We have all experienced it; e-mails directed at you personally, recommendations based on previous purchases or on what customers like you bought. All this content is tailored specifically to your wants and needs. But does this actually make browsing easier, or are companies stealthily making all your decisions for you? This blog elaborates on the up- and downsides of personalized content for the consumer.
When browsing on a web page in search for that one product, you will often find yourself presented with an abundance of choices. You would think this many choices are to your benefit. However, research has shown this is not the case. In 2000, Iyengar and Lepper published a study where subjects were presented with two display tables full of different kinds of jam. One table had 24 varieties, while the other had only 6. And while the table with 24 varieties attracted more interest, subjects that visited the table with only 6, were ten times more likely to purchase a jar of jam. This and other studies since have shown that excessive choice can cause “choice paralysis” and can reduce people’s satisfaction with their decisions (Schwartz, 2006). Following this evidence, personalized offers make browsing easier by reducing the perception of information overload (Devaney, 2014).
The facts don’t lie. Marketers see a 20% increase in sales after applying personalized content. Consumers also highly value their tailored web pages, since 74% of consumers get frustrated when presented with content that has nothing to do with their interest (Janrain, 2013). Opposingly, half of these consumers still do not want to cooperate fully in order to achieve such customized pages. This has everything to do with the downsides of personalized content.
In order for a company to create personalized content, it has to store data about their consumers. They track your journey on their page, your previous purchases and get to know you based on your web behaviour from your IP address. Nowadays, with all mobile devices constantly connected, nearly 80% of consumers have concerns about privacy invasion. However, consumers are willing to share data in exchange for coupons and discounts and other incentives based on their lifestyle (tech2, 2013).
Conclusively, personalized content has benefits to both companies and customers. Instead of perceiving the internet to have made the world into a dystopian 1984-like society, realize that sharing your data to in turn receive personalized offers and recommendations helps you narrow your choices and might even help you save some money.
What are your stands on trading your personal information to receive personalized content in return?
References
Devaney, E. (2014). The Psychology of Personalization: Why We Crave Customized Experiences, HubSpot, [http://blog.hubspot.com/marketing/psychology-personalization#sm.00rxgr551bn3epp10ja2hyl5bimyr]
Janrain (2013). Online Consumers Fed Up with Irrelevant Content on Favorite Websites, Janrain.com, [http://www.janrain.com/about/newsroom/press-releases/online-consumers-fed-up-with-irrelevant-content-on-favorite-websites-according-to-janrain-study/]
Schwartz, B. (2006). More Isn’t Always Better, Harvard Business Review, June 2006 Issue, [https://hbr.org/2006/06/more-isnt-always-better]
Dear Anouk,
Thanks a lot for posting this interesting blog on personalised content. I totally agree with you when you state that sharing your data is actually not the worst thing considering the benefits – reduced choice overload and more relevant offerings – it brings along.
However, from the company’s point of view it is very interesting to see that there is a wide gap between the percentage of marketers who like personalization, and those who actually like it. To throw in some numbers stated by Wainwright (2012): “88% of marketers say using social graph data to personalize the online experience has a high impact on both ROI, and engagement. But only 6% actually do it. Additionally, 68% of marketers say personalization based on behavioral data has a high impact on ROI, and 74% say it has a high impact on engagement. But only 19% do it.” However, I must admit that these numbers stem from 2012. Hopefully these numbers have changed by now, so that both companies and customers can seize the benefits from personalisation.