Coca-Cola used personalization to reverse a years-long decline in sales volumes, while Amazon has used it to become a dominant new force in retailing.
Personalization, however, still hasn’t been adopted by many companies, leaving CEOs who don’t start more sharply customizing their product offerings at risk of fading to irrelevancy.
Companies prepared to invest in the creation of more personalized customer experiences can reap immediate top-line benefits. According to new research by Boston Consulting Group, they can enjoy revenue increases of 6% to 10%, at least two times faster than those that don’t. The determination was based on an analysis of the personalization programs at more than 50 companies across 10 different industries.
“For incumbents to defend—and expand, share—they need to reimagine their business with an individualized value proposition at the core, merging physical and digital experiences to deepen their customer connections,” BCG partner Steven Mitchelmore said.
“By putting people’s first names on bottles and cans, the beverage company made customers feel special.”
Coca-Cola’s “share a Coke” campaign, launched in the U.S. in 2014, is perhaps one of the more successful personalization efforts launched in recent years. By putting people’s first names on bottles and cans, the beverage company made customers feel special, underpinning the first increase in sales volumes for previous CEO Muhtar Kent in around four years.
Amazon, meanwhile, has long utilized data analytics tools to accurately predict what products individual customers want to buy based on their personal details and purchase histories. The process has helped it tailor product marketing to individual customer preferences, while getting deliveries to them more quickly when they decide to make a purchase.
BCG found around half the companies it analyzed employed more than 25 people dedicated to personalization programs, while investing more than $5 million on campaigns. Among a sub-category of top performers, personalization programs were much more likely to be overseen by the CEO and board.
Still, only 15% of companies could be considered true personalization leaders, while another 25% were only at the experimental stage, it said. The remaining 65% were still using segmented marketing or mass-marketing approaches.
Challenges for CEOs exploring personalization aren’t just about finding enough money to invest in technology. Sourcing talented people to put it to work is tough, while leaders must also overcome cultural barriers, such as poor cross-functional collaboration and inadequate creative processes.
A failure to overcome those challenges, however, could prove costly: BCG estimates that over the next five years in three sectors alone—retail, healthcare and financial services—personalization will shift around $800 billion to the 15% of companies that get it right.