Personalization is not only a crucial capability, it’s one that punches above its weight, no matter whether the company is a digital native, a brick-and-mortar player, or a behind-the-scenes producer or supplier.
NB: This is an article from McKinsey & Co.
Consumers don’t just want personalization, they demand it. With store and product loyalty more elusive, getting it right matters. Roughly 75 percent of consumers tried a shopping behavior in the last 18 months, and more than 80 percent of those intend to continue with new behaviors.
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Furthermore, our research found that companies that excel at personalization generate 40 percent more revenue from those activities than average players. Across US industries, shifting to top-quartile performance in personalization would generate over $1 trillion in value. Players who are leaders in personalization achieve outcomes by tailoring offerings and outreach to the right individual at the right moment with the right experiences.
These seven charts show how consumer attitudes around personalization are changing and what outperforming companies are doing to grow customer lifetime value at scale.
Personalization matters more than ever before
The surge in online interactions since the onset of the pandemic escalated expectations—giving consumers more exposure to the personalization practices of e-commerce leaders and raising the bar for everyone else. From web to mobile and in-person interactions, consumers now view personalization as the default standard for engagement.
Our research shows that 71 percent of consumers expect companies to deliver personalized interactions. And 76 percent get frustrated when this doesn’t happen. Ratcheting up the pressure on companies, if consumers don’t like the experience they receive, it’s easier than ever for them to choose something different. Three-quarters of consumers switched to a new store, product, or buying method during the pandemic.
Research shows shoppers have a strong point of view on personalization
Seventy-two percent said they expect the businesses they buy from to recognize them as individuals and know their interests. When asked to define personalization, consumers associate it with positive experiences of being made to feel special. They respond positively when brands demonstrate their investment in the relationship, not just the transaction. Thoughtful touchpoints such as checking in post-purchase, sending a how-to video or asking consumers to write a review generate positive brand perceptions.
