The Power of Personalisation: Considerations, Challenges and What Comes Next - Part 2
We've explored what personalisation is and how it can benefit both businesses and consumers when executed well. But what are the downsides (if any) and what should companies be cautious of when implementing personalisation strategies? As personalisation continues to gain momentum, it's also worth asking: what does the future hold, and is it truly a worthwhile investment?
If you haven’t yet, be sure to read Part 1 of ‘The Power of Personalisation’ for an introduction to personalisation and the key benefits it offers.
The Ethical Considerations of Personalisation
Personalisation is now considered essential for both businesses and consumers, but it’s not without its own set of downsides and challenges. To offer personalised recommendations, businesses require customers to provide data, which allows them to analyse factors such as previous purchases, age, gender, location and more, to create targeted offers, products, emails and messaging.
Research by SmarterHQ found that many consumers are sceptical about data usage. 86% expressed concerns about their data privacy, and 79% believe companies know too much about them. It makes sense that if the consumer is handing over something – in this case, their data - they want to receive something positive and, importantly, something worthwhile in return. And despite their apprehensions, 90% of consumers stated that they would be willing to share their behavioural data if it meant they could enjoy advantages like cheaper prices or a more convenient shopping experience (1).
Businesses that provide personalised advertisements, products, and experiences must prioritise informed consent and transparency. Companies that handle customer data are responsible for taking the necessary precautions to protect consumer information from breaches. They should also offer consumers the option to opt out or request the deletion of their data. This approach not only safeguards data but also helps maintain consumer trust, ensuring that customers feel comfortable with how their information is being used.
Creepy vs Quality
As we’ve mentioned, personalisation is most effective when you offer something that consumers consider valuable or of high quality to them. While most people are generally willing to share their information in exchange for personalised offers, certain types of contact can feel more “creepy” or unnerving than welcome.
Push notifications were regarded as the creepiest, with 74% of consumers ranking mobile push notifications as the least favourable channel. When asked why, one respondent said, “I only want to be advertised to when I am on a website - not randomly on my phone. It's like being stalked.” It’s important to note that perceptions of mobile push notifications differ across generations. Gen Z finds them 68% less creepy, likely due to their extensive use and early familiarity with mobile devices from an early age; studies show that 95% of Gen Z-ers own a smartphone and a quarter of them had one before the age of 10 (1).
For businesses, several factors must be considered to understand their target audience's preferences, and to get a complete picture of them, such as age, location, lifestyle, and past shopping habits and website interactions. This way, they can use personalisation tactics that resonate with consumers without turning them off.
The Future of Personalisation
Recent changes in online data verification have heightened concerns about data security and usage. As a result, people are becoming more sceptical about and may be less willing to provide their data for personalised experiences. Businesses must ensure complete transparency regarding how data is used and protected, and they should offer consumers the option to opt out of personalised experiences if they prefer.
AI plays a significant role in delivering personalisation, and as technology continues to advance, we can expect to move towards "hyper" or "ultra-personalisation." Ultra-personalisation takes traditional personalisation up a notch by using advanced technologies, including AI, real-time data and behavioural insights, to provide highly tailored experiences. Netflix are an example of a company using ultra-personalisation to great effect. Their recommendation algorithm employs machine learning and AI to curate suggestions, ensuring that no two users have the same experience. This hyper-personalised approach helps to reduce churn (the number of customers who stop using a company's product or service within a certain period) and ultimately improves customer retention (2).
As AI becomes more ingrained into our everyday lives and even more widely used in retail, the quality and accuracy of personalisation will become key differentiators. Moreover, the overall customer experience – including the pre-purchase process, the buying experience, and after-sales care – will all be crucial for success.
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