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The Near Future of Personalization

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Our Near Futures Series of inspiration and insights reports is designed to highlight what is happening today and how it can shape tomorrow for brands and business. This one is on the Near Future of Personalization.

"Nowadays, consumers are overwhelmed with the available choice and the stream of messages being directed at them. In order to stand out and be useful, brands need to acknowledge and adapt to the needs of their consumers.

Personalization means adapting their products and services around the preferences and behaviours of the consumer to suit their real-life needs. Successful brands are designing customer relationships— before, during and after the purchasing process.

This report depicts changing consumption patterns that are no longer defined by traditional boundaries, drivers behind the need for personalised offers that reflect consumer behaviour, as well as ways of maintaining the ongoing and long-term relationship with consumers that are based on personalization."

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The Near Future of Personalization

  1. 1. UNDERSTAND TODAY. SHAPE TOMORROW. 1 WHAT I WANT. HOW I WANT IT. LHBS // THE NEAR FUTURE OF PERSONALIZATION The Near Future of Personalization Q3 2015
  2. 2. ABOUT. At LHBS, we are curious about the brand opportunities that lie at the crossroads of emerging consumer needs, enabling technology and market dynamics. What we learn, we like to share. That’s why we’ve created the Near Future Series of inspiration and insights reports designed to highlight what is happening today and how it can shape tomorrow for brands and business. This one is about The Near Future of Personalization. We hope you enjoy this deck and are able to be inspired by it in your innovation process. This report is powered by the LHBS Inspiration-Hub that systematically tracks changes in culture, markets and technology and how these signs collectively point to a bigger story. INTRODUCTION UNDERSTAND TODAY. SHAPE TOMORROW. 2 Discover Define Develop Deliver UNDERSTAND TODAY. SHAPE TOMORROW. LHBS // THE NEAR FUTURE OF PERSONALIZATION
  3. 3. UNDERSTAND TODAY. SHAPE TOMORROW. INTRO
 DUCTION. Personalization means adapting their products and services around the preferences and behaviours of the consumer to suit their real- life needs. Successful brands are designing customer relationships— before, during and after the purchasing process. This report depicts changing consumption patterns that are no longer defined by traditional boundaries, drivers behind the need for personalized offers that reflect consumer behaviour, as well as ways of maintaining the ongoing and long-term relationships with consumers that are based on personalization. INTRODUCTION 3 Nowadays, consumers are overwhelmed with the available choice and the stream of messages being directed at them. In order to stand out and be useful, brands need to acknowledge and adapt to the needs of their consumers. LHBS // THE NEAR FUTURE OF PERSONALIZATION Joanna Bakas Co-founder & Managing Partner at LHBS lhbs.com | jb@lhbs.com
  4. 4. INTRODUCTION UNDERSTAND TODAY. SHAPE TOMORROW. 4 PERSONALIZATION WHAT Creating experiences tailored to that particular individual that exist at a service, data or content delivery level. WHY Creates a stronger user experience by anticipating their needs upfront, making everything “just right” for customers, without them having to set it up. LHBS // THE NEAR FUTURE OF PERSONALIZATION
  5. 5. 40% 60% UNDERSTAND TODAY. SHAPE TOMORROW.*Source: 94% 6% 5 6% UNDERSTAND TODAY. SHAPE TOMORROW.Source: Microsoft but only 6% have a plan in place to actually use it 4% 96% 96% 96% of retailers believe personalization makes good business sense INTRODUCTIONLHBS // THE NEAR FUTURE OF PERSONALIZATION
  6. 6. UNDERSTAND TODAY. SHAPE TOMORROW. personalized SOLUTIONS personalization TOOL KITS pin point TARGETING CONTENT 6 CONTENT LHBS // THE NEAR FUTURE OF PERSONALIZATION
  7. 7. pin point TARGETING UNDERSTAND TODAY. SHAPE TOMORROW. 7 PIN POINT TARGETINGLHBS // THE NEAR FUTURE OF PERSONALIZATION
  8. 8. UNDERSTAND TODAY. SHAPE TOMORROW. Our connection to the world through our devices will increase, and as a result make more data available while enabling personalization on any connected device at the same time. But consumers will give over data only in exchange for real value that they can get in return. Personalized experiences that are powered with consumer data allow for greater customer intimacy— online or at POS— and being able to know the wants of the consumer before they realise what they want. In addition, brands are able to drive sales by increasing the cross-selling potential, through suggesting based on past, similar, complimentary or recently viewed items. The balance lies in the fine line between intrusive, almost creepy pin point targeting vs. data and behaviour based targeting that delivers real value. TREND OVERVIEW // PIN POINT TARGETING 8 pin point TARGETING Demographics based on age, gender, location, income and lifestyle are no longer viewed as reflecting real needs of consumers. 30% of Amazon’s revenue is attributable to sales based on personal recommendations. 70% of Netflix views are triggered by personalized rankings and recommendations. LHBS // THE NEAR FUTURE OF PERSONALIZATION
  9. 9. 40% 60% UNDERSTAND TODAY. SHAPE TOMORROW.*Source: 1% 99% 9 99% Number of consumers that will share personal info for rewards. However, they still want brands to ask for permission. WHY IT MATTERS // PIN POINT TARGETING Source: Microsoft The Consumer Data Value Exchange UNDERSTAND TODAY. SHAPE TOMORROW. LHBS // THE NEAR FUTURE OF PERSONALIZATION
  10. 10. 40% 60% UNDERSTAND TODAY. SHAPE TOMORROW.*Source: 10 While millennial consumers are relatively comfortable providing personal information, context is key. Customers expect reciprocity in the form of high-quality recommendations and relevant offers, and don’t want to be targeted in a way that they find “creepy.” UNDERSTAND TODAY. SHAPE TOMORROW. WHY IT MATTERS // PIN POINT TARGETINGLHBS // THE NEAR FUTURE OF PERSONALIZATION
  11. 11. 40% 60% UNDERSTAND TODAY. SHAPE TOMORROW.*Source: 11UNDERSTAND TODAY. SHAPE TOMORROW. WHY IT MATTERS // PIN POINT TARGETING “I like when a company makes recommendations that make shopping easier” “I would give more data to businesses if it meant avoiding irrelevant offers.” “I have no issue with companies using my data to improve my experience.” “I don’t like when companies use personal data to target offers at me.” “It creeps me out when I receive offers in social media for things I searched.” “It creeps me out when a company knows what I want before I’ve told them.” 49% 44% 44% 48% 46% 47% Source: L2 Report on Personalization LHBS // THE NEAR FUTURE OF PERSONALIZATION
  12. 12. UNDERSTAND TODAY. SHAPE TOMORROW. REPORT TITLE // IMPLICATIONS. UNDERSTAND TODAY. SHAPE TOMORROW. 12 Sephora Personal Targeting While Shopping Pin point targeting in-store ads to business and customer value A bit of new technology is turning up inside Sephora stores nationwide in the USA is called Beacons. When you're in a store with your smartphone, open the Sephora to Go app, and you'll see special promotions, birthday month benefits, and get a reminded to take advantage of in-store services like mini-makeovers. You'll have to opt-in to this tech, which surprisingly, most everyone does. When Sephora took Beacons on a trial run in a few San Francisco stores, more than 80% of Sephora shoppers wanted in. Learning Consumers appreciate value in exchange for access and data. Source: Internet Advertising Bureau SIGNS // PIN POINT TARGETINGLHBS // THE NEAR FUTURE OF PERSONALISATIONLHBS // THE NEAR FUTURE OF PERSONALIZATION
  13. 13. UNDERSTAND TODAY. SHAPE TOMORROW. Seamless Use of Data Netflix program and title tiles line up based on viewer preferences based on previously watched items. The items in the rows (or carousels as they are called) are ranked based on personal data as are the rows themselves. To continue watching an episode, series or film, the system automatically starts where the viewer last left off. It’s personalization that is barely noticed. Learning It’s not about “hunting” consumers down, it’s understanding their behaviour in order to better meet their needs. Opt In Targeting One of the top apps in Apple and Android app stores is RetailMeNot. Users sign-up for coupons and promos from their favourite retailers via the app and choose to receive communications via push notification and email. RetailMeNot is one of few retail apps that successfully offers a preference wall for users to manage notifications, including nearby alerts based on geo-location, featured coupons and special sales. Learning Behavioural targeting not only makes business sense but is a favourite for consumers. Learning Targeting that allows consumers to opt in is not only accepted but appreciated. 13 Movers are an important segment for broadcast service providers, as customers in a new home or apartment are ripe for acquisition. Using a third-party data partner, DirecTV is able to identify consumers who have or are about to move. These customers receive personalised content related to moving on the DirecTV desktop and mobile site, driving double-digit conversion lift. The Right Place at the Right Time SIGNS // PIN POINT TARGETINGLHBS // THE NEAR FUTURE OF PERSONALIZATION
  14. 14. UNDERSTAND TODAY. SHAPE TOMORROW. IMPLICATION Personalised targeting should be based on analysing and understanding the customer’s needs. The new way to target efficiently, is to look at actual behaviours, patterns and needs. Collect data and analyse it for patterns that create an accurate image of a real consumer need. Just finding them and tracking them down is not enough and can result in a negative experience. 14 LHBS // THE NEAR FUTURE OF PERSONALIZATION IMPLICATIONS // PIN POINT TARGETING
  15. 15. UNDERSTAND TODAY. SHAPE TOMORROW. IMPLICATION Consumers are happy to share their personal data, but only if they get something in return. Brands should be transparent on which data is collected & when, and offer easy “opt outs”. They should also be clear in communicating why do they need the personal data and the privacy of all their details. 15 IMPLICATIONS // PIN POINT TARGETINGLHBS // THE NEAR FUTURE OF PERSONALIZATION
  16. 16. personalized SOLUTIONS PERSONALIZED SOLUTIONS UNDERSTAND TODAY. SHAPE TOMORROW. 16 LHBS // THE NEAR FUTURE OF PERSONALIZATION
  17. 17. UNDERSTAND TODAY. SHAPE TOMORROW. True personalization is when consumers elect a preference and build products and services around their needs. Brands are taking personalization a big step forward into mass personalization. They are discovering that they can elevate customer loyalty and engagement—and use their customer base as an engine of advocacy to potential buyers. Equally, personalization helps companies differentiate their products from those of their competitors at a time when the Internet is rapidly making it easier for customers to compare the prices of products with standard features. Making it personal may just pay off. According to Deloitte, one in three consumers wants personalized products. TREND OVERVIEW // PERSONALIZED SOLUTIONS 17 personalized SOLUTIONS With overwhelming choice available anywhere and at any time, it is becoming increasingly difficult and time-consuming for customers to move efficiently throughout the purchase journey. Personalization is a strategy that brings an added value to consumers — saves time, stress and the possibility of an unsuitable decision. Source: Deloitte Personalization Survey LHBS // THE NEAR FUTURE OF PERSONALIZATION
  18. 18. 40% 60% UNDERSTAND TODAY. SHAPE TOMORROW.*Source: 34% 66% 18 66% Percentage of global consumers that switched brands due to poor customer service that came from not knowing what they need and want. WHY IT MATTERS // PERSONALIZED SOLUTIONS Source: Trendwatching The Future Of Customer Service Study UNDERSTAND TODAY. SHAPE TOMORROW. LHBS // THE NEAR FUTURE OF PERSONALIZATION
  19. 19. UNDERSTAND TODAY. SHAPE TOMORROW. REPORT TITLE // IMPLICATIONS. UNDERSTAND TODAY. SHAPE TOMORROW. 19 IOMA Creates Unique Skin Care Solution One size no longer has to fit all IOMA uses microelectromechanical systems, which are commonly called MEMS, to take such accurate analyses of the skin. For IOMA’s latest launch, the Bespoke Youth Rituals, a tool that looks like a remote control measures seven aspects of customers’ skin: moisture, water loss, bacterial activity, UV damage, pigment spots, redness and wrinkles.The results— on a scale of 0 to 18— show the counter person how many drops of each active ingredient to put in the customer’s day and night creams. It’s rare two people leave with the same products. Learning Though more complex and resource intensive, personalised solutions resonate with consumers, who are often willing to access them at a premium price. Source: Internet Advertising Bureau LHBS // THE NEAR FUTURE OF PERSONALISATION SIGNS // PERSONALIZED SOLUTIONSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  20. 20. UNDERSTAND TODAY. SHAPE TOMORROW. 20 Personalised & Evolving Playlist Weekly curated musical “mix-tape” from Spotify The playlists are tailored specifically to users based on their music taste from the previous week and are intended to make users feel like their best friends made them a personalised mixtape every single week. As user’s taste evolves, Discover Weekly will keep up. Explore Sign Learning The playlist are an example how brands can continuously nourish a relationship with consumers by turning an overwhelming amount of information into a curated playlist that evolves every week to reflect changing tastes of the listeners. LHBS // THE NEAR FUTURE OF PERSONALIZATION SIGNS // PERSONALIZED SOLUTIONS
  21. 21. UNDERSTAND TODAY. SHAPE TOMORROW. 21Source: Ad Plot Changes Based on Your Preference Viewer sees an ad that is relevant to their interests, music and consumption choices New Axe ads can show up to 25,000 mutations of the same story for a grand total of 100,000 outcomes. The stories are distributed based on interests like music, brands, or other consumption preferences, producing the four distinct groups: "Artsy," "Fresh," "Naturals" and “Roots.” The degree of customization varies and will be further optimised based on responses. Explore Sign Learning Personalised solutions offer new brand experiences not only in terms of products but also communication especially when enabled by data. SIGNS // PERSONALIZED SOLUTIONSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  22. 22. UNDERSTAND TODAY. SHAPE TOMORROW. Learning Rather than standardised solutions, a personalized service can make the difference between an ordinary or a memorable experience. Hotel Room Always Like You Left It Personalized Beauty 22 Learning Technology is a great and scalable enabler in delivering truly personalized experiences which have the capability to offer truly differentiated service offers. L’Oréal Paris has launched a beauty app called Makeup Genius where users can “try on” products virtually. The app uses advanced facial mapping technology and has over 11 million downloads. The company is now bringing out versions for hair colour, hair styling and skincare. Explore Sign Learning Personalization can be playful, fun while addressing functional needs as well as emotional ones e.g. my face is unique. By connecting Facebook accounts upon booking, the TAM airlines accessed customers’ feeds, liked pages and profile pictures, to create 100% personalized “Ownboard Magazine” including only content that customers are sure to be interested in. 100% Personalized Magazine Explore Sign SIGNS // PERSONALIZED SOLUTIONSLHBS // THE NEAR FUTURE OF PERSONALIZATION With the Hub by Premier Inn app, guests are able to pre- select the temperature and light in the room, not only book in and check in. They will also be able to choose TV or radio channel they want to listen to when they arrive or stream content from their own device. Explore Sign
  23. 23. UNDERSTAND TODAY. SHAPE TOMORROW. IMPLICATION Personalization in products and services works to build more effective customer relationships. Technology & data has made mass personalization effective and scalable. Brands can and should invest resources in creating solutions for people that they need, as they need them and when they need them– as added services, as well as innovation. 23 IMPLICATIONS // PERSONALIZED SOLUTIONSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  24. 24. personalization TOOL KITS PERSONALIZATION TOOL KITS UNDERSTAND TODAY. SHAPE TOMORROW. 24 LHBS // THE NEAR FUTURE OF PERSONALIZATION
  25. 25. UNDERSTAND TODAY. SHAPE TOMORROW. Product personalization helps brands boost sales on their own websites or gain share on a retailer’s site. A Bain survey of more than 1,000 online shoppers in the USA found that while less than 10% have tried personalization options, 25% to 30% are interested in doing so. Beyond the pure size of the opportunity, the survey showed that those customers who had personalized a product online engaged more with the company. They visited its website more frequently, stayed on the page longer and were more loyal to the brand. As more retailers and brands give their customers the design-it- yourself option, they should see a boost in profitable revenues, stay connected to their best customers. TREND OVERVIEW // PERSONALIZTAION TOOL KITS 25 Personalization TOOL KITS One of the consequences of the digital world that we have all come to embrace, is the level of personalization it affords us. From websites remembering our purchasing history to the serving of ads that reflect our browsing. Our expectations have been raised. Source: Baine Personalisation Survey LHBS // THE NEAR FUTURE OF PERSONALIZATION
  26. 26. 40% 60% UNDERSTAND TODAY. SHAPE TOMORROW.*Source: 26 If 25% of online sales of footwear were personalized, that would equate to a market of… UNDERSTAND TODAY. SHAPE TOMORROW.Source: Baine Personalisation Survey $2 billion per year. WHY IT MATTERS // PERSONALIZATION TOOL KITSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  27. 27. UNDERSTAND TODAY. SHAPE TOMORROW. 27Source: Personalized 3D Printed Cosmetics MINK not only allows personalization in design, but also production. 3D printing is all the rage these days. The Mink printer allows consumers to create perfectly personalized cosmetics based on any colour they like or see. The little printer lets users choose any colour on the web, or in the real world, and using simple already- existing software, print that colour into a blush, eye shadow, lip gloss or any other type of makeup. Learning As technology progresses, consumers will not only be able to co-create in design but also production, taking personalization to a new level. SIGNS // PERSONALIZATION TOOL KITSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  28. 28. UNDERSTAND TODAY. SHAPE TOMORROW. Blending vs. Buying With Whiskey Blender, it’s now possible for anyone to design and drink their very own custom bottle of Scotch. Blenders name their bottles and have the chance to be name Master Blenders. Whisky Blender is as much about the story and serving your own whisky; it's an extra layer for the consumer and a differentiating feature. Learning Personalization is even more engaging and interesting in high interest, highly emotional product categories or services. Build A Unique Bike Now with Trek, avid bikers don’t have to settle for anyone else’s bike. They can create their very own with Project One– Trek’s custom bike programme. Customize, personalize, sensationalize: the choice is the rider’s. Just select the model, fit, styling and components you desire, and we’ll build the dream bike. Co-Design Your Running Shoe NIKE iD offers a great customer experience and product. Their online community has recently reached 15 million people. Since launching the personalized shoe, Nike’s market share has grown from 48-61%. The most interesting fact is that that NIKE iD now is 20% of store revenue. Learning Personalization is especially important for “fan” groups who share a string passions and interests. Learning Personalization can significantly contribute to the bottom line and generate incremental customers. 28 SIGNS // PERSONALIZATION TOOL KITSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  29. 29. UNDERSTAND TODAY. SHAPE TOMORROW. IMPLICATION Keep it simple. Make the personalization co-creation experience as simple as possible for customers. The more complex the process, the more barriers it will create and less buy in and participation. 29 IMPLICATIONS // PERSONALIZATION TOOL KITSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  30. 30. UNDERSTAND TODAY. SHAPE TOMORROW. IMPLICATION Make it fun. Customer engagement will come from a fun, interesting and playful experience. Keep it lighthearted and enjoyable rather than purely functional. 30 IMPLICATIONS // PERSONALIZATION TOOL KITSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  31. 31. UNDERSTAND TODAY. SHAPE TOMORROW. IMPLICATION Consider the category. Not all product categories are ideal for co-created personalization. Generally, lifestyle and fashion brands have the most potential because they’re inherent and more high interest categories. 31 IMPLICATIONS // PERSONALIZATION TOOL KITSLHBS // THE NEAR FUTURE OF PERSONALIZATION
  32. 32. LHBS Put the Title of the Report here HUB. UNDERSTAND TODAY. SHAPE TOMORROW. 32 https://inspiration-hub.com/ INSPIRATION-HUB INSPIRATION -HUB Our Inspiration-Hub systematically tracks changes in culture, markets and technology and how these changes collectively point to a bigger story that carries implications for Business Development, Brand Building and Customer Experience. To apply much of this learning to specific and actionable ideas, contact up for a workshop.
  33. 33. UNDERSTAND TODAY. SHAPE TOMORROW. Discover ABOUT LHBS. Define Develop Deliver We are an unconventional strategy firm that helps clients to better understand today and successfully shape tomorrow. LHBS has extensive experience & expertise in business development, brand building and customer experience. The firm works across all major industries for clients from the FT Global 500, German Mittelstand and fast growing startups. http://www.lhbs.com ABOUT UNDERSTAND TODAY. SHAPE TOMORROW. 33
  34. 34. Die in dieser Präsentation dokumentierten Gedanken und Vorschläge sind geistiges Eigentum der 
 LHBS Consulting Berlin GmbH und unterliegen den geltenden Urhebergesetzen. Die unauthorisierte Nutzung, 
 die ganze oder teilweise Vervielfältigung sowie jede Weitergabe an Dritte ist nicht gestattet. LHBS Consulting Berlin GmbH Köpenicker Straße 154  10997 Berlin Germany   UNDERSTAND TODAY. SHAPE TOMORROW. IMPRINT www.lhbs.com THANK YOU 34

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