The Psychology of Personalization

In all blogs, including ours, you have read about how important personalization is and how it can help your business. It is true! Personalizing your services can help you increase conversion rate and average basket value. Users value personalization and you can see it in your sales results.

However, why does this happen? Why do users prefer one brand over another because of personalized services? What is the psychological explanation behind personalization? Why do we crave personalization in all aspects of our life?

What is personalization?

Personalization is when you receive something that is specially made for you. For example, a hat with your favorite team logo, a mug with your name on it, a mix tape with your favorite songs, a bracelet with your star sign, a trip to a destination you always dreamt.

Anything that was based on your interests and was designed only for you by someone that cares about you (or you made customized for you) can be considered a personalized experience.

What does personalization mean today?

Personalization is the act of tailoring an experience or communication based on information a company has learned about an individual.

That means a company can change the way the customers interact with them, based on the information they have and deliver personalized experiences.

When a friend is giving you a personalized gift it makes you feel special. You believe this friend really knows you and made an effort to find the perfect gift for you, so they care about you.

Well, it is the same for companies when they try to deliver a message to their customers. If they create relevant and individualized content the customer will feel special and of course they will be more satisfied with their buying experience.

To create a perfect individualized experience, however, companies must first understand why people want personalization.

The “cocktail party effect” or name game

You are at a party. Loud music playing, people talking and in general there is noise around. Suddenly you listen to a conversation that is relevant to you. This conversation rises above all other noise and now you are tuned in to that one only!

Something special happens in our brains when we hear our name and our focus changes to hear what is being said. Same goes for when we see our name written somewhere. It makes us feel connected somehow.

This is how personalization works. It makes you focus on the matter that appears in front of you that is relevant to you no matter what else is happening around you.

Why is personalization important for your business

Many surveys over the last years have revealed that consumers are more likely to shop with brands who recognize, remember, and provide them with relevant offers or recommendations. The percentage of these consumers can reach up to 91% !

Oh wait… it is also important for your customers!

Consumers are happy to see that your business has made the extra effort to keep them satisfied, it makes them feel special. Of course, this will most probably make them prefer your business over another one.

Real-life examples of personalization

In a restaurant / bar

Maybe there is a really nice restaurant or bar in your neighborhood and you go there once in a while with friends or family. After some time the waiter will greet you in a more personal way (even your name) and will directly ask you if you want to order “the usual”.

Before you even say anything, you have already experienced a great personal experience that adds to you perception of this place. Of course you will leave a tip for the waiter and of course you will visit there again, even more often.

Spotify

Spotify is at the top of the personalization game. If you use Spotify, for sure you have seen the suggestions under the song you are currently listening, the personalized song list and even the list at the end of the year with “Your top songs of the year”.

This keeps you engaged with the platform. You know you will open the app and there will be some music that you like ready for you. Spotify creates an experience that is relevant to each and every user.

Wrapping up

All in all, your customers expect and value personalization because it is part of their psychology and their everyday life. If it was not, your efforts for personalization would not have the expected results.

Personalization actions do not need to be complex. Simple ideas can go a long way to customer satisfaction and engagement. Feel free to experiment with different ideas and see the results on your own.

Georgia Papaioannou
Business Development Manager @Reccodo