There’s no doubt you’ve heard the term personalization floating around the last few years. After the Internet revolution, everyone worried the days of personalized service and not “being just a number” to a corporation were gone.
Turns out, that’s not quite the case.
Now, things have shifted in the opposite direction. Most brands and marketers are embracing personalization in marketing.
And that goes beyond changing automated emails from “Hello” to “Hello [Name],” now consumers want personalized home pages, choices, experiences, and apps that speak directly to them.
Brands and marketers are complying, because the facts bear out that personalization works. Check out this chart from a VentureBeat survey on marketing personalization:
Every major key performance indicator, after introducing personalization, saw a positive result, especially in the email marketing metrics.
There are a couple of reasons why this shift is taking place, which you’ll read about below.
Let’s look at some of the psychology behind personalization, and why it can help drive marketing.
The Psychology of Personalization
It always comes back to psychology, doesn’t it?
Seems that way, and the brands and marketers who excel in tying the psychological motivations of their customers into their marketing plans generally come out on top.
The Cocktail Party Effect
One of the biggest reasons personalization works is due to what’s known as “The Cocktail Party Effect.” Beyond having a great name, the cocktail party effect actually plays perfectly into our busy world.
Right now, consumers have epic amounts of data and content being thrown at them constantly, which means now more than ever, they are far more selective in what they read, watch, and pay attention to.
To highlight the signal inside all that noise, marketers have found a secret weapon: using a person’s name.
What the cocktail party effect really showcases is that we have the ability to tune most everything out in a noisy space except when we hear (or in the world of the Internet, see) something that is highly personal and relevant to ourselves.
That’s why, if you’re scrolling through your inbox or a website like Amazon and see “Recommendations for John” you’re far more likely to stop and investigate.
Of course most of us realize our favorite topics are ourselves, we don’t really need the cocktail party effect to know that.
But, tickling the curiosity of consumers is something marketers have been using to increase opens and clicks. Personalization is no different.
What personalization can trigger is that basic interest in wanting to know more. We know that curiosity does have a psychological effect. In our brains it feels like an itch that needs to be scratched.
When that applies to brands targeting consumers based on their personal interests and big data, it makes them more likely to click. Consumers want to know what their specific, personal recommendations actually are.
That can be pretty powerful.
Brands Get Personal
A 2014 study by Adobe with the ominous sounding name: “Digital Roadblock: Marketers Struggle to Reinvent Themselves” found one of the biggest ways brands and marketers were trying reinvent themselves was by embracing personalization.
Here are just a few of the stats:
- When asked to prioritize one capability that will be most important to their company’s marketing moving forward, personalization ranked highest.
- 69% agreed that marketers need to embrace ‘hyper-personalization’ (i.e. using data to provide the right products, services and content at the right time)
- In 63% of high performing companies marketers say that they are completely or very focused on personalizing experiences for customers
Much of the push behind personalization can be tied directly to the amount of data brands and marketers are collecting on consumers and how it’s used.
Though we’re well into the world of “big data” the fact of the matter is, most brands still aren’t sure exactly how to use that information and translate it into individualized customer experiences.
A recent study from Teradata highlighted this gap.
Moreover, only 50% of marketers routinely apply data-driven marketing to individual marketing messages and offers to enhance the customer experience. Yet individualized marketing is a priority for 92% of executives.
So brands know they have to get personal to get consumers interested. The successful ones have been able to use huge amounts of data to configure their sites to provide you with a completely personalized experience.
Think for a second about your own experiences. Raise your hand if you use Goodreads, Netflix, YouTube, or shop in Amazon.
One of things I love about those sites is how much they personalize my experience. On your Amazon home page, you’ll likely see a selection of books, items, and videos that are showcased based on your shopping and viewing trends.
Now, when you are given exactly what you are interested in watching or buying on a site how much more likely are you to click?
Judging from the number of times I see “Amazon” on my credit card statement, it’s much more often than not.
This is where personalization in marketing matters and highlights the results.
The Effectiveness of Personalization in Email Marketing
How much of a difference can personalization really make in email marketing?
See for yourself:
- A Hubspot study found that emails that included the first name of the recipients had higher click through rates than those that didn’t include a name
- An eConsultancy report highlighted that almost 75% of marketers surveyed found customer engagement was increased by targeted personalization in emails
- DemandGen did a study that saw 53% of marketers asked found that having ongoing and personalized communication with their existing customers resulted in a measurable positive impact on revenue
- Experian completed a survey that found when emails were personalized brands saw 6x higher transaction rates
As you can see, email marketing is one area where including just a little bit of a focus on personalization can actually have measurable results.
Take this chart from Marketing Sherpa, for instance:
By simply personalizing the subject lines of emails going out to consumers, the open rates dramatically improved.
Now, that’s not to say all you have to do is insert a name into the subject lines of your outgoing email campaigns and call it a day. Consumers are a bit savvier than that.
Yes, it’s a great place to start. But there’s even more you can do to really embrace personalization in email marketing.
An easy place to start is by segmenting your list. You should know by now not all your customers sign up for your email because they’re interested in the same thing.
Check out this simple, yet totally effective opt-in box from DoggyLoot. Their email list is further segmented by the size of the dog, allowing for much more tailored emails to go out:
Another route for personalization is to have targeted individual emails sent out based on customer behavior.
An example of this could include an email sent out to a consumer reminding them that they’ve left items in a shopping cart. It helps both reinforce the brand, and gently push them towards completing the purchase.
The most opened emails from any brand are the transactional emails (those that provide a receipt, indicate shipping information, etc.).
Brands and marketers can work on personalizing these emails as well by highlighting specific products or services that tie in or complement what they’ve already bought or their past purchase history.
You can see, there is plenty of data out there that highlights just how important personalization is to consumers. So, the sooner your brand starts embracing personalization in all your marketing channels, the better off you’ll be.