, offering organizations access to robust digital landscapes that are highly conducive to personalized consumer interactions.  

“Social media has always been, first and foremost, a consumer’s playground,” says Batistão. “But leaders should never underestimate the value of these kinds of platforms. They are data-rich. They offer direct access to customers that you can hand-pick based on personal preferences. Social commerce is the perfect example of successful consumer personalization.”  

3. The role of digital transformation and “big data” 

Digital advancements allow brands to gather and analyze large amounts of consumer data – we call this “big data”. ​​Recent information suggests that Facebook alone generates more than 4 petabytes (or 4,000 terabytes) every day.  

Why should organizations be excited about such vast data? Although funny cat videos could account for a significant portion of these figures, much of the more structured data that users submit can help companies identify new business opportunities and tailor future products, services, and campaigns according to consumer sentiments and demands.  

Consumers expect uniformity in their interactions with brands across various online platforms, and today’s digital tools help ensure that this personalization remains consistent. Batistão explains: “Think about a time when you viewed a sponsored advert on a social media platform, and you interacted with the ad in some way – maybe you liked the post or clicked to read more, or you completed a survey or poll linked to the content. If that brand is using its digital tools properly, you will continue to see its content across numerous digital platforms for weeks, even months. If they’re using the actual data properly, the ads would somehow appeal to you on a personal level, as though each advert is designed to address your specific demands. The power of big data lies in its granular details.”  

What every business leader should be asking about personalization 

Using sophisticated analytics and technology, companies can deliver tailored experiences to their customers that increase engagement and conversion rates. Here’s what business leaders should be exploring with their product managers, business analysts, and marketing teams: 

How is my organization using data analytics? 

Companies use data analytics to understand individual customer preferences, behaviors, and needs. By analyzing large sets of data, businesses can identify patterns that help personalize communication, product recommendations, and customer service. This could include: 

• Product or service development based on consumer behavior. 

• Tailored content displayed on digital platforms to align with personal interests. 

• Custom offers to entice interested consumers to engage further with the brand. 

What are the most useful data points for personalization? 

Big data can be overwhelming. It’s important to identify and hone in on relevant, fit-for-purpose information that helps to craft a personalized interaction with consumers. Key data points that companies can analyze include: 

• Purchase history – to understand what customers have previously bought, predict future purchases. 

• Browsing behavior – to identify consumer interests and re-position relevant products across all platforms. 

• Demographic information – to tailor experiences to different customer segments, like age, location, gender, or income level. 

• Social media activity – to provide insights into customer preferences, trends, and sentiment. 

• Customer feedback and reviews – to guide personalized communications or improvements in product offerings. 

Which market segments does the data suggest we target? 

To make personalization practical for multiple audiences, data analytics allows businesses to group customers into segments based on shared characteristics. Some methods include: 

• Behavioral segmentation – customers are grouped by their actions, such as frequent buyers, price-sensitive customers, or early adopters.  

• Geographical segmentation – based on location, companies can adjust offerings for regional preferences, climate, or local events. 

• Psychographic segmentation – this data enables more emotional and resonant consumer interactions by identifying segments based on lifestyle, values, and personality traits. 

• Predictive analytics – companies can use machine learning models to predict which customers are likely to make a purchase, allowing for targeted intervention or promotional efforts. 

One company that has demonstrated aptitude in consumer personalization is the Marriott Hotels & Resorts group. The pioneering hotel brand has made great strides in applying data within the hospitality industry to enhance the customer experience and increase revenue. For example, Marriott uses dynamic pricing algorithms to analyze various factors such as room demand, local events, weather, and even global economic conditions. Being able to adjust their pricing in real-time has reportedly led to a 5% revenue increase per room. 

Marriott has also started experimenting with facial recognition technology for check-ins, enabling guests to skip the front desk entirely. Some Marriott hotels have even installed Amazon Echo devices in rooms, allowing guests to control certain comfort functions via voice commands. This interaction is not only convenient for consumers but also helps Marriott gather data on guest preferences and needs, which they can use to personalize future visits further​.  

Is my organization using data ethically?  

“Leaders should remember that managing consumer data is always a huge responsibility,” says Batistão. “While personalization offers exciting opportunities, it comes with significant ethical considerations and potential risks that companies must navigate with the greatest care.”  

Increased data collection raises the risk of exposing sensitive information, which can lead to identity theft, particularly in cases of data breaches. It’s also essential for companies to obtain explicit consent from users before collecting and using their data. Many users may not fully understand how their data is being used, raising concerns about informed consent. To address this issue, clear communication about data usage and straightforward consent mechanisms are vital. 

The EU’s General Data Protection Regulation (GDPR) establishes strict rules regarding data collection, requiring explicit user consent and transparency about how personal data is used. Companies must adapt their personalization strategies to comply with these regulations, as non-compliance can result in heavy fines and damage to brand reputation. 

Curious companies use personalization to cut out consumer chaos 

In a world of fast change and constant noise, getting your business noticed can feel overwhelming. At the end of the day, attracting customers and retaining them remains essential to success. Speaking about placing customers at the center of a product or service, Richard Branson once said, “The key is to set realistic customer expectations and then not to just meet them, but to exceed them.”  

Batistão comments: “Company leaders must approach customer service with curiosity. This is the first giant leap toward personalization: using data to understand what consumers really want and need. Only then can they provide tailored solutions that cut out half the chaos their customers experience while searching a busy marketplace. That’s how you get noticed.”