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Customers appreciate when companies recognize and prove they know their customers. These consumers expect businesses to cater unique experiences to them.
With various ways to reach current and prospective customers -- including in-store and across social media platforms, email and mail -- companies have numerous opportunities to personalize marketing messages. Marketers can gather user data, create buyer personas, and analyze habits and behaviors to craft individualized experiences and messages for customers.
The benefits of personalized marketing include:
- Understanding of customers
- Customer engagement and feedback
- Social sharing and brand affinity
- Lead nurturing
- Customer retention
- Higher revenue
To understand and reap these benefits of personalized marketing, marketers should know exactly what the term means.
What is personalized marketing?
Personalized marketing, or one-to-one marketing, is when a business tailors a marketing message to an individual based on information the company collects, such as purchase history, interests and demographic data. It is unlike traditional marketing, which targets a wide range of customers with broad messaging tactics such as generic mailings and cold calls.
The goal of personalized marketing is to make customers feel as though the company is speaking directly to them. For example, the company might address customers by their first names in emails or send targeted messages about products or services in which the customer might be interested. Companies can use personalized marketing in various ways, including:
- Content. Marketers can segment customers and determine how to personalize that content based on the customers' industry, age range, job title, gender and more. Marketers may also use known preferences and interests to determine which content a customer receives.
- Emails. Marketers can personalize the emails they send to customers to educate, build loyalty or sell products based on their interests. Marketers may use email marketing strategies, such as welcome emails, cart abandonment emails and birthday emails, to engage with customers.
- Product recommendations. Companies can use customer purchase histories to determine product recommendations. If a targeted email or advertisement shows a customer a similar product to one they recently purchased, or an additional item that may be useful with that other product, the consumer may be more likely to make another purchase. Companies can also ask customers to customize their interests, which enables the vendor to make more specific product recommendations.
- Webpages. Marketers can personalize webpages that tailor the experience to whether customers are first-time visitors or repeat customers. Personalizing webpages may include adding a "Welcome back!" message or an abandoned cart reminder to repeat visitors. If someone visits the site for the first time, the webpage may display a welcome message or more introductory content.
Benefits of personalized marketing
Customers don't want to receive irrelevant advertisements and marketing messages, especially with brands they have visited or done business with before. If the company seems out of touch with their interests, customers may choose not to interact with it anymore. Companies that personalize their marketing strategies may retain customers more successfully and create long-lasting relationships with those customers.
Explore the seven top benefits of personalized marketing.
When a company reaches a prospective customer with the right message at the right time, the likelihood of conversion increases compared to when a customer receives an irrelevant message, especially at an inappropriate time. If a company curates an experience for that specific person, the prospective customer may be more likely to convert to an actual customer and make a purchase.
2. Understanding of customers
Personalized marketing enables a business to show customers it understands them from the first interaction. When a company has access to a site visitor's data, it can personalize the experience faster than a company that doesn't use that data.
3. Customer engagement and feedback
Customers may feel comfortable giving feedback, filling out surveys and providing personal information if they receive something in return, such as a coupon or discount on their next purchase. Through direct customer feedback, companies gain customers' personal data and preferences to inform how they personalize the user experience.
4. Social sharing and brand affinity
If customers enjoy a personalized experience, they may share their positive feedback with friends or family. When a company or product satisfies customers and they react positively, they may share their support on social media, which increases the brand's or product's reach.
5. Lead nurturing
Lead nurturing is a set of marketing strategies that sales teams and marketers use to convert a potential customer -- called a lead -- into a buyer. If sales and marketing teams focus on a specific prospective customer and learn what that person wants and needs, the teams can personalize their lead's experience and have a better chance to convert that lead into a customer than if they tried the same approach on everyone. If prospective customers feel as though the business understands their needs and can help them overcome potential obstacles, the sales and marketing teams can push those leads further down the pipeline.
6. Customer retention
Customers want to receive marketing messages and advertisements relevant to their interests and needs. If a company keeps up-to-date information about its users, it can continue to personalize messages for them and serve them relevant content. Customer retention measures a customer's loyalty and whether they will continuously purchase products from a business. If a company makes a customer happy through its marketing content and quality, that person will likely purchase a product from that business again.
7. Higher revenue
If marketers know a customer's preferred channels of communication, they can target their efforts on those channels to drive a purchase. For example, if a customer frequently visits a company on both its website and its social media page, the marketer may focus on those channels, provide product recommendations based on expressed interests and customize the experience. If customers enjoy what a company offers them, both in terms of experience and product, they may purchase more from that company and return multiple times, resulting in a boost to the company's ROI.
Challenges of personalized marketing
Businesses also face challenges with customer data when they adopt personalized marketing strategies. Problems include:
- Data silos. Within the company, teams may manage data in different locations. A company with large amounts of customer data may struggle to bring all the data together for all teams to access and view the customer completely. Companies should use technology -- for example, a customer data platform -- to align data across teams and eliminate miscommunication. Sending the same advertisement twice to a customer from both sales and marketing teams is not a positive interaction.
- Customer privacy concerns. The California Consumer Privacy Act and the General Data Protection Regulation in the EU, as well as other laws in various countries, regulate customer data collection. Regulations can create obstacles for companies to collect data and target their advertisements. If customers opt to not share their information with a company, it needs different means to personalize content for them.
- Transparency in data usage. Companies must be cautious with marketing strategies and avoid sharing how much they know about their customers. Sometimes, customers may not realize or remember they gave a company permission to use their data. Personalization could unnerve them. Companies should inform customers about what information they will use and how they plan to use it.