Today’s companies aren’t only focused on their profit margins. To survive in a competitive landscape, business also need to establish a solid growth strategy. This approach drives development of a wider range of product offerings—and helps businesses tap into other markets. Ultimately, expanding an organizations’ scope can also lead to higher revenue growth.
However, achieving both business and revenue growth is easier said than done. Do you simply move into new, underserved markets with the promise of novel solutions? Or, would you rather reengage with your current audience and look into providing them with more value? After all, retaining customers is always a more efficient option than having to continuously find new ones.
Personalization Can Enhance Your Customers’ Engagement
One way to increase customer engagement is through personalization. Instead of treating your entire customer base as one big market, why not deliver unique experiences that cater to each buyer’s specific needs? It means taking a deeper dive into relevant information—such as demographics, purchase data, survey responses and browsing history. By using this information, brands can generate insights that give them a better idea of what each customer wants. So, the next time the buyer visits the storefront, brands will be ready to offer personalized and relevant recommendations.
Consumers who’ve enjoyed a customized sales experience via one or more of their chosen brands are usually keen to come back for more. McKinsey’s 2021 Next in Personalization report noted that 71% of customers now expect personalization in their online sales interactions. For a start, they want online stores and email newsletters to address them by name. Plus, they want those stores to remember their details—from specific measurements and delivery addresses to purchase information. In addition to shrinking revenue growth, failure to deliver personalization can lead to a loss of customers. According to the same McKinsey report, an absence of personalized services is liable to frustrate as much as 76% of consumers, prompting them to shop elsewhere.
Why Do Customers Value Personalization in Businesses?
What’s so appealing about personalized services? Humans are creatures of habit. If they find something that holds their interest, they’re more likely to return for more of the same. People will frequent the same restaurant for years—and order their favorite dish most of the time. Furthermore, fashion-conscious buyers will go back to the same brand for any number of reasons. At the minimum, they’ll expect the store to remember their name, not to mention their previous orders and payment details.
The same applies to online shopping. Customers prefer stores that remember their visits and keep a record of recent activities. Sites that ask the same questions or require entering the same information at every visit are apt to lose the buyer’s attention. Moreover, stores that recommend the same products and services to all their customers are a huge turn-off. This is especially true in respect of products that shoppers have no use for.
Instead, what customers really love is a good deal. This includes offers of free shipping, bulk discounts or savings on bundled items that they’re interested in. They also want the convenience of a trusted brand that allows them to complete the order and pay for their purchases with ease. Personalization lets them experience familiarity and convenience whenever they shop online.
What Customers Want From Personalization
A good example of a personalized customer experience is loyalty or rewards programs. The more a customer buys, the more points they accumulate. Collect enough points, and these can be exchanged for an item of choice. Further, customers who successfully reach their shopping targets can enjoy additional discounts or greater reward choices.
Purchase histories also help brands learn more about each customer. For example, data could show that a customer is in the habit of purchasing Star Wars Lego sets. With personalization, that buyer could be alerted every time the store releases a new Star Wars Lego offering. Personalization also enables online stores to create and deliver unique bundles incorporating frequently purchased products. As a result, buyers who receive these notification—and don’t want to miss out on new products and deals—will likely be prompted to purchases additional items.
Personalization can also mean a deeper understanding of what the customer needs. Here, analytics tools are able to generate insights based on previous purchasing activities. AI tools can look for patterns in buying behaviors and make recommendations to improve the experience in future. To illustrate, retail clothing sites will note the customer’s size and limit their recommendations to items in stock. It might seem like a small thing, but busy customers will appreciate the gesture.
How Can Personalization Affect Revenue Growth?
When applied correctly, personalization is an excellent driver of revenue growth. Moreover, it can produce several benefits that apply to buyer, seller—or both.
Helps Businesses Understand Their Customers
Buying shoes online is a very tricky experience. The lack of universal sizing standards means that customers might be a size 9 in one brand and 9.5 in another. In some cases, they’ll measure 9 in one model and 9.5 in a similar shoe—even by the same brand. This type of complication can lead to an uptick in product exchanges and returns. Worse yet, some customers may stop buying altogether.
Nike Just Did It
In 2019, global footwear giant Nike did what its competitors never thought of doing. The company utilized artificial intelligence (AI) and augmented reality (AR) technologies to minimize one of the biggest problems of the shoe industry: standardized sizing. But instead of campaigning for a worldwide standard, Nike took matters into its own … feet. The American company devised an app that uses AR to measure individual customer foot sizes accurately. Nike also incorporated information on its various footwear models (which may have varying size discrepancies) to ensure customers got the correct size—every time.
The effects of the app went beyond providing consumers with accurate measurements. With a better idea of their shoe sizes, customers become more confident about buying shoes online. Furthermore, knowing their exact measurement meant little to no chance of returning or exchanging a purchase. For Nike, which offers money-back returns and product exchanges, this translates to fewer returns and lower warehousing costs. It’s a definite home run for Nike: lower operating costs combined with revenue growth.
Enhances Customer Satisfaction and Loyalty
Nintendo’s Wii console launched in 2006 introduced a novel way to play video games. Instead of mashing buttons using a controller, the Wii allowed players to mimic natural arm and hand motions to control characters. The Wii also let users create simple video game replicas of themselves through basic but extensive customization options. These two features combined to establish the surprising popularity of the console. By the time it hung up its cables, the Wii was the 6th most popular console of all time, selling 101.63 million units.
The Wii’s Personalized Approach Led to Nintendo’s Revenue Growth
What caused its meteoric rise despite the presence of bigger, more powerful consoles such as Sony’s Playstation and Microsoft’s Xbox? The Wii managed to tap into a bigger audience who loved a fun gaming experience and personalized characters. Kids enjoyed playing racing games such as Mario Kart with their parents. Senior citizens held bowling nights using Wii Sports. College kids staged Smash Bros tournaments in their dorm rooms. Instead of catering to a hardcore gamer audience, the Wii brought the games to younger kids, parents and senior citizens.
After enjoying moderate success with earlier consoles such as the N64 and the Gamecube, Nintendo finally found real revenue growth in the quirky but fun console.
Improves Brand Reputation
Everybody knows the origin story of Amazon as an online bookstore. As it added more and more items to its catalog, founder Jeff Bezos continued to work tirelessly to scale-up the site. Eventually, Amazon grew into the world’s most formidable online retailer. From net sales of $609 million in 1997, the eCommerce titan generated $504 billion in revenues 26 years later. This unprecedented revenue growth helped Bezos achieve the rank of World’s Richest Person for five years.
Amazon Recommends
Apart from its ultra-wide inventory, Amazon is also a master of personalization. The retailer incorporates data from customer purchases and browsing history to make recommendations. When looking at branded microwave ovens, for example, you’ll find recommendations that include other models from the same brand, competing brands, microwave accessories and product bundles. Amazon also shows the most popular products that other customers recently bought. These suggested listings provide shoppers with additional purchase perspectives, thus enabling them to make educated choices.
Personalization is the Key to Revenue Growth
Personalization opens up new opportunities for additional markets and revenue growth. It takes an in-depth understanding of your buyer to deliver a unique customer experience. And when customers receive personalized communication and recommendations that fit their needs, they can’t help but feel special.
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