Today, we’re excited to share the findings of our second State of Personalization report.
When we first released this report back in 2017, we never imagined how fast consumer expectations and behaviors would change. COVID-19 brought unprecedented and unforeseen growth to e-commerce, accelerating the shift away from physical stores to digital shopping by up to a decade.
This has set a high bar for businesses and their digital experiences. Once a luxury only afforded to best-of-breed companies like Amazon and Netflix, personalized customer engagement has become table stakes.
So, how are businesses doing?
Twilio Segment surveyed over 3,000 businesses and consumers worldwide to analyze their attitudes, expectations, and experiences when it comes to personalization. In doing so, it tells a compelling story about how consumer behaviors changed over the past 12 months, and how businesses reacted.
The personalization gap: expectations vs. reality
In 2020, customers migrated to digital channels in record numbers. But the resulting change in consumers' expectations far exceeded many businesses' capacity to handle them.
Overnight, consumers expected brands to remember who they were, where they came from, and what they liked, no matter what channel they were using.
Although many businesses had started to accelerate their digital transformation efforts, there is still a gap between consumer expectations and reality. Our survey found that many businesses are still notably behind in their personalization efforts.
While 85% of the businesses studied by Twilio Segment believe they are offering personalized experiences, only 60% of consumers seem to think that’s the case.
Some businesses are benefitting, while others fall behind
The e-commerce uptake seen in 2020 is a permanent shift that is unlikely to be reversed, and those who get personalization right have a lot to gain.
More than half (60%) of consumers say they will likely become repeat buyers after a personalized shopping experience with a retailer, up from 44% in 2017.
Put simply, in today’s world, brands that cannot deliver true personalization will lose customers and revenue to those that can.
Our survey found over a third of consumers say they’d return to shop with a brand following a personalized experience, even if there are cheaper or more convenient options available elsewhere.
Omnichannel is being overlooked
2020 also saw a proliferation and fragmentation of digital channels where businesses interact with their customers.
Customer behavior (curbside pickup, telehealth, etc) saw people jump between channels like never before. This resulted in customer data being spread over dozens if not hundreds of different systems within an organization.
Our survey found that less than 1 in 4 businesses have the required technology to deliver consistent, personalized experiences across channels. Departmental silos and legacy infrastructure were cited as the key obstacles to success.
Personalization and privacy aren’t mutually exclusive
For years, brands have relied on third-party cookies to track users across the web before serving them personalized ads. While third-party cookies, in some cases, have improved advertising efficiency, they have also led to a decline in consumer trust. More than ever, consumers are rightly concerned with their privacy.
However, businesses and consumers are starting to realize that a better option has emerged – first-party data (data collected about a business's own interactions with its customers).
Our survey shows that 7 out of 10 consumers say they appreciate personalization, so long as it’s data they’ve shared with a business directly.
The data in The State of Personalization makes it clear that brands only face two choices: personalize or perish. As a result of the pandemic, digital technology has made new realities and expectations possible. Businesses must take this seriously, or customers will walk away and support their competition.
For a deeper look into our findings, you can read the full report here.