Hyper-Personalization: For Better or For Worse?
But How Do You Know?
When it comes to communications, personalization, segmentation and targeting customers is just a natural way of doing business. So what is hyper-personalization? Is this just a new marketing word made up to describe something very similar? Well, maybe not. Hyper-personalization is a form of marketing that uses artificial intelligence (AI) in conjunction with real-time data. It creates communications such as emails, videos, and more that are customer-specific and highly granular. Hyper-personalization can also be referred to as one-to-one marketing. But aren’t we already doing that?
The Same But Different
For years, good marketers have been personalizing communications and working toward targeting customers with a variety of different techniques and tools. For example, a brand may send out 15 different email versions, tailored to a specific target audience they are looking at. So what's the difference between personalization and hyper-personalization?
62% of consumers say they expect personalization and a brand will lose their loyalty without it. An additional 49% of consumers say they will become repeat buyers/users if personalization is offered (Forbes, 2023). Personalization involves using data collected to target the audience while hyper-personalization involves using real-time data to deliver specific communications to the target market.
Source: Instapage
Think of segmenting your audience by offers based on their previous purchases into 5-10 different communications. Hyper personalization would be sending each customer their very own specific personalized offer based on the data collected and adding them to an email journey using the customer data. Each journey would be personalized and triggered in real time with offers specific for that customer and using their name. Traditional personalization is using the customer's name in the email. 86% of companies report seeing a measurable uptick in business results from hyper-personalization, according to Evergage, a Salesforce company (cmswire, 2024).
But Is That Just Segmentation?
So, is personalization just segmentation? Well, traditional personalization often involves customer segmentation. Segmentation is grouping customers together based on identifiable characteristics. This can include attributes such as gender, location, age etc.
Personalization takes these characteristics and optimizes them to be used strategically to send communications (such as emails), and content, to each individual specifically. This is unlike segmentation, where the version of content they receive is based on the characteristics or group they were put in. While segmentation is still somewhat effective, it can lack the depth needed to truly understand individual preferences and behaviours.
Think of it like taking photos at a party. Segmentation is taking group photos. This could be just the grandkids, the parents, just the girls, only the dads and uncles. It groups them by shared traits or demographics. Hyper-personalization would be taking a selfie. It takes very individualistic data to provide a “just-for-you” or “your offers” type of communication or experience.
Hyper-personalization utilizes advanced algorithms and artificial intelligence such as machine learning to analyze large data sets including real-time interactions to create distinct content sent at the best time through the best channels to each user's unique preferences. This dynamic approach ensures that every interaction with the brand feels personalized and relevant. This results in driving higher levels of engagement, conversion rates and customer loyalty.
How Is AI Used?
The use of AI to support hyper-personalization communications is a game changer when it comes to providing real-time consumer data. Predictive analytics and machine learning are the main tools that support this. To break it down, predictive analytics helps to predict what people will want next, based on what they previously picked or purchased. Machine learning uses algorithms to constantly change and adapt content in a way that is personalized based on the consumer's behaviour and actions. AI isn't completely necessary when looking to personalize your communications but it can be helpful. At the very least, you can leverage unused information in your CRM system to help further personalize your communications.
Give It to Me!
With consumers seeing more and more messages a day, it takes more effort to stand out. A great way to do this is to personalize the content. Here are just some of the benefits that come with hyper-personalization.
Shortened sales cycle: By better targeting your audience and getting the best communications in front of the right people, it will aid in shortening your sales cycle and increase purchases.
Brand Loyalty: When brands show they know their consumer and the experience feels more personalized compared to other options, it keeps the consumer coming back
Retention: Similar to the above, as a system learns your habits, past actions and preferences, it is able to more effectively personalize the experience and will only get smarter and better, keeping the consumer coming back.
Reduced consumer stress: Consumer stress is reduced by providing only the information they need and want versus sending a lot of information they need to sort through.
Removed obstacles to purchase: By knowing customers' information and wants, it reduces the number of steps it takes to purchase a product or service.
Hyper-Personalization IRL
So now that we know how we get the information and why we want it, how do we use it? There are many ways the information can be put to use. Really, it can be used to elevate any communication you are putting in front of your target market. One of the more common uses is for email marketing and CRM journeys. A customer relationship management or CRM journey would take the customer data and deliver a specific sequence of emails based on the action in the previous email. For example, the customer clicks on the basketball link vs the soccer link in a sports email and would now get basketball-tailored emails moving forward. This ensures the very specific email is sent to the right person, at the right time. Subject lines, product suggestions and relevant offers are just a few examples of where hyper-personalization comes in. This can also include dynamic pricing and discounts.
Let's look at a few examples:
Orange Theory is a gym that uses heart rate monitors to track and display real-time heart metrics. They took these metrics and created a personalized video made with the music created using the individual's heartbeat. It also shows highlights from the year's workout including the number of classes, calories burned etc. This creative video helped to display the value and results they got throughout the year while specifically personalizing it using the heart rate monitor data.
Another example was a loyalty video Mr. Cooper sent their target market. Mr. Cooper helps customers by showing them how they can reduce spend and save money to support other financial goals they may have. In this video, they sent a very specific personalized video message that included things like your name, street address, home value, remaining mortgage balance and more! The video explains about refinancing a home in a way that is so specific to each customer.
Lastly, we have Netflix. While this example may be more obvious, it is a prime example of personalization becoming a customer norm. It uses viewing history, purchasing history, user-entered preferences and the time of day to make movies and show recommendations just for you.
The race to stay ahead is always ongoing. It is said that providers are looking at advanced software like facial recognition that can use and understand viewers’ emotions to make highly accurate recommendations. What do you think? Is this too much?
Benefits or Backoff?
Hyper-personalization seems to be the next marketing thing that brands are working towards (or some are already there!) to elevate communications - or should I say compete with one another, to stay ahead or keep up. It is constantly evolving, and while hyper-personalization seems very similar to personalization, it is that next step, taking a personalized experience, to one that is curated very granularly, specifically just for you.
Whether it is a personalized offer, a brand video, or a loyalty message, the benefits of hyper-personalization seem to be valuable for the customer and the brand. However, at what point is it too much? With the streaming service example, they are looking at facial recognition to better understand your emotions and wants and needs. To better personalize your communications, marketers need your data. The old saying goes, good data in, is good data out, and bad data in is bad data out. In the keep-up race with brands, is getting better and more specific data necessary to continue to evolve and provide good predictions? As we enjoy the benefits of hyper-personalzation now, we should consider when it will go too far. Is the information businesses want to collect from us too much? Or will it just always become the norm and we reap the benefits?
Our opinion? We think this move toward hyper-personalizing communications is positive as it allows us to target only those who want to receive information, when they want it and what kind of message. Therefore, as a consumer, I will not get the messages that aren’t relevant or of interest to me.? However, we’re conscious of the balance with privacy and will be watching to see what brands take it too far and step over the line with their data collection and the usage of that data. One thing is for sure, hyper-personalization is here to stay… well, for now at least.
Sources:
https://www.idomoo.com/en-gb/blog/7-hyper-personalisation-examples-from-brands-who-got-it-right/