How Personalized Brand Experiences Help Drive Customer Loyalty

Guest post by Mehdi Hussen.

Modern consumers are demanding. Beyond top-notch products, they expect quick customer service and tailored shopping experiences. A McKinsey report notes that 71% of customers expect brand personalization and 76% get frustrated if it’s not provided.

B2C brands (and B2B companies increasingly, as well) focus on personalizing their services to build recognition in a cutthroat market. A new consumer may try out your product at first on an impulse buy. But you need to create meaningful connections to retain their business.

Personalization can help. It boosts customer loyalty and ROI by:

• Customizing fulfilling experiences
• Making the journey memorable
• Showcasing your customer-centric values
• Generating trust among your audience

This post details the ins and outs of how personalized experiences help drive customer loyalty and how to create those experiences.

Understanding customer loyalty

Customer loyalty creates an ongoing relationship between a business and its customers. Loyalty makes customers more willing to repeatedly purchase from that business instead of its competitors.

It’s an often reported statistic that acquiring a new customer costs five times as much as retaining an existing one. That makes customer loyalty paramount to business success. A loyal consumer base helps you in:

• Establishing brand value
• Building meaningful and profitable relationships
• Sustaining revenue growth
• Leveraging customer advocacy
• Reaching social media marketing goals

According to reports, 34% of consumers switch to competing brands due to changing needs and expectations, whereas 56% are more likely to buy from a brand with a loyalty program.

While product quality remains the primary driver, many other factors influence customer loyalty. These include:

• Convenience
• Customer expectations
• Memorable buying journey
• Rewards
• Social impact

Personalization aligns all of these factors with? brand image and makes it the customer’s first choice.

Why personalized experiences matter to customers

Personalized experience means treating every customer differently based on their unique interests and preferences, creating long-lasting connections with them. It offers each buyer a customized experience through brand messaging, marketing, recommendations, and offers.

Personalization helps businesses boost their customer retention by enhancing brand loyalty. It demonstrates the value a company puts on its customers, adds credibility, and keeps the business relevant to the target audience.

For example, Spotify uses hyper-personalization to engage users and enhance their experience on the platform. With the platform’s thoughtful user account customization, you can build an entire music library according to your taste. Spotify also recommends music and podcasts based on your search history.

How personalized experiences drive customer loyalty

Here’s how personalization enhances customer loyalty for brands:

Builds emotional bonds through personalization

Likability drives sales. According to reports, 31% of advertisements that performed well had emotional content, while only 16% had rational content. But the impact of emotional bonds goes beyond marketing — and with personalization, you can elevate it further.

A thoroughly customized experience engages a customer and increases their interaction with you. By infusing their preferences and desires into business strategies, you give them a sense of belonging. This creates strong emotional connections that drive brand loyalty and retention.

For example, Nike launched an app to strengthen customer relationships under its direct-to-consumer initiative. The brand offers expert guidance according to your requirements.

The app offers personalized workout routines and the Nike Plus reward program access. The brand also provides a 30-day shoe wear test to eliminate fitting doubts.

While Nike still remains a retail-first brand, their personalized D2C initiative paid off. At the end of fiscal 2020, it contributed 35% of Nike’s total $5.5 billion revenue.

Enhances customer satisfaction and engagement

Effective personalization gives customers what they desire. Tailored communication serves unique customer needs and queries, increasing satisfaction. Relevant recommendations encourage buyers to explore your services, boosting engagement on your site.

For example, customer data shows you that a particular customer prefers email communication over on-site chat. In that case, you can share personalized emails with relevant offers based on their purchase history. This helps you in three respects:

• They will engage with your email’s content better than other marketing methods.
• You can send relevant offers that show you understand their expectations.
• It shows you will go the extra mile to accommodate their preferences.

This approach lets customers feel they are getting a better deal with your services. This increases their satisfaction and engagement, and rewards their brand loyalty, strengthening it further.

Increases customer lifetime value

Personalization increases customer interaction with the brand. Recurring engagement helps companies collect more granular data over time. This lets them improve services regularly, serving a continuously elevated experience.

This kind of approach creates a flywheel effect, retaining more customers and increasing customer lifetime value.

Amazon is a prime example of how personalization can enhance customer lifetime value. The online retailing giant offers customers exclusive recommendations, serving unique needs. Buyers find shopping for their preferred items easier and prefer Amazon over its competitors. Such personalized experience retains customers, enhances CLV, and provides Amazon with a loyal and growing customer base.

Word-of-mouth marketing and advocacy

Brand advocacy is one of the most low-budget marketing methods that drive tangible results. It generates earned media such as reviews, testimonials, and media coverage, earning 3x more brand lift than any paid marketing.

But to understand how to get more reviews from customers, you need to start personalizing your efforts. Why? Personalization enhances customer satisfaction and boosts loyalty. Your loyal customers are your best brand advocates, creating authentic word-of-mouth.

Brands develop referral initiatives to boost brand advocacy while also incentivizing customer loyalty. This sustains the consumer’s preference for your brand. It brings more loyal customers by spreading positive comments about your business.

For example, coffee brand Cometeer rewarded its customers’ loyalty through a referral program on the occasion of International Coffee Day. The brand offered a $50 voucher for the referring customer and another $50 voucher for the referred contact.

How to implement personalized experiences

Understanding the multiple benefits of personalization, here’s how businesses can implement it in their customer experience (CX):

Collect and analyze customer data

Accurate personalization requires a thorough understanding of your customers. Ideally, you’ll collect first-party and third-party customer data to get insights into unique preferences and pain points.

Analyze each data segment to identify:

• Purchase patterns
• Cart history
• Engagement rate
• Conversion rate for each website visit

Categorize your customers based on demographics including:

• Age
• Gender
• Location
• Hobbies
• Ethnicity and religion

A detailed analysis of online customer data will help guide your efforts at building strong personalization.

Leverage technology and data-driven insights

Manually processing customer data is an error-prone task. To ensure precision in your personalization, leverage technology to automate data collection and analytics. Consider opting for tech stacks like:

• Dynamic pricing tools
• Smart site search
• AI-powered intuitive bots
• Product recommendation engine
• Analytics tools
• Marketing automation software

Protecting customer data from cyber attacks is vitally important. Make sure the software you implement is secure and compliant. Audit your budget, check the solution’s scalability, and compare its features with other alternatives. Select software that offers the required integrations to seamlessly fit it into your existing system.

Tailor products, services, and communications

Examine the analyzed reports and proactively implement personalization wherever possible. Determine which marketing channels appeal to each customer and optimize their use. Insights gained from purchase history can help drive better product recommendations.

Make it a routine to go through the issues customers face with your support team. Look for opportunities to change or update product designs to suit customer needs, improving sales and reducing support issues.

For example, for online stores, by partnering with fulfillment experts to personalize product packaging, you can enhance the unboxing experience, making it unique and memorable for customers.

Balance personalization with privacy concerns

The relationship between personalization and data security in your organization should be symbiotic. While buyers are willing to share their personal information for better convenience, data breaches can cause severe harm to their trust in your brand.

To balance personalization with data security, familiarize yourself with

• General data protection regulations;
• Compliance guidelines; and
• Associated risks of data breaches.

Adopt best practices for ethical data use and transparency to maintain customer trust. Make it a point to eliminate stakeholder friction by collecting specific individual-level data needed to improve CX.

Ensure consistency across touchpoints

Sustaining brand loyalty requires consistency in brand messaging. Your personalization should have a uniform tone across every level of the CX.

Here are five best practices for personalization:

• View the experience from the customer’s perspective and understand how they move through the buying journey.
• Anticipate their needs at every stage.
• Examine the gaps and prioritize the most prevalent ones.
• Be open to what’s working and what’s not.
• Focus on creating an end-to-end experience by eliminating the root causes.

Measure the effectiveness of personalized experiences

Once you implement personalization updates, examine their efficacy by tracking vital metrics. Monitor repeat purchase rate, referral rates, ROI on UGC marketing, engagement, etc.

Finally, benchmark the results with historical data to check improvements.

Conclusion

Boosting loyalty through personalization is not a one-day job. It takes time to accurately infuse customer needs into different touchpoints and build lasting customer relationships.

For that, your efforts need to be diligent and data-driven. Make sure you collect and analyze relevant data accurately. Carefully evaluate different options before settling on software for personalization.

Finally, keep an open mind about changing your product, UX, and customer service.

Mehdi Hussen is a SaaS marketing and organic growth consultant. He helps SaaS businesses drive organic growth and customer acquisition through SEO and data-driven content marketing strategies. Mehdi spends his spare time musing about startup growth strategies, personal productivity, and remote work. Connect with him through Twitter or LinkedIn.