The Importance of Hyper-Personalization in Customer Communications

Digital communications are absolutely crucial to the customer experience. According to Mulesoft’s 2022 Connectivity Benchmark Report, 72% of customer/business interactions are digital, and that number is only going to climb. But digital interaction alone is not enough. Today’s customers expect all communications to be relevant and customized to meet their needs. It should take personalization well beyond the “Dear John” approach from the 1980s into a realm that many organizations have yet to enter. From a customer perspective, this level of personalization is no longer ‘nice to have’, but ‘required’.

There’s considerable research to back up this shift in perspective. All the way back in 2018, Epsilon reported that 90% of surveyed customers found personalized interactions appealing. Even more significantly, 80% of those customers said they would be more likely to buy when the experience was personalized. More recently, SmarterHQ found that 72% of respondents said they would only engage with business messages if the experience was personalized to their needs and expectations. And the numbers don’t stop with preferences: Adobe notes that 42% of customers become actively annoyed when content isn’t personalized.

Customer expectations are high, but the potential rewards for brands who can deliver are also lofty. Businesses can expect more sales, higher retention rates, increased customer satisfaction, and expanded opportunities for upselling to name a few. Most organizations understand this and would like to do better. According to McKinsey, only 15% of Chief Marketing Officers truly believe their organization is on the right track with personalization. Unfortunately, when it comes to digital customer communications, regulated industries are particularly behind the times.

You know your customers: cater to them

Too often personalization stops at ‘Dear Jane’, but this doesn’t cut it when the body text of that same communication tells the customer there are five possible reasons their loan may have been declined or why there are issues with their account. This kind of communication puts the onus entirely on the customer to determine which reason is relevant to them and makes for a very poor customer experience.

Businesses need to start taking advantage of the data they have about their existing customers to both help them and tailor offers to them. While sometimes this will require additional consent regarding communications, the effort is worth it. McKinsey found that 78% of customers are more likely to make repeat purchases from companies that properly personalize their communications.

Taking personalization beyond segmentation

When organization take their first steps beyond basic personalization, they usually are simply marketing to fairly broad segments of the population. A decade ago this meant that marketers used wide and simplistic segments like age. ‘Seniors 60+’, for instance, or ‘Working adults 25-55′. Over time, technology began to make it easier to create more segments and add more specific attributes relating to income, marital status, education levels, etc.

Nowadays companies can use granular customer data to target very precisely, identifying individuals that share similar demographics, as well as psychographics and even purchasing patterns. But creating segments to match these profiles could quickly spawn a explosion of segments and associated templates. Effective personalization needs a different approach:

1 – Dynamically tailor communications to the individual: Hyper-personalization leverages information the organization has collected about the individual through previous interactions to provide communications tailored to a specific customer. Obviously, this approach goes beyond broad dividers like age or income bracket. Instead, it delves into customer-specific datapoints like location, spending habits, purchase history, credit rating, responses to marketing offers, and other preferences. Those preferences might include the channels they most commonly engage with, the credit card they use most often, and more.This kind of in-depth analysis of customer behaviour can be used to dynamically curate the right content elements to form a communication that speaks to an individual vs a segment.  This ensures that personalization is both relevant and adds value for the customer. For example, knowing past spending habits could lead to an estimation of how many points a customer could earn if they applied for a new credit card, whether they prefer travel rewards or cash back, and which nearby retail partners can help them earn the most points.  Or perhaps a customer has missed a payment for the second time in a year: a communication could include information about refinancing options available to them, offer a meeting a local branch, or provide articles related to balancing finances.

2 – Support 1:1 “hyper-personalization” where appropriate: The next level of personalization goes beyond curating the right content and requires empowering customer-facing teams with the ability to tailor communications 1:1.  This can be done by a customer service rep sending out information after a phone call or by a claims agent following through with updates on a recent claim. To do this well, there should be controls in place which limit the text that can be edited and where required, allows supervisors to approve the communications before they are sent.  Imagine the impact of a communication which begins not with “Hello Ahmed”, but with “Hello Ahmed, congratulations on the birth of your son! Following up on our conversation today, here is some information related to getting  pre-approved for a mortgage….”.

3 – Staying consistent across the customer journey: Personalization needs to be consistently applied across all communication channels and throughout the customer lifecycle. Organizations often struggle to standardize personalization, especially across journey stage and channels because different communications systems offer different personalization capabilities. In many cases, organizations will work at the level of the lowest common denominator rather than look for a solution that can help them drive consistency across all channels and stages of the relationship.

4 – Multi-dimensional personalization will impress your customers: Personalized text is great, but personalized graphics can take an experience to the next level. For example, if a customer is being offered a travel credit card, the ads and associated images related to the card could be specific to their age and demographics, the airlines or hotels they frequent, and the types of places they like to travel. It’s even possible to explore new technologies like personalized videos.

Today’s customers want digital access to every business they interact with, including their financial service providers. And in general, they want all of their interactions, whether mobile, on the web, or in-person, to be personalized and targeted to their individual needs. With so many options to choose from, the organizations that seize the opportunity to add personalized value and relevance to their customer communications will be poised for success.

In part 2 of this blog, we talk about the technological barriers that stand in the way of businesses delivering effective personalization and what they can do break them down.

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