The psychology of personalisation. Modern technologies, including artificial intelligence, machine learning and data analytics, make it easier to create the personalised experiences, products, services and communications that consumers desire. To create a perfect individualised experience, however, companies must first understand why people want personalisation.

“Remember that a person’s name is, to that person, the sweetest and most important sound in any language,” American self-improvement expert Dale Carnegie wrote in his book How to Win Friends and Influence People. By using a person’s name whenever appropriate, Carnegie suggested, you could better influence that person’s way of thinking.

As companies use technology to personalise marketing content, services, products and experiences to individual customers’ preferences, Carnegie’s advice has become increasingly relevant. And it’s working – Econsultancy’s “Conversion Rate Optimisation” report found that 93% of companies report having more success in converting prospects into customers when they personalise their marketing. But what makes personalisation so effective? It is so much more than getting their name right.

“The reason is simple,” said Jeriad Zoghby, global lead for personalisation at Accenture Interactive in Austin Texas. “Customers like to feel unique. They appreciate a company that recognises and remembers them and wants to make their experience enjoyable.”

“Personalised products and experiences make us feel unique in a sea of sameness,” said Laura Bright, associate professor of communication at Texas Christian University in Fort Worth. “Brands now have so much information about their customers that they can instantly offer exactly what they want when they want it, which consumers like because it’s more convenient and time efficient. This customisation and instant access to what they need also allows consumers to feel as though they’re in control.”

AN EASY LIFE

Today, however, personalisation does more than stroke our egos. It also respects our time.

The modern marketplace is awash in similar products with minor variations; reviewing all of them can be overwhelming. The more a company knows about its customers, the more precise it can be in recommending exactly what each user is likely to want.

45% of potential customers have abandoned a website because the amount of information or number of choices was overwhelming, according to Accenture. A company that knows its customers well, however, can deliver those choices that best match an individual.

“The human brain hasn’t developed to cope with the flood of information and the thousands of mini decisions we’re faced with every day,” said Liraz Margalit, an Israeli-based web psychologist and head of Behavioral Research at global experience analytics company Contentsquare. While the internet is responsible for generating much of this overload, “personalisation allows companies to present customers with a shortlist of search results, product recommendations or service options specifically tailored to their personal needs and preferences, so they can easily work out what’s best for them.”

Retail giant Amazon, for example, sells more than 562 million products. Its machine learning algorithms proactively display product suggestions personalised to each customer, based on everything Amazon knows about the people whose product preferences align. There is something more sophisticated now since the advent of AI, hyper-personalisation software using machine learning. This identifies the consumer’s future behaviour ranking every SKU by the greatest likelihood of that individual consumer to purchase, in order of greatest propensity. It presents them to that individual at exactly the right moment – send time optimisation, thereby maximising that individual’s customer lifetime value CLV potential. (i.e. Likelihood to Purchase, Discount Affinity, Likelihood to Churn etc).

Despite recognising that customers want experiences that make them feel important and in control, companies often struggle to develop, but now there is a revolutionary change. The fundamental challenge? Companies often fail to understand the motivations behind a customer’s actions.

Companies mistakenly think they can predict customer behaviour by analysing data about what individuals have done in the past, assuming they will do the same in the future. However, humans are intelligent, complex and emotionally driven, so their decisions are always influenced by multiple factors.

Consequently, companies should apply psychological theory alongside analytics, so they can identify how external factors combine with their customers’ different personality traits, mindsets, expectations and preferences to impact their decision to buy (or not buy) products. Once organisations truly understand how their customers are likely to behave in any given mindset and situation, they can develop personalised experiences that will delight customers and drive sales.

Focused customers who have already decided to buy a specific product will likely click on one product and head straight to checkout. Mindful shoppers may hover over different items on a web page for several minutes. Disoriented or explorative consumers might flit between multiple pages and several product categories, and disinterested people will leave the site quickly or abandon their basket.

Once companies learn to recognise certain behavioural patterns, they can determine which type of personalised experiences individuals will find helpful in real-time. For example, they could send a personalised recommendation to an explorative or disoriented customer during the shopping process to help them make a purchase decision.

There is also the added danger of marketers not truly understanding personalisation, or more specifically what technology to adopt to maximise the opportunity. The inherent danger is a huge investment to be thrown away later when it was not appreciated what pressures and scope were necessary for corporates, large and small to adopt.

MUTUAL BENEFITS

Personalisation offers significant benefits for consumers, but it also has multiple advantages for organisations that master it. The better companies are at understanding why customers like personalisation, the better they will be at offering customised experiences for their clientele, and the more customers will trust and embrace their services and products.

Humans are naturally happiest when they are recognised and valued as individuals, and when they feel safe and in control of their experiences. When companies get it right, personalisation answers all of these basic human needs because it enables every customer to feel like they have their own 24/7 personal assistant who can be trusted to help them make the best possible decisions. Once customers have experienced this type of personalised assistance from a brand, they won’t settle for anything less.