Personalization drives business outcomes. It is inarguably an essential part of any marketing and wider business strategy and, without it, businesses risk losing customers to competitors.
With the rise of artificial intelligence (AI), personalized marketing has become both more accessible and more complicated than ever before. With AI, narrowing in on specific customer segments, analyzing data to predict customer behaviors, and personalizing content with dynamic fields is easier than ever before. But with all these options, almost endless data points to work with, and increasing fears around privacy and security, marketers have a lot to grapple with as they navigate when, how, and what to personalize throughout the customer journey.
In this guide, we’re going to bring some clarity to the space with a look at what personalized marketing means today, how and when to use it, and what marketers see as the biggest emerging trends in the space.
What is personalized marketing?
Personalized marketing is when you use data to tailor messages to a specific customer or prospect. This might include demographic, firmographic, behavioral, and transactional data.
When personalized marketing is achieved, customers and prospects will feel as though they are being spoken to one-to-one, and that you are addressing their needs directly.
Personalization typically involves segmenting and targeting your audience; and using dynamic content fields to make recommendations, share relevant information, or insert customer details.
The benefits of personalization in marketing
At this stage, your customers expect to receive a personalized experience. In a recent report on personalization published by McKinsey, it was found that:
71% of consumers expect companies to deliver personalized interactions
76% of consumers get frustrated when this doesn’t happen
Companies that grow faster drive 40% more of their revenue from personalization than slower-growing counterparts
Since basic personalization is an expectation and an essential part of marketing today, it is the degree to which you are able to personalize customer experiences that will help you get a leg up on your competitors and cut through the noise.
Businesses that are able to achieve a level of marketing personalization that wows their customers will benefit from:
1. Increased conversions
Using audience segmentation to target leads with relevant messages and information can help you increase conversions and even shorten the sales cycle. When a new lead comes in, it’s likely they’ve completed a specific form, visited your website, downloaded a piece of content, or attended an event. Each of these actions creates data points that can be used to personalize the lead’s experience through nurture journeys, paid advertising, or sales outreach.
At this stage, the goal should be to directly address the lead’s needs and interests to give them an understanding of how your products or services could solve a problem they’re facing or streamline their life in some way.
2. Deliver a better customer experience
Customers see every interaction they have with your brand — on your website, social platforms, advertising, email communications, SMS messages, pop-up widgets, and conversations with sales and support representatives — as part of one, holistic experience that informs their perception of your brand.
Personalization takes the speed bumps out of their experience, helping you to deliver a clear message about your brand, products or services, and what you can do for them.
3. Improved retention and loyalty
Throughout a customer’s lifecycle, their expectations around personalization increase. After all, they’ve developed a relationship with your brand and it feels jarring to be spoken to as a stranger.
A strong marketing strategy will see communications become more personalized over time, nudging the customer further down the funnel to loyalty and, eventually, advocacy.
What is preventing brands from delivering personalized marketing experiences?
We have more data and technology than ever before, but many brands are still struggling to deliver the level of personalization customers have come to expect. Here are some of the most common challenges marketers face with personalization today:
1. Finding and utilizing the right data
Marketers have more data at their disposal than ever before, but advanced personalization tactics require clean, organized, and high-quality data that is accessible to your marketing automation software — something that many businesses are lacking.
In fact, according to The Clear Path to Personalization report by Forbes Insights and Arm Treasure Data, 48% of marketers cite data quality as a leading roadblock to effective personalization.
To overcome this problem, create a culture of data hygiene, invest in a CDP or CRM that helps you organize and operationalize your data, and, as Nish Ithayakumar recommended on the Grow with It podcast, identify a data quarterback who is responsible for data quality.
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2. Adhering to changing privacy and security requirements
The way we collect, store, and use data is changing as governments enact new rules and regulations around data privacy and security. Though this should not prevent businesses from personalizing marketing, it can ignite some caution and it does require marketers to stay abreast of changes and change tact when necessary.
The best way to overcome this is to invest in security audits, identify or recruit security and privacy officers within your organization, and provide employees with robust training programs. That way, you can stay compliant with all the modern standards, including GDPR, HIPAA, and SOC2, and confidently collect, store, and use data for marketing personalization.
3. Getting a single customer view
Personalization requires you to have a complete view of your customer’s experience across channels, devices, and physical locations. Without the right technology, this can be near-impossible.
Investing in a sophisticated, AI-powered customer data platform (CDP) that brings all your data together is crucial here. From there, you need to be able to use this data in your automated marketing through segmentation, dynamic content, and merge tags. Ideally, the technology you use will be user-friendly enough for anyone on the marketing team to use without needing to call in assistance from your dev team.
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Examples of personalized marketing strategies
When your data is in order and you have the right tools for the job, the personalization options are endless — so much so that it can be overwhelming to figure out where to start. These personalized marketing strategies should provide you with some inspiration. Once you’ve put one into play and witnessed the results, building on additional layers of personalization will come naturally.
1. Personalized ads for leads
Leads are more likely to respond to nurturing campaigns if the content is relevant to their interest or speaks to a specific goal or challenge they face.
Brian Lukorito, Senior Web Architect at Reaction Power, says they use segmentation to divide their audience into groups including geographical location, past and current browsing data, and where they are in the sales funnel.
“For example, in the sales pipeline, a marketing qualified lead (MQL) will get different content to a sales qualified lead (SQL). MQLs get more informational content while SQLs receive content that leads to conversions.
We implement this personalization in ads using retargeting. Meta has dynamic ads that specifically ensure the audience is shown a combination of content that would pique their interest based on their browsing patterns.”
2. Tailored advice
From finance to healthcare, many businesses offer advice as part of their content marketing efforts, generally in the form of blogs that are accessible to all customers or website visitors.
This content is invaluable both from a value-add perspective for leads and customers and to gain visibility in search engine results pages. But once you’ve grown your library of advice content, it can become difficult for people to find exactly what they need.
Personalization can come in here to create a better experience for your customers and prospects. As Shawn Plummer, CEO of online insurance agency The Annuity Expert explains. “We use data-driven insights to provide personalized financial advice and investment strategies. Understanding a client's risk tolerance, financial situation, and objectives allows us to offer tailored solutions that align with their needs.”
Recommended content can be surfaced via emails, pop-ups, on-site experiences, or a combination of all three.
3. Customized learning paths
As an online education platform, the team at Preppy understands that we all learn at different paces, and in different ways. They’ve used this insight to build a personalization engine that results in better business outcomes and improves the customer experience.
“At Preppy, we leverage personalization to create customized learning paths for our users,” Grant Aldrich, Founder of Preppy explains. “By analyzing their preferences, progress, and learning styles, we recommend specific courses and resources tailored to their needs. This not only enhances the user experience but also improves learning outcomes.”
This tactic should not be reserved for education platforms, it could easily be utilized by a SaaS business with training modules or a company in the health or finance space where free educational resources are offered.
4. Dynamic pricing and discounts
Pricing models, especially in SaaS, can be confusing, especially when you offer a number of features or products to different types or organizations. Dynamic pricing allows you to show the most relevant pricing model to your leads to take the confusion out of the process for them, and increase conversion rates.
Debbie Moran, Marketing Manager at social media management platform Recurpost shares, “We offer tiered subscription plans and personalized pricing options that align with customers' needs and budgets.”
Offers or discounts are another area of pricing personalization that can help increase conversions. Kate Ross, PR Specialist at Irresistible Me, shares, “By analyzing the purchasing behavior and interaction history of our customers, we are able to design customized offers and promotions that hold real value for them. This personalized approach not only incentivizes repeat purchases but also strengthens the bond between our brand and our customers.”
When using dynamic pricing, it’s important to stick to a few general pricing tiers rather than individualizing pricing or offering steep discounts. Your leads and customers are likely to compare pricing and will feel put off if they’ve been shown something dramatically different to a peer, and steep discounts will only cheapen your product. Instead, use dynamic pricing to highlight the most relevant pricing tier or bring the most relevant features to the forefront for your leads.
In short, dynamic pricing is about making your pricing model more digestible and clear for leads. It’s not a cash grab!
What’s next in personalization?
We’re looking at two opposing forces in personalization: AI makes hyper-personalization possible in almost every digital environment, but stricter privacy regulations, especially the impending death of cookies, make generating and utilizing personal data more difficult.
At this stage, it’s difficult to tell where the chips will fall, though marketers are optimistic.
“I think we're just scratching the surface on what's going to be possible. With AI and zero-party data, we can get so granular, sending messages timed perfectly for where prospects are in their journey,” shares Jason Smit, CEO of Contentellect.
“The next era of personalization I'm sure will blow people's minds, like walking past a bus stop and having an ad with your name pop up.The key is using all that data responsibly with transparency and consent. Do it right, and you create customers for life. Marketers who leverage personalization will win big.”
Isaac Robertson, Co-Founder and Chief Editor at Total Shape sees addressing growing privacy concerns as a way of building trust with leads and customers, “Personalization is here to stay and will only become more sophisticated in the future. Striking a balance between personalization and data protection will be crucial, and ethical and transparent data handling will be a significant trend in the years to come. The key will be to use cutting-edge technology responsibly while maintaining the trust and respect of our customers.”
Voice assistants, virtual assistants, and chatbots were cited by many of the marketers we spoke to. They’re seen as a space where customer interactions can be improved by offering immediate, personalized support, but also an area where content can be surfaced and customer experiences can be improved.
“We anticipate a surge in AI-powered financial planning tools,” Shawn said. “These tools will offer real-time financial insights, allowing individuals to make informed decisions about investments, savings, and retirement planning. AI-driven chatbots and virtual financial advisors will become more common, offering personalized guidance.
Debbie agrees saying, “RecurPost aims to integrate voice search and chatbot capabilities, enabling personalized recommendations and support for users. Conversational AI features within the tool will enhance interactions and offer more personalized assistance.”
The more companies and customers adopt conversational AI, the more consumers and businesses will likely be looking for reassurance that their conversations are kept private, especially if those conversations disclose personal information about their financial situation or health.
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Personalization hasn’t peaked yet, and the brands with a clear personalization strategy in place now will be set up to take advantage of the many improvements to come in the future. Those who aim to deliver highly-relevant and personalized experiences right throughout the customer journey, while staying abreast of and adhering to privacy regulations, will win the race.