You’ve seen it before: a pair of shoes that follow you all the way from Zappos.com to Facebook, or even creepier, when you have a conversation about Patagonia and suddenly, Instagram serves you an ad for their latest down jacket. Today’s marketers don’t have to guess where to place their ads anymore. Instead, they track online behavior to tailor ads, offers, products, and experiences to the specific consumer.
Leveraging online consumer behavioral data for personalization is now a standard marketing strategy, but what are the implications for brands and consumers?
Personalization drives consumer behavior. In fact, 80% of people are more likely to do business with a company if it offers them a personalized experience. Amazon revolutionized personalization when they rolled out their product recommendation algorithm—a feature some attribute to their huge sales increase (29% in the second fiscal quarter) in 2012. And it’s only advanced since then. With the help of AI and big data, brands can deliver highly custom experiences to consumers. Now, personalization spans devices, following you from your tablet to your desktop, and can recommend your next TV binge or anticipate an unmet need.
Personalization can also inspire loyalty, which means a greater customer lifetime value and possible advocacy. With forty-four percent of consumers saying they will likely make additional purchases after a personalized shopping experience, this is a tremendous opportunity for brands to break through the clutter with tailored messaging and offers.
But is there such thing as too much personalization? As brands continue to collect data to better understand and serve their customers, where does the line between service and invasion of privacy begin to blur? InMoment's 2018 CX Trends Report found that 75% of consumers find most forms of personalization at least somewhat “creepy”. And while half of consumers admitted they’d still shop with the brand after a creepy experience, almost a quarter reported it would drive them to a competitor.
The stakes are high for companies collecting customer data: 70% of consumers would stop doing business with a company that experienced a data breach. And this data is exactly what enables brands to personalize their offerings.
So, we’ll continue to see this tension play out across industries—while consumers continue to expect more personalization, brands must deliver tailored experiences without risking the creep factor.
Julia Walker is a Project Manager at CMB and an avid online shopper whose decisions are often influenced by algorithm recommendations.