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  • Writer's pictureNidhi Agarwal

The Role of Personalization

Updated: Jun 5

By Nidhi Agarwal, Director Customer Experience, Zupee

02/06 2024

1. Understanding Customer Experience

When we Hear the word Customer Experience, it means how a Customer has perceived your organization/brand/service after having an engagement with your product/team/website/Application. Generally, it refers to customer engagement throughout the user journey. 

2. The Power of Personalization

When we add personalization to the user experience it refers to customizing the product, service or interactions as per the specific needs/requirements or preferences of the customer.   

For Example – Food delivery apps like Zomato & Swiggy recommend dishes/restaurants based on users' past orders and cuisine preferences. Similarly, Shopping Apps Like Amazon, Flipkart, and Myntra also recommend products based on user preferences, purchase history & browsing behaviour.  

Personalized journeys enhance the user experience & increase the likelihood of conversion which boosts customer satisfaction, encourages repeat purchases & enhances customer retention on the platform.

3. Benefits of Personalization

3.1.Word of Mouth Promotion

Customers may share their positive experience with their peer groups promoting the brand or service through word of mouth which further enhances brand reputation and reach.

3.2.Customer Retention and Loyalty

While personalization helps with Customer Retention & loyalty, it also brings challenges related to the use of customer data. Organizations must understand and respect the customer's privacy & ensure robust data security methods are in place. 

4. Challenges of Personalization

4.1.Data Privacy and Security

The algorithms have to be unbiased and built on aggregated data rather than individual user information to maintain privacy and fairness.

Customers should be made aware of the data collection practices transparently & should be empowered to review & edit their preferences along with a mechanism to opt in/out – which further builds user trust.

4.2.Data Breaches

Given the prevalence of data breaches among major industry players, it is crucial to maintain utmost caution to protect user data and have policies that limit data retention. Conducting audits at regular intervals can further mitigate risks. Unnecessary data should be removed which may further reduce the likelihood of data breaches.

Personalization strategies should be implemented with caution and a structured approach, informed by data insights, to ensure effective and responsible delivery of tailored experiences that meet individual customer needs. 

5. Steps for Implementing Personalization

The various steps that need to be followed while implementing personalization are:

  • Data Collection: User data has to be collected based on their demographics (like age, gender, and location), and Behavioral patterns (like time spent on various sections, keywords searched, when they generally browse the App etc.)

  • Data Segmentation: Basis the data collected, segment them into various cohorts & use predictive analysis to predict user behaviour.

  • Content Creation: Basis the cohorts create blog posts, messaging & promotions that resonate with the customer & address their challenges or opportunities. Make recommendations based on user requirements & make sure the content is unbiased & free of any kind of discrimination. Multilingual content can also be created to give a personalized touch & to increase engagement. Content should always be vetted by the legal team to ensure it is free from any legality.

  • Track Performance: A mechanism to track the performance of personalized content should be created to measure its effectiveness. Generally, multiple strategies are created for A/B testing & the strategy that gives the maximum output is implemented.

  • Stakeholder Management: Make sure that Stakeholders are involved in the decision-making as they can additionally give you insights if the content is in line with the KPIs they are trying to move or improve. 

  • Automation: All user journeys should get automated through AI tools to maintain consistency across all touchpoints

  • Continuous Review & Modification: A strategy or content that has worked today may not work in the future or there may be changes in user behaviour & demographic data. With new users joining the App/Website – there may be changes in Cohorts – hence it is important to review and tweak the content & recommendations periodically. 

6. Overcoming Personalization Challenges

While Personalization is important & comes with an additional responsibility of Data Security & maintaining user privacy, there are other challenges that organizations face. 

  • Data Quality: Gathering accurate, comprehensive data is difficult. Incomplete/inaccurate/inconsistent data hinder effective personalization. The sheer volume of data makes it impossible to manually verify the accuracy of every data point & works on an assumption of truth. To overcome this challenge organizations should implement data governance strategies to collect the data & ensure the accuracy of data by cleaning & validating it through external agencies. Surveys & customer royalty programs can also be run to ensure data collation is accurate & correct

  • Data Segmentation & Content Creation: Data segmentation and content creation can be challenging due to the complexity of identifying the basis of segmentation and creating cohorts and content tailored to specific groups. This process involves understanding user behaviour and demographics, which can be difficult to determine. Additionally, creating user journeys and cohorts requires specialized expertise, making it a complicated task. To overcome these challenges organizations should observe user behaviour or response to past campaigns & invest in skilled data science teams & collaborate with 3rd party agencies to leverage their expertise in creating effective content strategies.

  • Cost of Personalization & Technical Expertise: Implementing Advanced personalization algorithms requires significant expertise, resources, tools & budget. Compatibility with existing CRM & technical tools can also pose significant challenges. To address these obstacles organizations should initially adopt simpler models & select tools that align with existing systems. Integrations can be facilitated through APIs & collaboration of Product & engineering teams during implementation. Regular data analysis is required to tweak the implemented models to adapt to changing behavioural patterns. 

7. In The End, 

 The future of personalization in Customer Experience involves a deeper understanding of customer behaviour & meeting their expectations. The future is defined by the significance of Data-Driven, AI-powered & ethical approaches to deliver tailored experiences while prioritizing customer trust & security.

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