Greg Ng
What Psychology and Behavioral Economics Teach Us About Personalization
Greg Ng
August 30, 2017

What Psychology and Behavioral Economics Teach Us About Personalization

From a technical standpoint, delivering personalized experiences is easy to do. Today’s businesses have multiple avenues to learn more about target audiences (paid, earned and owned), and aggregating and analyzing consumer data is easier than ever thanks to sophisticated AI solutions.

However, from a customer adoption standpoint, personalization walks a narrow line. And when you cross that line, it’s incredibly hard to go back.

Alarms instantly go off when people receive highly personalized messaging. A top concern – how did businesses access this information, and what else do they already know about me? While three-fourths of consumers say they’re more likely to buy from retailers that can recognize them by name or know their purchase history, this enthusiasm is entirely conditional. Many consumers remain skeptics, and a single negative personalized interaction can undo any willingness to share information in exchange for more curated experiences.

The Crossroads of Academia and Personalization

For personalization to work, you have to understand peoples’ motivations regarding unique experiences. Why do people want personalization – that’s the million-dollar question. Or the trillion-dollar question for today’s brands.

Research suggests that, in today’s highly complex sales environment, demands for personalization are more closely tied notions of control, not a sense of elitism. Instead of seeing every product and suffering an information overload, personalized experiences help consumers more easily navigate through life’s exhaustive choices. Control comes through the tailoring of options.

However, as consumers forfeit personal information in the hopes of a refined experience, they become increasingly sensitive to what businesses know about them. This means that brands have to be careful about the messaging and words they choose, as well as the devices via which they communicate. Likewise, brands must be particular about even the data they reveal they have and can never make assumptions based on it.

Perhaps you remember back in 2012 when Target accidentally outed a pregnant teenager to her father. This particular shopper had recently purchased products associated with pregnancy, and so Target proactivity reached out with a direct mailer highlighting similar maternity deals. But the shopper’s father was not yet aware of his daughter’s pregnancy, and rather than delighting a customer with proactive and personalized experiences, Target’s assumption crossed a line that scared the consumer and associated itself with a host of other issues around feeling watched and judged by brands.

This is personalization in theory, but a case of data usage gone wrong in practice (or happening at a rate some consumers are not yet comfortable with). Target’s misjudgment is also an important reminder that our public personas are not always how we want brands to regard us, especially online.

Achieving Personalization Through Persona Building

We’re all guilty of presenting idealized versions of ourselves when others are watching. The summer before I went to college, I was worried people would make fun of me for the music I liked. So I bought some top albums I’d found in Rolling Stone Magazine before moving to campus. This misinformation may seem harmless, but what if a business based its entire summer marketing campaign on the idea that I liked 2Pac or Madonna when I’m really a much bigger fan of Aerosmith? Businesses must have strategies in place to get at who shoppers truly are to avoid assumptions.

At PointSource, we do so through in-depth persona building. Successful personalization must be both relevant and appropriate to end users, but these factors are difficult to nail down without input from users. To solve for relevance and appropriateness, businesses must do a better job of asking end users what they want from their experiences, using that data to inform personas and then developing unique pathways based on those insights.

Newer brands are showing how it’s done. Take Trunk Club, a personalized shopping service headquartered in Chicago. Unlike a Walmart.com, which has everything shoppers may need but only learns more about its customers over time, Trunk Club actively sources customer information to develop a strong understanding of individual shoppers from the first click. This up-front exploration pays dividends later when Trunk Club must select unique wardrobes for its customers.

Unfortunately, this process is an ongoing struggle for many brands. Just half (51 percent) of businesses feel they currently address specific user needs across all platforms, despite the availability of solutions and techniques to generate more accurate user personas.

At PointSource, we’ve made it our mission to help brands establish unique end-user personas and create feedback loops with customers to keep updating and refining these personas over time. Thorough persona building allows businesses to map these insights into strategies and act like a transformer – using the same foundational elements, the experience changes in real time to best fit current needs.

Curious what opportunities your business is missing when it comes to personas? Reach out to find out more.

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