How Personalized Customer Experiences Drive Business Growth

For companies across industries, personalization is no longer a nice-to-have. Personalized customer experiences are a must for being seen as a brand of choice and driving repeat purchases and engagement. That’s why the vast majority of businesses (92%) are embracing AI-powered personalization to tailor the experiences they offer. 

In this guide, we’ll define what personalized customer experiences are and what it takes to deliver the kinds of impactful personalization that benefits both brands and consumers.

What Is a Personalized Customer Experience?

A personalized customer experience is an experience brands provide — whether in person, over the phone, or via digital channels — that is tailored to meet individual customer needs, based on a deep understanding of their unique preferences, interests, and behaviors. 

Effective personalization involves gathering customer data from across channels and throughout the customer journey, such as:

• Web browsing history
• Purchase history
• App activity
• Engagement with marketing campaigns
• Customer service and social media interactions
• Customer feedback and survey responses

Brands can then harness these insights to create personalized experiences, content, services, and products that are relevant, timely, and responsive. 

Examples of Customer Experience Personalization

From addressing customers by their first name and remembering their shopping preferences (such as their usual delivery method or clothing size) to making product recommendations based on their past purchases and search history, there are many different ways brands can treat consumers as important individual customers.

According to the 2023 report, How Consumers Really Feel About Personalization, some of the types of personalization that consumers say have the greatest positive impact on their customer experience include: 

• Receiving special recognition, rewards, or treatment for customer loyalty (69% agree)
• Not having to repeat the information that’s already been provided when transferred to a new customer service agent (68% agree)
• Being offered forgiveness or understanding for late payments, returns, etc. (68% agree)
• Getting proactive help when an error or issue is detected (e.g., account is locked or service is down) (65% agree)
• Customer service agents being able to see customers’ full history of the times they’ve contacted the company (65% agree)
• Being treated to a special offer or free item on a customer’s birthday (65% agree)

Benefits of Customer Experience Personalization for Businesses

Personalized experiences have the power to make customers feel valued, which in turn can enhance loyalty, sales, revenue, and your brand’s overall reputation. 

Enhanced Customer Satisfaction and Loyalty

By understanding customer needs and interests, businesses can deploy personalized campaigns, outreach, product recommendations, and offerings that drive brand choice. According to a 2023 Medallia Market Research survey, 82% of consumers say personalized experiences influence the brand they end up purchasing in at least half of all shopping situations. 

Increased Sales and Revenue Generation

An earlier Medallia study analyzed the performance of more than 580 organizations’ customer experience programs and found that companies with top-performing programs are two times more likely to prioritize improving personalization across interactions than laggards. At the same time, customer experience leaders are 26x more likely than laggards to report year-over-year revenue growth of 20% or more. That makes sense, given that most consumers (61%) say they’re willing to spend more with companies that customize the way they serve their needs, according to the same 2023 Medallia Market Research study cited above.

Improved Brand Image and Reputation

Brands that leverage best-in-class personalization tools and tactics can improve their brand image and reputation in a variety of ways. For starters, providing customer service agents and frontline personnel with valuable insights at the individual customer level can help these team members better understand and meet customer needs and communicate with empathy. In addition, companies that invest in personalization technology solutions are able to curate more relevant, customized, and engaging websites, apps, marketing campaigns, and product and service offerings. 

By demonstrating greater empathy and tailoring communications, products, services, and experiences at the 1:1 level, brands should see customer service complaints decrease and overall customer sentiment improve. 

The Key Elements of a Successful Personalization Strategy

While consumers are more likely to purchase from brands that offer personalized experiences, not all personalization efforts result in a positive impact. According to the most recent study from the Medallia Market Research team, more than half of consumers say they have encountered brands that have failed to deliver on the highly personalized experiences they said they would offer. 

Achieving success with personalization requires investing in the right technology, having a solid customer data strategy, and leveraging real-time data analysis to orchestrate optimized, tailored experiences in the moment.

Choosing the Right Technology

Delivering personalized customer experiences that resonate starts with investing in the right customer experience management platform. Look for a solution that allows your brand to:

• Create rich customer profiles that reflect individual 360-degree experiences across touchpoints, channels, and journeys
• Segment similar customers by group
• Leverage AI and machine learning to detect patterns and trends, analyze customer journeys, predict customer behavior, and orchestrate next best actions and experiences 
• Set up automated workflows to intervene when customer issues arise

Gathering and Analyzing Customer Data

At the end of the day, a company’s personalization efforts will only be as good as the data they have available about their customers. Rich, timely personalization results when businesses have (and act on) rich, timely data. That takes bringing together every piece of information your company has available about your customers from across interactions, touchpoints, and channels to create one single customer view and one source of truth that is continuously updated in real time. 

Acting on Customer Data in the Moment

The breadcrumbs customers leave as they navigate their customer journeys — the interests they express, the behaviors they exhibit, and the intent they demonstrate across channels — provide opportunities for brands to anticipate and meet customer needs before customers reach out for support or, worse, switch to the competition. By acting in the moment, businesses can orchestrate the ideal customer experience at the 1:1 level, designing next best interactions aligned to individuals’ interests, behaviors, and intent. 

Testing, Measuring, Iterating, and Implementing Personalization Across Channels

Adopting a test-and-learn mindset is key to establishing a solid foundation with personalization efforts. Brands can generate quick wins by starting with a specific pilot initiative and measuring the impact on important KPIs, such as revenue, customer satisfaction, and loyalty and then expand and scale across channels after demonstrating success. 

Tips for Implementing a Successful Personalization Strategy in Your Business

Segment Your Audience

Use past purchases, spending patterns, and other customer behavioral data to group like customers together and send them down the most appropriate, relevant, and customized paths. 

Start Small and Scale Gradually

Don’t try to boil the ocean. Look for easy wins where introducing personalization could improve the customer experience and deliver ROI. Begin by testing out one hypothesis, approach, or tactic at a time, and, as you evaluate your efforts, adapt and scale. 

Eliminate Silos and Adopt a Customer Journey Mindest

Instead of setting out to personalize one aspect of the customer experience — such as the digital experience, the contact center experience, or the customer loyalty member experience — brands yield maximum results when they take a holistic approach and personalize the customer journey in its entirety.

Collaborate Across the Organization

Cross-department coordination is necessary for truly achieving personalized, connected experiences. Work together with teams like the contact center, digital, operations, and marketing to have the greatest positive impact on the customer journey. 

Integrate Systems Seamlessly

When customer experience management systems work together, brands are able to unlock a cohesive customer view and execute true experience orchestration.

Develop Dynamic Content

Optimize promotions and messaging based on real-time customer needs to drive open rates, click-through rates, conversions, and sales. 

Leverage Machine Learning and AI for the Customer Experience

AI-powered analytics, such as text analytics and speech analytics, make it possible for companies to instantly sift through customer feedback and signals from across surveys, online reviews, social channels, customer service interactions, digital interactions, and more, to understand how customers feel and pinpoint what they need. AI-powered experience orchestration helps businesses identify what the best experience or content will be to help them advance along their customer journey to personalize every experience at scale. 

Prioritize Customer Data Quality

Personalize interactions with greater accuracy by capturing rich customer signals from across every channel, from direct and indirect feedback, including:

• Customer service chat logs, calls, SMS conversations, and emails
• CRM data
• Point of sales system data
• Digital experience behavior 
• Social media reviews and mentions
• Customer feedback survey responses
• Customer loyalty program data

Ensure Customer Data Privacy

Select a customer experience management platform that treats your customer data as private and sensitive and is built with security and compliance in mind, using privacy-by-design principles. 

Stay Up to Date with Trends

Personalization and AI technologies are continuously evolving. Keep a pulse on customer sentiment about your company’s personalized experiences by gathering and analyzing feedback from your customers about your efforts, and stay informed about market research on personalization trends.

The Role of AI in Personalizing the Customer Experience

The rapid rise of AI adoption has been one of the biggest shifts the world of business has seen since the debut of the internet, and it’s shaping how brands personalize the customer experience. AI-powered customer experience management platforms are helping brands better understand customers, anticipate their needs, and apply these insights to craft tailored experiences. 

Learn More About How Medallia Can Help Personalize Your Customer Experiences

Attend Medallia’s Experience ‘24 February 5-7, 2024 in Las Vegas, Nevada to unlock the latest best practices from top innovators who are transforming interactions with AI, machine learning, and predictive analytics. Register today to secure your spot.