Nearly all brands (96%) believe that personalization helps advance shopper relationships. Because 75% of shoppers are more likely to buy from a brand that can recognize them across a number of factors such as purchase history, the only surprise is that the number of businesses isn’t 100%. In fact, 56% of people say they’re more likely to buy just because a brand recognizes them by name. In the digital age, most often brands capitalize on this sort of custom interaction on the marketing end, especially content, but there’s more to it than that, namely product personalization.
What Is Product Personalization?
It is exactly what it sounds like: allowing the shopper to make choices about design elements or functionality in the product they receive. Sometimes this is very basic. Ipsy, for example, allows its subscribers to enter details about their skin tone and hair color as well as their cosmetics interests in order to provide a box of products they will like and can use; this is further personalized month-by-month by prompting the customer to make reviews. This taps into two major shopping drivers — the convenience of less time spent shopping (important to 44% of shoppers) and aversion to waste and receiving what they don’t want (33%). Sometimes it’s much more in depth, allowing someone to essentially design the product from the bottom up; brands like Converse and IBM give shoppers these kinds of options. These benefits can boost engagement rates and loyalty, but there’s a cost to failing to personalize: 78% of shoppers will only engage with offers personalized to previous engagements with a brand.
The interest and impact can vary a little by industry and type of shopper. Millennials prefer the element of surprise while building up a particular self-image or lifestyle, and Gen Xers prefer the way personalization helps them fully meet the needs of their family while saving time. Boomers emphasize discovering new products while avoiding waste. Men tend to focus on banking services (preferred by 44% of male shoppers), entertainment (49%), and technology (50%), whereas women focus on wellness (58%), fashion (59%), and skin and hair care (61%). Digitally native brands were able to take an early lead thanks to their initial focus on data and the processes they have in place to leverage that data into meaningful experiences.
However, the impact on brands is clear. Most shoppers (59%) say personalization affects their shopping decisions, and even more (77%) say that they’ve chosen, paid more for, or recommended a brand that provides a personalized service or experience. As a result, brands that commit to this through digital technology and proprietary data see 6% to 10% lifts in their revenue over the brands that don’t. And in just the retail, healthcare, and financial industries alone, personalization is projected to drive $800 billion to the 15% of companies that get it right.
The Brands That Are Doing Personalization Right
Personalization is much more than just a buzzword, and a number of brands are successfully leveraging it as a winning strategy. We’ve collected a short list of examples below.
In 2015, Nike revamped its custom shoe personalization process as NIKEiD. Shoppers can develop their own sneaker, starting from a base design (such as the Air Max series) and choosing the colors and even fabrics as well as a personalized icon or ID. This alone has brought a lot of success, but the brand didn’t stop there. In the Nike+ app, workout videos and routines can be suggested based on user interaction. The brand put out its most advanced product yet with its HyperAdapt sneakers, which can customize the tightness and looseness of the shoe to a highly individualized degree, even on the fly.
At times, personalization requires as little as a first name, and Coca Cola took that literally. In 2011, it piloted bottles labeled with first names and brought it to the US in 2014. While the initial offering didn’t provide full personalization on creation, the potential boosted sales in the US for the first time in four years. Since then, the company opened a direct-to-consumer option at its ecommerce site, allowing shoppers to add names, phrases, logos from favored teams or events, and more.
Amazon isn’t just a leader in all things ecommerce, it’s also a leader in the application of data. To make up for the fact that shoppers didn’t have aisles to wander down while they decided on their purchases, it developed digital shelves full of curated recommendations based on a slew of data. Amazon’s algorithms tend to be spot on, which is undoubtedly why it’s already been the subject of a number of case studies. The brand has become a powerhouse thanks to providing easy discovery, but it doesn’t stop there. In 2017, it even invited subscribers to influence its next round of original streaming series production.
One of the leaders in streaming music, Spotify wants to provide the best playlist for every listener; to that end, the brand developed personalized playlists that will help listeners enjoy music they love in a new way and to discover new music. It leverages algorithms to draw parallels in each subscriber’s individual listening habits to provide Daily Mixes (comprised mostly of what the subscriber already listens to, with new music mixed in), Release Radar lists (new music from artists the subscriber listens to), and a Discover Weekly playlist (new music from artists they probably haven’t listened to yet, but aligns with the genres and styles they already prefer). The application of data has brought the company to 50 million paid subscribers this year.
While L’Oreal’s endeavors in this area were just announced this year, that doesn’t make them less powerful. It launched a smart hairbrush through its luxury line, Kérastase, which uses a signal analysis algorithm to monitor hair quality and the impact and efficacy of different products and routines. In conjunction with the app, it can make detailed suggestions based on the user’s actual hair, and allows L’Oreal to connect and allow them to essentially have a digital stylist at their fingertips around the clock thanks to mobile devices.
As a jewelry subscription box, Rocksbox should consider leveraging a combination of personal data with the expertise of its staff to carefully curate each subscribers’ need for a fully customized experience. Each piece of jewelry in the box is chosen specifically for its recipient, and to maximize that, Rocksbox folded in an Instagram functionality to wishlist items straight from the social platform. The effort catapulted their Instagram following to 20x the number they had before and landed the brand another $8.7 million round of funding.
The truth is, Starbucks entire industry runs on personalization; some people may order straight off the menu, but most tweak their beverage and food orders, sometimes to an almost extreme level of detail. But the company has taken that sense of personalization and ownership and added it to the way people interact with it through the mobile app. Full drink customizations can be detailed through in-app ordering, but in 2016, Starbucks even added personalization to its loyalty gamification. Such personalized games have doubled email redemptions as well as multiplied the incremental spending of offer redeemers threefold.
Bear Naked Granola
Kellogg’s partnership with IBM to leverage its AI powerhouse, Watson, has been fruitful — it opened the door to shopper personalization for subsidiary company, Bear Naked Granola. Shoppers simply head to the website, make selections based on Watson’s recommendations, and customize the name (Watson also has suggestions for that) and design. The option has been available for a little over a year now, and according to company reps, response has been “fervent,” with shoppers wanting to share their granola inventions.
Mondelez International Oreo
As one of its initial steps into the direct-to-consumer market, Mondelez offered shoppers the ability to design and personalize classic Oreo packaging as gifts to friends and family for the winter holidays in 2015. It was the brand’s first direct-to-consumer offering, and it didn’t even initially have the logistics in place to handle it. Developed in under two months, Mondelez found a way to keep it in budget, protect consumer information, and ship in time for the holidays. While the personalization options were only available for that one season, it was proof that Oreo was capable of selling straight to shoppers, and the company has plans to grow its ecommerce to $1 billion by 2020.
Personalized experiences are a huge driving force for shoppers. It helps them meet their needs more easily, ensures they’re more satisfied with what they receive, and engenders loyalty through a continually built relationship founded on that personalization. Reaching shoppers with the right message is critical, but product personalization can be just as powerful. The brands we’ve mentioned above are a perfect example of that.