The Human Need for Personalization
Personalization isn't new. For decades retailers have been personalizing offers in order to entice consumers to buy. However, as more retailers have turned to selling their products online and as the internet marketplace has become more crowded, the need to evolve their personalization tactics in order to reach today's time-strapped and overstimulated consumers has grown.
Personalization isn't just about collecting data on shoppers and providing automated recommendations; it's actually part psychology, part science and part technology. Effective personalization systems consider the human needs of shoppers and dig into their motivations and response mechanisms. In other words, the human psychology of personalization is just as important as the technology behind it.
If we examine the technological constructs that make automated personalization systems possible and the science behind the man-machine interface that brings user psychology and technology together, we discover that the goal of personalization is to provide consumers with interactive experiences tailored to their individual needs. Historically, personalization was about giving each individual a unique experience. However, it's possible for many shoppers to find the exact same experience fulfilling, thus one-to-one personalization isn't an effective goal.
Retailers should look to the psychological factors and motivators that underlie a shopper's desire in the moment and provide the product or service that best satisfies that shopper's need. In this sense, the most effective personalization is built on a set of rules and algorithms that take advantage of group behavior and demographics, which are then applied to individuals to meet their needs.
Just as one-to-one personalization has been shown to be inaccurate on its own, so-called prediction technology has proven to be just as ineffective at targeting what shoppers really want. Although many online retailers are talking about how profile and demographic data can help boost sales, contextual information on a shopping session as it's happening is far more valuable when personalizing the shopping experience.
Profile and demographic data can be used to create predictions, however, context provides more accurate information about a shopper's desire and more insight into what they may also find helpful or interesting. Effective use of on-site search allows the shopper to define context in their own words and can be a valuable resource for retailers. Where prediction falls short, context can help build loyalty and a long-term relationship that will drive more sales overall.
By examining the psychological factors influencing consumer decisions and taking into account what shoppers really want, retailers can be far more effective with their personalization strategies and will see a measureable improvement in their business.
For online marketers looking to gain more in-depth insights and identify the key considerations to evaluate in order to improve the customer experience, you can read my new whitepaper, The Human Need for Personalization: Psychology, Technology and Science.
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