Introduction to Personalization in Marketing
Finishing watching a good show on Netflix can be bittersweet. Luckily, the streaming service’s personalized recommendation system ensures that your next hours-long binge-watching session is perfectly tailored to your interests.
Netflix has mastered the art of personalization in marketing: creating a blend of content, experiences, and messaging that cater to the needs of various customer segments. In a world inundated with information, it is what helps brands capture consumers’ attention more effectively and stay relevant, going beyond a one-size-fits-all approach to reliably deliver a unique experience to each individual. Let’s explore how personalization strategies work, why they’re effective, and how you can harness them to make your business the one that customers remember.
Understanding Personalization
Personalization sets brands apart from their competitors by connecting them more deeply with their customers, strategically using data to capitalize on leads in the customers’ behavior. But how exactly does it work?
To understand the development of a personalization strategy, it is first important to outline its steps, the first being data collection: gathering information on demographics, browsing history, purchase behavior, and preferences. Specifically for e-commerce—a particularly impacted industry, where personalization can mean the difference between a skipped ad and a sale—this can entail tracking a customer’s past purchases, responses to offers, and interactions with post-purchase emails.
After collecting this data, the next step is analysis: looking at metrics like click-through rates, the number of clicks an ad receives divided by the number of times it is shown; time that users spend on certain pages; and conversion patterns, or the steps that site visitors take that lead them closer to a purchase, such as signing up for an email list or clicking on a link.
How, then, do companies adapt their strategies to this analysis? The simplest example is tailored communication. Take e-commerce giant Amazon as an example: more than just inserting your name into the header of an email, their communication involves exclusive offers and recommendations to your taste, thanks to storing data about the products they know you love. Specifically, Amazon’s emails often follow a strategy called remarketing, re-engaging users with reminders of products they viewed. This has the effect of cementing customers’ long-term memory, placing Amazon in the forefront of your mind the next time you want to indulge in some retail therapy.
Another example of data collection is interactive content. This may be implemented as a pop-up survey or a promotional quiz (“Which Netflix TV show matches your personality?”), but for Amazon in particular, engagement is absolutely integral to its model in the form of customer reviews. Beyond fostering the atmosphere of a social media platform, where customers can share their opinions and interact with others, the Amazon algorithm also uses this engagement to promote your next purchase: “Customers who viewed this item also viewed that item.” Consumers feel connected and understood, turning Amazon into not just a platform but a community.
Beyond drawing in customers, the nuance that personalization adds to your marketing strategy is also useful logistically. The data you collect and analyze can help determine the channels through which you should funnel your marketing resources: do most conversions happen through paid promotions on social media? Emails? Physical campaigns? Ultimately, this targeted channel marketing can help your brand financially, boosting brand revenue as well as optimizing your spending.
How Personalization Works for You
Now that you know the technical definition of personalization, it may be helpful to get a sense of its tangible effects by taking a closer look at one of the most well-known marketing efforts of the past decade: Spotify’s yearly Wrapped feature.
Originally launched as “Year in Music” in 2015, then re-branded as “Spotify Wrapped” in 2017, the feature provides each Spotify user a unique compilation of their top songs, favorite artists, time listened, and other creative metrics, such as the “mood” of your listening habits. This information is displayed aesthetically directly on the app, allowing users to share to social media platforms and compare with friends and followers.
Statistically, the impacts of Wrapped are significant: when Wrapped released at the end of 2020, the feature was credited for increasing Spotify’s mobile downloads by 21%. Psychologically, the impacts are a little harder to measure but are just as clear: every year, Tweets and Instagram stories sharing Wrapped data are interspersed with the complaints of Apple Music users, who are feeling the FOMO of not getting the same personalized experience. In this way, Spotify ensures better customer retention and encourages conversion from other music streaming platforms. For many, music taste is reflective of personality, and Wrapped makes it even easier to link your listening habits directly to your identity. All of this has the combined effect of making Spotify Wrapped a sort of “yearly tradition” on social media, with users anticipating it weeks in advance.
The fact of the matter is, a tailored experience is already expected by most customers, and most brands have incorporated it into their marketing to stand out in a competitive landscape. In response to Wrapped, even platforms that are not music streaming services have released their own yearly reviews, from Duolingo to Letterboxd to Nintendo, but none had quite as much of an impact or individual personalization as Spotify did. It’s important to stay ahead of the curve, so you can be the one leading the marketing movement instead of trying to stand out in the noise of the aftermath.
Implementing Personalization
With the increasing digitalization of consumption, it’s easier than ever to use data to your advantage—but some steps of data collection and analysis are more difficult than others.
To break it down even further, the typical process in its simplest form looks like this:
- Identify a customer from a page visit, a purchase, or an email.
- Store data on that customer in something like a data warehouse. This storage should be easy to parse for seamless access and analysis, especially as your reach grows and the amount of data you store increases.
- Effectively analyze the data to derive individual insights. For the example of e-commerce, here are some questions you might ask: what product will they most like? Will that product likely be out of stock? Will the customer respond to a discount? Are they likely to refer a friend?
- Lastly, feed the results into your communication tools, whether this means email, push notifications, or the in-app experience itself.
Fortunately, Cotera can help you accomplish all of these steps. By segmenting customers based on their behavior and level of engagement, Cotera helps optimize where you should be dedicating your time and resources—as well as what those resources should be, depending on what technology you have available. And Cotera’s use of machine learning models ensures that you can experiment and adapt your strategies, so you can guarantee that your efforts are reaching your various customer segments.
Conclusion
To summarize, personalization strategies such as remarketing, interactive content, and targeted channel marketing can provide a solid boost to your brand's success by increasing revenue, optimizing spending, and enhancing your relationships with your customers. The reliance on precise and smart utilization of data means that using AI models, like the services Cotera provides, is crucial for successful implementation.
As consumption increases and data analysis advances, personalization is becoming no longer just a trend but a necessity in the evolving landscape of digital marketing, so casually ingrained that you might not even notice it—but the subconscious impacts are undoubtedly powerful. The next time you’re figuring out what to watch, what to buy, or what to listen to, remember what’s going on beneath the surface.