Does Personalization Always Improve CX? It Depends on Your Customers

Personalized experiences are one of the foundation stones of great customer experience, according to conventional wisdom. But is that true across the board? Not necessarily. In some cases, personalization that’s too precise can underwhelm customers at best, and drive them away at worst. The concept of personalization itself needs to be tailored to age cohorts that demand it, those that don’t mind it, and those for whom it creates a negative experience.

According to data from ClearSale’s latest survey of consumer attitudes on ecommerce, fraud and CX, there’s a striking range of opinions about personalization among generations. This insight can help businesses more effectively plan, implement and leverage personalization technology and processes for different segments of their customer base. It’s especially important to be clear about the optimal levels of personalization for different customer segments before investing in new technologies like AI to support personalized recommendations and services.

Gen Z: High Expectations for Personalization

The consumer attitudes survey found the highest desire for personalized shopping experiences among Gen Z adults, aged 18 to 24. Consumers in this age group are truly digitally native. Many of them have been interacting with digital devices since they were old enough to sit up and hold a tablet. They’ve never known a world where the best digital engagements didn’t recognize them and cater to their specific interests and needs.

At a minimum, businesses that sell to this age group online need to personalize their experiences for these customers. This generation has the highest expectations for personalization, and many Gen Z members haven’t yet reached adulthood and come into their full spending power. That means investing in AI-powered personalization tools to tailor experiences for individual customers makes the most sense for businesses catering to this demographic now and those that hope to grow their Gen Z customer base over the long term.

Millennials: Moderate Desire for Personalization

The oldest millennials are now 42, and while they have decades of experience interacting with the digital world, they didn’t grow up as fully immersed in it as their Gen Z counterparts. The consumer survey found moderate interest in personalized shopping experiences among this group, which means that investing in hyper-personalized AI-driven experiences may not be as crucial with this age group as it is with Gen Z.

However, it’s worth noting that millennials, while primarily motivated by price when shopping, listed convenience as a secondary motivation. This makes sense for a group of mid-career adults who may also be raising children and/or caring for aging family members. Personalization strategies that focus on making the millennial customer’s browsing, purchasing and service experiences more convenient could help strengthen their loyalty. For example, AI-based tools for personalized customer service to streamline product searches, returns and exchanges could be a worthwhile CX investment. Cultivating that loyalty is particularly important because this generation is committed to shopping online rather than in stores and has $2.5 trillion in spending power, according to the ESW Global Voices Survey,

Gen X: Personalization? Maybe

Like millennials, Gen X, adults aged 43 to 58, are interested in price and convenience when they shop online. Unlike their younger counterparts, Gen X consumers are merely open to personalized experiences. This is a generation that grew up with landline phones and without the internet, so personalized digital shopping experiences are nice to have but not must-haves.

That doesn’t mean you should ignore personalization for your Gen X customers. This generation is in their peak earning years, they’re often caregiving for kids and parents and they outspend every other age group. Gen X consumers in the U.S. spent an average of more than $83,000 in 2021, according to the World Economic Forum. To cultivate and strengthen your relationship with these customers, consider convenience-focused personalization efforts similar to those for millennials.

Baby Boomers: Personalization? No Thanks

Among the online shoppers who participated in the consumer attitudes survey, those in the baby boom cohort disliked personalization. Growing up in an environment where no one had your information unless you deliberately shared it with them, the idea of online businesses having personal details and preferences can feel invasive and aggressive to these consumers.

That means applying Gen Z-style hyper-personalization to baby boomers’ shopping experience isn’t just unnecessary; it could also turn your baby boomer customers away from your business. This age group expressed an even stronger desire for convenience than Gen X and millennials, so personalization that focuses on better service, rather than recommending products or recognizing individual customers across channels, is a wise choice for these customers. 

Smarter Personalization Strategies for Every Generation

Of course, very few businesses cater to a single age group. And just as personalization avoids the one-size-fits-all shopping experience, smart segmentation can help businesses focus their personalization efforts in ways that will appeal most to each age group. In addition to providing better experiences for each generation of shoppers, segmenting personalization efforts this way can help businesses allocate their resources more wisely.

For example, rather than spending time and effort on hyper-personalization for older customers who don’t care about it or don’t want it, businesses can apply those resources to experiences for the smaller group of young adults who expect that level of personalization. That approach can also help businesses scale up and enhance their more refined and granular personalization programs as more Gen Z members become adults with more spending power, while at the same time delivering the more lightly personalized convenience that older shoppers prefer.

Original article at: https://www.retailtouchpoints.com/features/executive-viewpoints/does-personalization-always-improve-cx-it-depends-on-your-customers