Personal greeting, personal touch, personal best. Close, personal friends. All good things, right? Right, according to consumers in a recent McKinsey survey. When asked to define personalization, consumers associated it with positive experiences that made them feel special. Personalization marketing represents an opportunity for companies to benefit from those warm, fuzzy feelings. Personalization marketing has real advantages for companies: it can reduce customer acquisition costs by as much as 50 percent, lift revenues by 5 to 15 percent, and increase marketing ROI by 10 to 30 percent. Personalization has also been shown to improve performance and provide better customer outcomes. Companies with faster growth rates derive 40 percent more of their revenue from personali zation than their slower growing counterparts. McKinsey research also shows that personalized experiences drive up both customer loyalty and a company’s gross sales. And the COVID-19 pandemic has only made personalization more urgent for brands: three quarters of customers switched to a new store, product, or buying method during the pandemic, proving that store and product loyalty is increasingly a thing of the past. But it’s a tricky needle to thread. Getting it wrong can have lasting consequences for brands. You probably already know the uncanny feeling of being served a too relevant ad. Sometimes it’s just a little unsettling; other times, it can put us off the product altogether. Even so, the modern customer does expect a personalized experience—even if they take it for granted. McKinsey research shows that 71 percent of consumers expect companies to deliver personalized interactions. And the story doesn’t end there: 76 percent get frustrated when this doesn’t happen. How can companies get started with personalization and scale up? What trends can we predict for personalization in the future? And—critically—how can companies toe the line between creepy and helpful? Read on to learn more. What do customers value in personalized marketing? McKinsey asked 60 shoppers to create mobile diaries of their personalized interactions with various brands over two weeks. They made over 2,000 entries, which helped us see what works for customers and what doesn’t. Here are four things customers said they wanted from brand interactions: 1. “Give me relevant recommendations I wouldn’t have thought of myself.” One common personali zation practice is to remind shoppers of items they looked at but didn’t buy. This can be annoying or intrusive if not executed well. Instead, customers appreciate being recom mended products or services that complement what they’ve already browsed or bought. Brands should keep track of impressions and stop serving ads to customers who haven’t responded. 2. “Talk to me when I’m in shopping mode.” A message’s timing is just as important as its content. Perfecting the timing requires a close look at customer behaviors, patterns, and habits. One clothing retailer found that shoppers who visited a physical or online store were more likely to open and respond to messages delivered either on that same day or exactly a week later. 3. “Remind me of things I want to know but might not be keeping track of.” Brands can become relevant to shoppers by tracking events and circumstances. These can include letting a customer know when a desired item is back in stock or when a new style is launched for a product the shopper has previously bought. 4. “Know me no matter where I interact with you.” Customers expect communications that seamlessly straddle offline and online experiences. This is challenging for retailers because it requires collaboration between disparate areas of the organization—from store operations to analytics. 2 What is personalization?