The Power of Personalization in the Age of AI | Mark Abraham | TED

Summary

The speaker highlights the frustrations of impersonal customer experiences, from healthcare to online shopping, and stresses the importance of true personalization. By using insights gathered from past interactions, companies can improve customer satisfaction, trust, and growth. The speaker introduces the 'Personalization Index,' a tool that measures how well brands tailor experiences to individual needs. Successful companies, like Netflix and Fidelity, excel by offering relevant, personalized interactions. The message emphasizes that less is more in personalization, calling for brands to reduce spam and focus on building genuine, data-driven relationships with customers.

Takeaways

• 🌞 Personalized customer experiences are essential but often lacking in industries like healthcare, where repetitive and impersonal interactions occur.
• 🐕 Many brands fail to adapt based on customer preferences, leading to irrelevant ads and poor customer experiences.
• 📉 Companies that embrace true personalization grow 10% faster and build stronger customer satisfaction.
• 📊 Personalization is distinct from customization; it's about improving experiences based on previous interactions, not just altering products.
• 🏆 Companies like Netflix and Starbucks lead in personalization, offering tailored content and suggestions based on user data.
• 🔢 The speaker and team created a Personalization Index to measure how well brands tailor their experiences, scoring companies from 0 to 100.
• 🎯 Fidelity stands out by using a 'less is more' approach, sending fewer but more relevant communications based on individual customer goals.
• 💼 Only 10% of companies excel at personalization, leaving the majority relying on mass communication and spammy marketing tactics.
• 🔄 Personalization builds trust and improves data collection, as customers are more willing to share data with brands that deliver relevant experiences.
• 🚫 The future of marketing may become even more saturated with irrelevant content, unless businesses shift to more thoughtful, personalized approaches.

Q & A

What is the main issue the speaker experienced at the urgent care center?

The speaker was frustrated by the lack of personalized service at the urgent care center, having to fill out forms again despite being a regular visitor. This impersonal experience made the situation worse, especially after a dog attack.

What examples of poor personalization does the speaker give?

The speaker mentions a friend who continued receiving emails for dog treats after his dog passed away and receiving ads for senior citizen discounts after buying a cane for his uncle, despite not being that old.

What is the difference between customization and personalization, according to the speaker?

Customization involves tailoring products, like selecting a custom fabric for a sofa, while personalization focuses on tailoring experiences by using previous interactions to improve future ones.

What is the personalization index, and why is it important?

The personalization index is a score from 0 to 100 that measures how well a company personalizes its interactions with customers. It's important because it provides a way to evaluate and improve personalized experiences.

Which companies score high on the personalization index, and why?

Companies like Netflix and Starbucks score high because they personalize content and offers based on user preferences and interactions. Netflix suggests movies based on past viewing habits, and Starbucks offers personalized drink recommendations.

What industries tend to score low on personalization, according to the speaker?

Industries like financial services, insurance, B2B distribution, and healthcare, including the speaker’s local urgent care, tend to score low on personalization.

How does personalization impact business growth?

Personalization leaders grow 10 points faster than others and achieve higher customer satisfaction. They are expected to capture a $2 trillion incremental growth opportunity over the next five years.

What is the key principle of true personalization, as discovered by the speaker's research?

The key principle is that 'less is more.' Companies should send fewer, more relevant messages and offers, respecting customer preferences and building trust.

How does Fidelity implement the 'less is more' personalization strategy?

Fidelity personalizes its outreach by focusing on customers’ investment goals through surveys and one-on-one meetings, and adjusts future interactions based on changes in the customer’s life. They also avoid irrelevant communications, such as suppressing emails about new products that don’t match the customer’s needs.

What broader societal issue does the speaker connect to the lack of personalization in businesses?

The speaker suggests that people's growing anger and frustration in society may stem from feeling unheard and treated impersonally, especially by large businesses and institutions.

Outlines

00:00

🐕 A Dog Attack and a Frustrating Urgent Care Experience

The speaker recounts an unfortunate event where they were attacked by a dog that wasn’t up-to-date on rabies shots. Injured, they visited urgent care, expecting quick admission since they had visited before. Instead, they were forced to fill out forms again, despite a sprained wrist, and endured a long wait. This frustration parallels impersonal customer service experiences many people face, and it’s an example of how businesses can fall short in delivering personalized care.

05:02

💻 The Annoyances of Impersonalized Marketing

The speaker highlights examples of impersonal marketing, such as receiving dog-related emails after the death of a pet or irrelevant ads for hearing aids. They express frustration with repetitive, unwanted advertisements, like being pushed to buy another dishwasher after receiving a damaged one. These experiences demonstrate how businesses fail to offer true personalization, which leads to customer dissatisfaction.

10:04

📈 The Power of True Personalization

The speaker leads a team focused on building true personalization in customer experiences, which goes beyond customization of products. True personalization improves interactions by learning from past experiences to enhance future ones, making them faster, cheaper, or more convenient. They created the Personalization Index, a score from 0 to 100, to measure companies’ performance in delivering personalized experiences. Their research reveals that top performers like Netflix and Starbucks excel at this, while industries like healthcare and financial services struggle.

💸 The Trillion-Dollar Potential of Personalization

The speaker shares findings that leaders in personalization see growth rates 10 percentage points higher than their competitors. They predict a $2 trillion increase in incremental growth for these companies over the next five years. Personalization can improve customer satisfaction and build competitive advantages. One surprising takeaway from their research is that successful personalization often involves fewer interactions—less spam and irrelevant messaging, which leads to stronger trust between the customer and the brand.

🏦 Fidelity’s ‘Less is More’ Approach to Personalization

Fidelity is presented as an example of a company that uses a ‘less is more’ approach. They personalize customer experiences by thoroughly getting to know their clients’ investment goals, using tailored surveys, and reducing irrelevant outreach. Fidelity adjusts communications based on individual needs, such as suppressing promotions for unrelated products when a customer has other priorities. This approach increases customer engagement and trust while still boosting transactions.

📧 The Dangers of a Content Explosion

The speaker warns of an impending ‘content explosion,’ where companies will produce massive amounts of content, thanks to generative AI, at much lower costs. They argue that focusing on personalized, relevant content is key to preventing a flood of impersonal messages. Otherwise, companies risk overwhelming consumers with spam, further reducing engagement. The speaker advocates for building trust through personalization to gain customers’ willingness to share data.

🔔 The Call for Consumer Voices to Be Heard

The speaker encourages consumers to demand better experiences from brands. With so much impersonal content flooding inboxes and feeds, it's time to send feedback through surveys or simply end relationships with companies that don’t respect customers' attention and data. By doing so, companies will be forced to pay attention to consumers’ needs, ultimately improving the quality of interactions.

🤝 Bringing Personalization Back Into Our Lives

The speaker reflects on the sense of anger and dissatisfaction in society today, partly due to feeling unheard in an impersonal world dominated by large corporations. They suggest that, historically, communities were more personalized, with local businesses knowing their customers well. The speaker calls for businesses and consumers to work together to bring back personalization in today’s interactions, making people feel valued and understood once again.

Keywords

💡True Personalization

True personalization refers to tailoring customer experiences based on what a company has learned about a person during previous interactions. In the video, the speaker emphasizes that true personalization involves improving the next interaction, making it 'better, faster, cheaper, or more convenient.' An example is the comparison between Netflix, which uses personalization to suggest content based on viewing habits, and the healthcare system, which fails at creating personalized experiences for patients.

💡Customization

Customization is the process of adjusting a product to meet a customer's preferences, like selecting custom fabrics for a sofa. The speaker contrasts customization with personalization, explaining that while customization focuses on products, personalization is about enhancing the entire customer experience based on interactions and data gathered. This helps illustrate the broader concept of creating better relationships with customers.

💡Personalization Index

The Personalization Index is a scoring system, from 0 to 100, developed by the speaker and their team to measure how effectively companies are using personalization. The index is mentioned as a way to quantify and compare brands' efforts in improving customer experiences. Companies like Netflix and Starbucks rank highly on this index, while industries such as healthcare and financial services rank low.

💡Less is More

The concept of 'less is more' refers to the idea that when brands show fewer but more relevant messages, offers, or ads, it results in a more positive and personalized experience for the customer. Fidelity is used as an example of a company that embodies this principle by reducing unnecessary outreach and focusing on tailored communication, which improves customer trust and engagement.

💡Customer Experience

Customer experience encompasses all interactions a customer has with a brand, from initial contact to post-purchase services. The video highlights how true personalization enhances customer experience by making each interaction more relevant and efficient. A negative customer experience is illustrated by the speaker’s visit to urgent care, where the lack of personalized care caused frustration.

💡Data

Data is the information companies gather from customer interactions, which is used to create personalized experiences. In the video, the speaker argues that customers are more willing to share data when they receive personalized and relevant services. This data fuels the 'virtuous cycle' of personalization, where companies like Fidelity use it to better understand and serve their customers' needs.

💡Spam

Spam refers to irrelevant or excessive messages, emails, or offers sent to customers, often leading to frustration. The video critiques brands that bombard customers with unsolicited or poorly timed messages, as opposed to using a personalized approach. The speaker describes spam as a byproduct of companies failing to understand customer needs, which leads to lower engagement and opt-in rates.

💡Trust

Trust is the confidence customers have in a brand’s ability to respect their preferences and provide relevant services. The speaker explains that true personalization builds trust by showing customers only what is relevant to them, reducing unnecessary ads and content. Companies like Fidelity, which personalize their communication, earn higher levels of customer trust, resulting in better engagement.

💡Competitive Advantage

Competitive advantage is the edge a company gains over its competitors by offering better products or services. In the video, companies that lead in personalization are shown to grow 10% faster than their peers and build long-lasting relationships with customers, creating a moat that makes it harder for other companies to compete. This advantage is achieved through personalized interactions that increase customer loyalty.

💡Artificial Intelligence (AI)

Artificial Intelligence (AI) is mentioned as a key enabler for brands to personalize customer experiences at scale and speed. The speaker emphasizes that AI and technology allow companies to quickly analyze customer data and make personalized decisions in real-time, like recommending products or services tailored to a customer's needs. However, the misuse of AI for spamming content without personalization can lead to poor experiences.

Highlights

The speaker experienced a frustrating situation at an urgent care facility where they had to fill out repetitive forms despite being a regular patient.

The speaker's wrist was sprained after being attacked by a dog that wasn't up to date on its rabies shots.

Brands often fail to provide personalized experiences, like sending irrelevant ads or recommendations based on outdated data.

The speaker highlights their friend, who continues to receive recommendations for dog treats, despite their dog passing away six months ago.

A personal experience involved purchasing a dishwasher that arrived after nine months and was damaged, yet the company continued to send emails about buying another dishwasher.

True personalization is about improving customer experiences by learning from each interaction, not just customizing products but tailoring experiences.

The speaker developed a Personalization Index, a score from 0 to 100, to measure how well companies personalize customer experiences.

Companies at the top of the Personalization Index include well-known brands like Netflix and Starbucks, which are recognized for their tailored customer interactions.

A mental health app called 'Sind' uses personalization to match users with therapists based on 12 different brain functions, providing a more customized mental health experience.

Fidelity, a financial services company, excels at personalization by learning about customers' investment goals from their first interaction and continuing to adapt based on future engagements.

Fidelity's approach includes a 'Gratitude' question to better understand a customer's personal values, helping them tailor investment strategies accordingly.

Fidelity reduces unnecessary communications by focusing on personalized, triggered content rather than bulk emails, which has led to increased customer engagement and transaction rates.

Only 10% of companies qualify as leaders in personalization, with the majority of businesses failing to adapt to customer needs, resulting in spam and irrelevant marketing.

The speaker warns that with advances in generative AI, businesses are on the verge of creating an overwhelming flood of content, which could lead to even more irrelevant communication.

The speaker emphasizes the importance of brands building trust with consumers by reducing irrelevant content and focusing on what matters to the individual, using personalization to improve experiences.

Transcripts

it was a bright sunny day and I was out

for a run when the large dog escaped

from behind his fence attacked me bit me

right in the leg I fell sprain my wrist

and to make matters worse I find out

he's not up to date on his rabies

shots okay off to the local urgent care

I go i' been there a bunch of times

before so I figured they'd my

information on file and quickly admit me

instead I got

this the same form that I filled out so

many times before and now I had to do so

with a busted

wrist and then I sat there waiting and

waiting and nothing beats waiting in a

waiting room than thinking did I just

get

rabies this is the opposite of a

personalized customer cust experience

you see it all around you don't you and

it makes you want to

go there's the hurtful my friend sanjie

his dog died six months ago and his

Online Marketplace is still sending him

email recommendations for his dog's

favorite

treats then there's the inaccurate I

bought my uncle a cane online and now

I'm getting trolled with ads for hearing

aids and senior citizen discounts all

over the internet I'm not that old and

then there's the I don't want another

one of that I just want one that works I

bought a dishwasher and it arrived after

9 months

damaged uh so I was waiting and waiting

and the same company sent me an email

and then another and another with

recommendations for more

dishwashers it's infuriating and it

doesn't have to be this way I lead a

team of over a thousand people around

the world dedicated to helping Brands

build better customer experiences what

we call true

personalization I've been geeking out

about this for years so much so that I

even wrote a book on it check it out and

I want to share with you what I learned

because I think we need to be demanding

but experiences from the brands we

interact with especially now in this day

and age when companies should be

competing on the scale of insights they

have about us at a speed enabled by Ai

and

Technology okay but let's start with

what true personalization even is unlike

customization which is about tailoring

products say a custom fabric for a sofa

personalization is about tailoring

experiences true personalization is when

a brand takes what it learned about you

in one interaction and makes your very

next interaction better faster cheaper

or more

convenient sounds simple on paper but in

all my work I found there's not really a

great way to measure personalization and

it's really hard to improve what you

can't

measure this is why my team and I built

the personalization index it's a simple

score 0 to 100 and it tells you exactly

where a brand stands you can score any

company on it in any industry and it's

really a first measure of its kind we

did exactly this for hundreds of

companies around the world and the

findings kind of shocked us what may not

surprise you is some of the companies at

the top of the personalization index

scoreboard of course we have Netflix and

we all know they provide great feeds um

of movies that you love to watch and

they match your preferences then you

have Starbucks when you open their app

they provide per scienced offers for

your favorite drinks but there are other

lesser known companies at the top of the

personalization index take sind their

mental health app and they actually uh

score you on 12 different brain brain

functions and then they might match you

up with your perfect therapist or they

would just give you helpful everyday

advice now some of the companies at the

bottom of the personalization index also

won't surprise you they hail from

Industries like Financial Services

Insurance B2B distribution and yes us

Healthcare including my local urgent

care but what did surprise us is the

extent to which personalization can

boost growth my research shows that

personalization leaders grow 10 points

faster than lards 10 points and they're

building competitive modes they're

achieving the highest customer

satisfaction scores in fact combined

personalization leaders will capture a

$2 trillion prize in incremental growth

over the next 5 years yes that's

trillion with a

t Okay so with all this potential upside

you might ask what's the secret sauce to

making customer experiences truly

personalized here's the secret and this

was the most counterintuitive finding

from our

research with true personalization

less is more less is more fewer ads

fewer offers fewer messages less spam

because when a brand truly respects you

and knows you it's only going to show

you what's relevant for you with this

less is more approach a brand can build

trust okay so let's look at how

companies actually put less is more into

action a brand that's perhaps less

talked about in this regard is Fidelity

and for those of you watching outside of

the US they're a financial services

company and they do two things really

well to live up to the less is more

Mantra number one Fidelity really gets

to know

you they don't just send you email and

blast you and then make decisions off of

Open rates no they actually want to get

to know the investment goals of each and

every client they might do this with a

one-on-one meeting with an adviser or by

sending you an online survey now this

survey is really interesting because the

companies designed it with their future

Outreach efforts in mind so they're

really thinking about your next

experiences from your very first

interaction they even have this cool

thing called the Gratitude question

where they ask what are you grateful for

in your life and then they personalize

your investment goals accordingly

imagine what my experience would have

been like in that local Urgent Care had

they been thinking about my future

experiences from the first time I walked

in second Fidelity once they get to know

you uses personalization to Delight you

teams look at your investment goals

along with data from your every next

interaction to decide what to do next

say you had a baby and you updated the

beneficiaries on your life insurance

they would take this data and educate

you on the benefits of opening a college

savings account they would even choose

how to educate you say you were new to

investing they might show you a brief

video or if you were really a Savvy

investor wanting to dig into the details

they'll send you an in-depth

article next and this is key they would

decide what not to do for example they

might suppress that previously scheduled

email about the newly launched Bitcoin

fund

in this way Fidelity massively reduced

the scheduled Outreach and shifted to a

much more triggered and personalized

approach the result engagement and optin

rates shot up okay so customers are

happier but what if I'm the guy at

Fidelity in charge of brokerage

transactions what about me if I can't

spam my customers I won't be able to

meet my monthly goals right

wrong Fidelity actually saw transactions

increase with this new

approach but unfortunately Fidelity is

in the

minority the saddest part of our

personalization index results is that

only 10% of companies qualify as

personalization

leaders as a result we live in a world

of

spam 360 billion emails are sent every

day yet conversion rates and open rates

are down we downloaded 250 billion apps

last year but uninstalled half of them

within 30

days and I'm afraid this is about to get

much much

worse why you ask because with geni

companies can deliver an order of

magnitude more content at a fraction of

the cost in a fraction of the time

we had the precipice of a Content

explosion and the jury's still out on

how this is going to

go so as Business

Leaders we need to stop myopically

focusing on selling stuff these people

don't want more

dishwashers and build trust with

personalization my research is clear

when you personalize customers

experiences they will give you their

data much more willingly in fact the

percentage rates go up from 30 to

90% with this data in hand companies can

build a virtuous cycle so if you're that

email marketer out there still spamming

customers stop for a second look at your

unsubscribe rates and think about how

you feel getting all that relev relevant

content and as consumers now is the time

to make our voices

heard you you can feel it when a brand

isn't doing right by your attention your

dollar your data can't you so break off

that relationship or at a minimum give

them a thumbs down in that survey after

you had a bad

experience companies are paying much

more attention to this aspect of their

digital relationship so it's worth the

two seconds to send that

signal I want to leave you with

something that I think a lot about as I

do this work have you noticed people are

a little bit angry actually they're a

lot angry they're angry about big

government and big corporations about

flying they're angry about how everyone

else is

angry look I'm not going to stand here

as the personalization guy and tell you

I have the answer to all the world's

problems but I do have to think

underlying a lot of this simmering gang

is a sense of not being heard of being a

cog in an

unresponsive impersonal

world I get it for much of human history

the world was personal we knew our

butcher Baker and Candlestick maker and

they knew us it's only been in the last

century or so with the rise of mass

Commerce and digital advertising that

businesses got impersonal

the fact is we have taken

personalization out of our

Lives it's time for businesses and us as

consumers to work together to put it

back

in to make us feel seen and heard once

again thank you

[Applause]