As technology revolutionises the ability to personalise omnichannel experiences, the days of one-size-fits-all approaches are long gone. Brands now recognise the importance of influencing customer journeys in real time, dynamically shaping each interaction to meet, if not exceed, individual wants and needs at every touchpoint. This however, is easier said than done.
To gain deeper insights into how customer experience (CX) professionals are approaching personalisation within their organisations, Medallia and the Customer Experience Professionals Association (CXPA) recently produced the 2024 State of CX Personalization report. Despite the growing demand for personalised CX, businesses still grapple with data and technology limitations, hindering their ability to understand their customers’ changing needs and consistently deliver orchestrated experiences that delight and strengthen brand loyalty.
The Medallia/CXPA report evaluates brand personalisation capabilities, explores current challenges and priorities, and examines artificial intelligence’s (AI) role in future strategies.
Understanding personalisation maturity in CX deliveries
As organisations advance their personalization efforts, the maturity level of personalization across industries still has room for improvement due to being in the early stages of implementation. The report found that only 24% of CX practitioners rate their personalisation efforts as highly personalised, almost identically mirroring previous research that only 26% of consumers rate their last company interaction as highly personalised.
The report revealed that CX practitioners who rate their brand’s personalisation capabilities the highest are twice as likely to achieve significant revenue growth (10% or more) compared to those with lower self-ratings. Furthermore, delivering personalisation at scale will hinge on AI, with 46% agreeing that their business has a clear plan for the uses and benefits of AI.
Personalization has become a vital component of business strategies for several key reasons. According to the same report, 47% of organizations cite the clear ROI achieved through enhanced personalisation. In comparison, 34% are driven by customer dissatisfaction or a lack of engagement, as generic experiences no longer resonate with today’s consumers. Meanwhile, 31% report that their strategic focus has evolved to align with personalisation, reflecting the growing demand of businesses to deliver tailored in-the-moment experiences at scale.
Today’s customers expect a personalised experience when interacting with a brand, with 71% expecting it every time and 76% expressing frustration when they don’t get it. A special report published by Medallia titled “Understanding Personalisation Efforts in the Hospitality and Retail Industries” studied 1,749 hotel guests and 1,905 retail consumers and found a strong link between personalisation and overall satisfaction. This validated earlier research that showed 61% of consumers are willing to spend more with companies if they offer a customised experience.
The newer study also revealed that hotel and retail brands have significant opportunities to improve and capture more revenue. Currently, only 23% of consumers report high levels of personalization from recent hotel stays, while just 26% experience similar satisfaction in their retail interactions. This highlights that despite the availability of tools designed to enable personalisation in CX, a clear gap exists between their potential and effective utilisation.
The role of AI in Personalised CX
AI is crucial in personalised CX as it utilises sophisticated algorithms and data analytics to tailor every interaction, content piece, and service offering to suit customers’ unique preferences. As of 2023, 92% of businesses are embracing AI-powered personalization to tailor experiences for individual customers.
AI’s capability to analyze vast amounts of customer data from diverse sources such as social media, purchase history, and browsing behaviour allows it to identify patterns and preferences. By processing this data, AI can recommend products or services that are most relevant to each customer, enhancing their overall experience.
Moreover, AI drives significant improvements in operational efficiency by automating numerous backend processes, including data entry, inventory management, and customer service tasks. This automation reduces manual intervention, minimises errors, and accelerates operations.
In the APAC region, 32% of CX practitioners see the use of AI-powered technologies for operations as a key trend. By streamlining workflows and optimising resource allocation, AI boosts productivity and contributes to a superior customer experience, enabling companies to respond more swiftly to customer needs and adapt more effectively to market changes.
Personalisation is the way forward
A true commitment to personalisation requires moving beyond basic practices, such as addressing customers by name or tailoring campaigns based on simple segmentation like demographics or purchase history.
More advanced forms of experience orchestration are becoming table stakes, and recent advances in AI, if implemented correctly, can deliver these experiences at scale.
Clearly, personalising experiences has quickly risen as a top priority for organizations who strive to increase customer loyalty and retention.
To learn more, download Medallia’s “Let’s Get Personal: Your Official Guide to Personalizing Customer Experiences” guide, which discusses four dynamic approaches brands can implement at any phase of their efforts, whether looking to begin, improve, or perfect their personalisation strategy.