Hyper-personalization can increase your conversion rates by up to 60%
With the advent of modern technologies and smart devices, the various channels and services through which companies communicate with clients are also changing. Therefore, it pays for companies to give greater attention to hyper-personalization by effectively capturing what information to serve to clients and at what specific stage. Not only do clients expect this, but it can also bring significantly better business results.
Personalization is experiencing a boom, which is now moving to the next level, referred to as hyper-personalization. How do they differ?
Personalization of messages is largely based on segmentation. The traditional concept of segmentation creates homogeneous customer groups according to predefined criteria. The problem is that according to these criteria, customers are indeed the same, but according to other criteria, they are completely different.
Hyper-personalization is built on an individual approach to each person, treating each client as a unique entity. This is personalization on a 1:1 basis. This specific approach and real-time decision-making are used extensively in digital channels, where interactions are most frequent, to enhance the next-best-customer-experience.
Hyper-personalization thus has a multi-dimensional character:
- We personalize the time in which we will communicate with the client,
- We personalize the communication medium and format,
- We personalize the layout, text, tone of the message, as well as the colors, images, and the graphics themselves,
- We personalize the product and its settings, tailor pricing and the manner of arrangement.
The message is not static, but dynamically changes and adjusts depending on the client's journey, and based on their reactions and feedback.
[.infobox]According to McKinsey, hyper-personalization can yield up to an 8-fold return on marketing investments and increase sales by 10% or more. IDC reports that conversion rates can increase by as much as 60% with hyper-personalized campaigns compared to traditional ones.[.infobox]
Customers expect personalization
73% of consumers expect some level of personalization, 76% would be disappointed if there were none, and for 78% of consumers, it’s more likely that they will repeatedly buy from companies that provide personalization. Further research by McKinsey indicates that companies excelling in personalization generate 40% more in revenue than those that do not utilize it.
Customers, especially from social networks, are accustomed to receiving content that is relevant to them, based on the topics they follow and the interests they express, including offers of friendship and purchases of products relevant to them.
Data, or digital footprints of clients, have become the most valuable asset, and whether you like it or not, a high degree of personalization plays a crucial role and is known as a game-changer or key differentiator. Simply put, only those who can personalize messages and the overall customer experience well will play in the major league!
Hyper-personalization is the most advanced way brands can tailor their marketing to individual customers. It’s done by creating custom and targeted experiences through the use of data, analytics, AI, and automation.
Through hyper-personalization, companies can send highly contextualized communications to specific customers at the right place and time, and through the right channel.
- Gartner
What hyper-personalization looks like in practice
Take a look at this brief video that demonstrates it all in action.
Peter, aged 40, who has been with his bank for over 10 years and represents the segment of modern savers, currently holds several products with the bank and has previously held term deposits and investment funds.
- Based on his long-term behavior, as determined by behavioral analysis and evaluating the most suitable offer both from Peter's current needs and the bank's perspective, the term deposit offer came out on top. Since Peter logs into the mobile banking app several times a day, the bank decided to display the offer through a push notification.
- Peter immediately clicks on the offer, but after reading, he closes it. The bank promptly reacts by offering Peter a chat with a consultant. However, Peter closes the app.
- The bank then uses another natural interaction with Peter the next day when he logs into the mobile banking app to make a money transfer. In the app, Peter sees an offer for several deposit products and pauses at the offer for a savings account with 6% interest. However, he does not respond further and completes the money transfer.
- At that moment, the bank decides to enhance its offer based on this behavior (price sensitivity combined with a deposit affinity) and immediately offers Peter an online savings account with an interest rate of up to 7% per year! Peter notices the offers, but does not take any action.
- After a few days, when Peter's salary is deposited into his account and he logs into the mobile banking app again, the bank actively shows him its improved offer for the online savings account with 7% p.a. and a different visual design as part of continuous testing. This offer greatly interests Peter, and he immediately accepts it. He sets up the online savings account and transfers a significant portion of his salary into this account.
This example clearly shows that during a single visit by a customer to a digital channel, several decisions regarding personalized content need to be made. Every page view leads to offers and content arbitration. Customer behavior (each step, each reaction) triggers repeated adjustments to the content personalization and customer journey.
Change the Next Best Offer (NBO) to Next Best Experience (NBX)
How can this information best be utilized? The fundamental criterion is to shift the approach from NBO, where you choose the best product offer and communicate it to the client as you wish, when you wish, and how you wish, to NBX, where you recommend the most suitable product or service in a way that resonates best with the client.
Choose the best communication channel for them (one they prefer to use), select the most appropriate time based on the data gathered, decide how to present the offer (in terms of graphics, text, tone of voice), and carefully consider what relevant added value the product has for the client. Offer simple products suitable for digital sales in an easy and intuitive way. Offer complex variable products only to selected clients who are suitable for them and opt for a more personal approach. It is also key to individualize pricing and consider the client’s price sensitivity.
It is evident that there are many dimensions, criteria, and attributes based on which you need to decide which product or service to offer to which client, by what means, at what time, in what form, etc. Here, common sense, years of experience, and intuition are not enough. We must use products of artificial intelligence, which will continually improve and learn according to how your clients' behavior evolves, and while you are asleep, they will be making clear and sound decisions about these attributes for you.
[.infobox]1. Hyper-personalization provides a clear differentiation from the competition, creating an exceptionally positive customer experience—clients want to feel special!
2. Correctly implemented personalization drives a positive customer experience, which supports customer loyalty and thus brings greater value to the company (known as the Value Chain).
3. You will increase ROI, conversion rates, and revenues.[.infobox]
The Ten Key Enablers of Hyper-personalization:
- Data: Data hides valuable information about your clients, their preferences, and current behavior. It is essential not only to collect and analyze this data but also to respond to it promptly.
- Advanced Analytics: It is crucial to continuously evaluate client behavior and the performance of the current CI strategy, seek valuable insights, and immediately apply them in practice while continually testing, measuring, making changes, and improving.
- Real-Time Decision-Making and Interaction: To remain relevant in digital channels, we must be capable of making real-time decisions, arbitrate between different offers, and serve the optimal one to the client immediately.
- AI: Given the volume of interactions in the digital world and their analysis, including multidimensional analysis, unstructured data analysis, finding optimal offers, propositions, and prices for both the client and the company, and generating many variants of layouts, texts, visuals in a very short time, etc., it is necessary to involve artificial intelligence products, from machine learning predictive models to generative AI products. Machines work reliably, quickly, and never tire!
- Technology: Evaluating such a large amount of information is demanding, and for this, we need reliable and scalable technology that supports us in processing large amounts of data, involving AI, and making real-time decisions. The technology should also be user-friendly for regular marketing users, not just designed for developers.
- Customer Centricity: The client is the focus of your organization. The client is the one who trusts you and gives you their money. Everything revolves around engaging the client, maintaining a positive relationship so that they continue to use and purchase your products and services, and share their positive experience with their surroundings. Customer feedback is crucial for your further development if you want to grow in terms of revenue and CX. Your corporate culture, products, and processes should be adapted accordingly.
- Omnichannel: Real-time orchestration of personalized messages across various communication channels is crucial, meaning transferring information among them so that the client always receives the most relevant sales or service offer.
- Design of Client Pathways: The design of client pathways should be dynamic, allowing free transitions between individual pathways and parts of pathways according to the client's current preference, to ensure that all communication with the client is always optimal and the offers highly relevant.
- Individualized Pricing: Each client has different price sensitivity. Some are more sensitive to interest rates, some to the value of installment payments, and some are indifferent and accept the offer as it is because they need the product. However, calculating an individualized price tailored to a specific client can significantly contribute to optimizing your revenue and increasing client satisfaction.
- Individualized Value Proposition: Every client is unique, with their preferences, distinct needs, and perceptions, and is in a different life stage or situation. It is essential to respond to this to make your offer as attractive as possible to the client. It is necessary to gather this information and tailor a product or service offer based on it so that the client does not hesitate and immediately accepts it.
How to start with hyper-personalization
Successful implementation is a complex process divided into several phases. Initially, it is crucial to gather relevant data about clients, followed by study and analysis, setting up a roadmap, planning individual pathways, and then proceeding to implementation itself. It is advisable to bring in experts capable of managing all these steps from A to Z and ensuring that no business or technological errors occur that could negatively impact the customer experience.
Thanks to our long-standing market presence and a team of over 1000 IT experts, we are able to oversee the entire process. We have extensive experience with implementing such changes, even in large companies where there are typically more obstacles. Therefore, if you want to take your operations to the next level, do not hesitate to contact us. We will be glad to assist you.
Author
Jakub Hytka
Head of Business Consulting / Principal Business Consultant, Trask
Contact: jhytka@thetrask.com
