The Power of Personalization for the Experience Economy
Over the past 15 years, 52% of Fortune 500 companies have disappeared. Amazon is continuing to imprint its disruptive retail culture and this trend has overtaken out at least a third of the top 100 retailers over the last decade.
But certain companies have outperformed the rest of the field during the past decade, posting 2.8 times the industry’s average growth rate. Companies such as Apple, Disney, Marriott, MGM Resorts, Progressive, Whirlpool, Capital One, and Tesla share the same line of attack: they have decided to compete by creating unique experiences for their consumers rather than focusing on just the products or services they sell.
Customer experience-focused players realize that economic value is added by providing differentiated experiences capable of catering to consumers’ individual needs. Goods and even services are becoming commoditized (widely available and interchangeable), whereas personalized experiences remain unique as high-visibility standouts.
“The best way of competing is based on the “time well spent” factor – by offering such an engaging experience that customers cannot avoid spending time with you, as Joe Pine stated in an article for Harvard Business Review.
How has the Market Redefined the Shopping Experience for Consumers?
The good news is that anyone can become a customer-experience player. Carnival Cruise Lines, for example, has rolled out a massive project using wearables, IoT (Internet of Things) devices, and personalization to redefine consumer experiences.
Tesla has revolutionized the automotive industry and is now one of the most valuable automakers in the US, all of which has elevated every aspect of the automotive experience, such as how consumers buy and use cars.
Another example is Nordstrom Local, which is streamlining the shopping experience through personalized curators, individual stylists, and fun perks such as manicures and curbside pickup (customers place orders online but pick them up from a store).
To ensure that the customer experience evolves, we have to start by observing the needs of 21st century customers from their own point of view. Customer-experience players rely on different rules to get ahead of the pack: individuals (rather than segments), customer interface points (not just omnichannel), custom interactions (not just product recommendations). They gain ground because personalized experiences drive engagement, loyalty, repeat purchases (which equals further long-term investment), and financial return.
Forrester Research found that personalized customer experiences give rise to three times more propensity to buy, 76% more engagement, 10% more sales revenue, and 15% larger cart sizes.
How Can Bad Experiences Affect Brands?
Personalizing customer experiences can create huge pay-offs, but there are risks involved too. Successful experiences place customers front and center of the model to ensure their time is well spent (so that the brand engages, grows, sells, inspires or delights). But poor experiences will quickly send you on your way to losing customers at each of these stages. Although 75% of digital customer-experience-based decision makers say that personalization is a priority, more than half (53%) of them do not have the right technologies to deliver this personalized experience.
There may be a lack of individuality in the way we handle these events. Perhaps our technology is not capable of identifying consumer context. Or perhaps there are few or narrow-band points of connectivity. Whatever the cause, the outcome is the same: consumers will be leaving.
Some 54% of customers would consider no longer buying from a seller if they do not see their content and offerings as relevant and exclusive. Half of them will no longer do business with a company immediately after a negative purchasing or marketing experience. Moreover, a quarter of them will post their complaints on social media and 54% will contact other companies.
So why is this difficult? The exorbitant number of decision points along the consumer journey means that companies have to learn how to identify customers with a unified real-time vision and then deploy scalable intelligence to optimize multiple objectives.
Delivering the right experience requires automatic creative controls that may be instantly scaled up to millions of interactions. Every personalization initiative must be able to kick up the scope and scale in order to accelerate the pace of change.