Required Reading: Personalization Will Yield $2 Trillion If Done Right

In Personalized: Customer Strategy in the Age of AI, Boston Consulting Group senior partner Mark Abraham and Harvard Business School senior lecturer David Edelman predict that AI-powered personalization will become the ultimate advantage and that the next decade will witness $2 trillion in growth from the companies that get it right. To help companies get there, they offer the Personalization Index, a way to measure personalization at scale. CRM editor Leonard Klie got more personal with them in the following interview:

CRM: Is personalization more important today than ever before? Why is that?

Abraham: Yes! We benchmarked hundreds of companies and surveyed 23,000 customers and found three things:

1. Customers want personalization done right. Our survey consistently shows that more than 80 percent of customers want companies to use their personal data to make their experience better. But it also shows that two-thirds of customers recently had an inaccurate or invasive personalized experience—so getting this right is not trivial. But the reward for doing it well is huge: personalization leaders are winning across categories.
2. The tech is here. New martech, data, and AI tools are making it easier than ever to deliver an experience that is custom-tailored, but it takes strategy and sharp guidelines to get it right. Generative artificial intelligence can create more content than ever before, but it’s critical to curate what is relevant to each customer. Algorithms can determine when a customer is in the right context to receive a message and can select the right channel, but you can’t bombard them. Less is more.
3. Personalization leaders are emerging in every industry. Our study showed that any industry that has access to first-party data already has companies pursuing successful personalization programs. Even companies in regulated industries, like healthcare, and in B2B industries, such as industrial distribution, are figuring out how to personalize the experience to each individual at scale.

How do companies adopt a strategy that is more centered on personalization?

Edelman: When they personalize, companies implicitly make five promises to customers:

1. Empower me.Companies need to focus personalization initiatives on customer experiences. They unlock opportunities to break compromises that frustrated customers before. They open new possibilities for customers.
2. Know me.It is critical to set up the data foundation to enable the targeted experience. Most companies can actually tap a wide variety of data, but it is scattered across functional teams or trapped in formats that are not accessible. AI capabilities now exist to turn unstructured data into usable information and to integrate data more easily. You can ask customers questions that they would be happy to answer if it gave them value back.
3. Reach me. AI needs to be geared toward pinpointing the next best action for each customer as well as the right timing and channel. This means spotting a trigger that a customer is in the market or vulnerable to attrition, knowing that they had a customer service issue, so when you send a message, you acknowledge it, and knowing that they respond best to app notifications, since they use your app often.
4. Show me. The right content has to be served to each customer, requiring dynamic content management and scaled application of genAI tools. This includes personalized videos, content built from customizable components, langugage that fits the knowledge someone has about your category.
5. Delight me.Teams need to test and learn quickly and run experiments continuously to constantly improve customer experience. We call this “agile operations,” based on Agile in software development, enabling small teams to get ideas and tests out every two to four weeks, or even in days, relentlessly learning, building up feedback data for their AI models, and getting results faster

All this means that personalization must be a corporate priority, not just a marketing effort. All functions have a role to play, and enrolling the entire C-suite is key to success.

In the book, you introduce the Personalization Index. What is this, and how do companies determine where they stand on it?

Abraham: Personalization is an overused buzzword. True personalization is about learning from each customer interaction and making the next interaction better, faster, cheaper, or more convenient. This requires rethinking operations, customer service, analytics, tech, and marketing. It goes beyond just adding a name to an email or customizing product features.

Measuring personalization has been hard. Our personalization index assesses personalization maturity and provides a simple score between zero and 100. It evaluates company capabilities and how those translate into valuable customer experiences across each of the Five Promises of Personalization.

How do companies measure the impact of their personalization efforts?

Edelman: Given the significant investments required in tech, data, and people, it is critical to build a personalization profit and loss and manage it as a business. It’s not hard to measure incremental revenue and profit from personalization by running tests vs. control experiments. Personalization leaders name senior leaders who are accountable for the growth targets associated with personalization and the overall roadmap of use cases and investments to be delivered each year. While these executives won’t control all the cross-functional resources needed for personalization, they play important roles to keep their organizations on track. When leadership is aligned to a personalization strategy, having regular updates becomes critical.

What role does AI/generative AI play in this new personalization-focused business climate?

Abraham: According to our latest survey, 70 percent of marketers are already using generative AI to massively improve the efficiency of their content generation and to generate more content. Many are also using predictive AI for targeting customers in paid and owned channels. More advanced companies are using genAI to write the code to integrate data across their functional teams and with outside partners in a secure, privacy-compliant way. The next step is to bring these two technologies together to build vast content libraries via genAI, which can then be curated using predictive AI, and to coordinate the delivery of just the right message to each customer at the right time.

The future is also in enabling customers to pull personalization when and where they need it. These take multiple parties to coordinate, and leading brands are building the rails to move information around and satisfy more complex customer requests.

What is the main theme you want readers to take away from this book?

Edelman: Personalization is the best way to drive growth. Personalization leaders grow 10 points faster annually than laggards, and they deliver higher shareholder value and customer satisfaction. They are poised to capture a $2 trillion prize over the next five years by increasing share and expanding category growth. It is a corporate strategic imperative, not just a marketing issue. Winners are already aligned across their leadership teams to pursue aggressive agendas.