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User Experience

How much personalization is too much?

Luiz Lima
August 10, 2022

Personalization is “the” buzzword in today’s marketing glossary. It’s hardly surprising as it is what the consumers do not just expect but in fact demand. In fact, the hype around personalization is substantially skewing towards “hyper-personalization” - which is simply about displaying highly curated products and content to shoppers leveraging real-time data, and treating each shopper as an individual with distinct needs and preferences. 

Successful execution of personalization results in more engaged customers and a higher lift in sales. Consumers are more likely to make purchases from companies that offer personalized experiences. But on top, it is a driver of brand loyalty. McKinsey suggests personalization at scale can “drive up loyalty and share-of-wallet among already loyal customers” and “reduce marketing and sales costs by around 10-20%.” 

Data-driven experiences are the winners

Every marketer knows that targeted, relevant efforts perform better and drive more positive user experience and superior outcomes, making personalization indispensable for competitive advantage in digital environment. According to Salesforce research, 66% of consumers expect companies to understand their unique needs and expectations. Similarly, McKinsey’s “Next in Personalization 2021” report suggests that 71% expect personalized interactions and, predictably, get frustrated when it does not happen. The demand for it is strong and in fact, some call it the hygiene factor in the consumer experience. “One size fits all” does not apply anymore and it is obvious that those who cater to the individual needs better, reduce disorientation, and differentiate the experiences they offer are the winners in the game. 

And we all know that personalization nurtures from a hard-to-replace stream: Data. It is the integral component of bringing tailored experiences, messaging, and offers to customers throughout their journey and creating a seamless brand experience. As a matter of fact, the gains from data are twofold: While it helps improve the customer experience, on the one hand, it enables companies and brands to inform their marketing, content, and even business strategies on the other. 

Brace for the personalization-privacy paradox

But there is one more thing to consider: Consumers are complicated. As British advertising legend David Ogilvy once said, “Consumers don’t think how they feel. They don’t say what they think and they don’t do what they say.” Despite what they say about their expectations in personalization, they make no bones about their privacy concerns - entangling marketers in a paradox. According to “State of Connected Customers” research of Salesforce, 72% of customers said “they would stop purchasing a company’s products and services due to their privacy concerns,” urging companies to use the data they collect with a strategic approach and find a balance in the personalization-privacy paradox. 

Amid rising consumer expectations of privacy, data protection and privacy legislations are also being enforced on businesses and BigTech is taking significant steps to comply with both the law and the consumer expectations. Google announced its plans to overhaul Chrome by phasing out the third-party cookies and building alternative tracking identifiers back in 2020. Likewise, as a company that has long been seen as a champion of privacy in technology, Apple rolled out its big, much-hyped privacy update in 2021, disrupting the ad industry by cutting off the majority of its data streams. The company has also been dropping ad campaigns focusing on raising awareness around data privacy and taking shots at its competitors. 

How much is too much?

Interestingly, 71% of adults in the US say that they are aware of apps and websites are collecting information about them and 65% think tracking users across platforms to customize ads is wrong, as stated in a research by Forrester. So, are the consumers right about how they feel? Well, it happens to all of us. We go into an e-commerce platform, check out a pair of trousers, and maybe add it to our cart, but then for some reason, we change our mind, abandon the cart ready to forget about the trousers forever - which will never happen because we will immediately start to see the ads reminding us those exact pairs while reading news or scrolling down on social media. They will haunt us all over the internet making it feel like we are living in a dystopian plot. 

Obviously, there is a fine line between personalization and over-personalization, cool and creepy, and today the key to building an exceptional customer experience is about understanding the balance here. 

Zero-party data a.k.a. the “earned” data

There is no doubt that personalization in a post-cookie world will be a challenge. Cookies have been helping marketers understand the tastes, likes, and preferences of their consumers based on their browsing activities for over two decades. But it is coming to an end. 

That brings us to “Zero-Party Data” - a term coined by Forrester - which is used to define data that a customer intentionally, voluntarily, and proactively shares in exchange for an improved experience. In a way, it is not sought but earned data. And many industry experts claim that it has the potential to boost consumer trust, personalization, and loyalty even further since “it could validate assumptions” better than third-party data. Forrester VP and principal analyst, Fatemeh Khatibloo, says “They know they’re going to a get a better experience based on that zero-party data versus something that’s been sniffed out about them on the web.”

When it comes to Zero-Party Data, their own mobile apps and websites are great tools for brands - because it enables them to establish that balance they should be seeking between personalization and privacy in addition to helping them to achieve their user retention, in-app purchases, awareness, engagement and conversion goals. As Storyly, we touched on the topic our guide for app personalization; customers who feel as though a brand values them are more likely to convert and become loyal. 

Ultimately, risk concerns should not hold brands back from creating great experiences but not every data collection instance is a breach of privacy - especially, if we are talking about zero-party data. The key to it all is offering a personalization experience without being identified as a “personal space intruder” and with the right tools, there is no reason why you cannot achieve it.

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