What is hyper-personalization? Benefits and key features explained

In today’s competitive digital landscape, connecting with current and potential customers is more important than ever. With 92% of companies worldwide using some form of AI-driven personalization to promote growth, brands across industries are developing more targeted products, messages, and experiences.

Now that personalization is a well-established trend, 71% of people expect businesses to be able to anticipate their wants and needs at every touchpoint. This speaks to the value of hyper-personalization, the most advanced method of customer targeting. This technique has been a major driver of success for big-name companies like Google, Netflix, and Amazon, but that doesn’t mean its uses and benefits are limited to tech giants alone.

In this guide, we’ll discuss what hyper-personalization is, how it creates value for both businesses and their customers, and key components of a winning hyper-personalization strategy.

What is hyper personalization?

Hyper-personalization makes use of real-time data, artificial intelligence (AI), and machine learning (ML) to customize products or content to individuals within a target audience.

Regardless of industry, businesses can use AI hyper personalization to make stronger personal connections with customers and clients. By analyzing data around previous purchases, preferences, demographics, and other important information — technology can enhance the customer experience in a scalable way.

Traditional personalization vs. hyper-personalization

Hyper-personalization and traditional personalization both use customer data to tailor communications and service offerings. The difference lies in the type of data used and the level of personalization each can accomplish. For example, traditional personalization can use information on what a customer bought last winter to display an ad for a coat that will likely appeal to them in the current season.

Hyper-personalization takes it a step further. This approach uses advanced algorithms to estimate the customer’s preferred colors, height and weight, location, shopping times, payment method of choice, and other details to create an online ad tailored to their personal preferences and needs. Hyper-personalization is able to identify exactly what the customer is looking for at a certain time to prompt moments and interactions that will truly resonate.

How does hyper-personalization work?

In order to implement hyper-personalization, companies need vast quantities of data, AI and ML capabilities, and a range of other tools to deliver preferred customer experiences. Some of these tools include websites, chatbots, and customer relationship management (CRM) software.

Here’s a step-by-step breakdown of how hyper-personalization works:

1. A company establishes a vast database of information on customer preferences.
2. An AI algorithm draws on that database to model different types of behavior and determine what approaches have a higher chance of resonating with consumers.
3. The AI software integrates with the other tools and incorporates automation to generate personalized messages, ads, alerts, and product recommendations.
4. Technology that continuously collects and deposits information in an AI algorithm's database lets you anticipate a customer’s needs further, meeting them where they are at any given moment.

Benefits of hyper personalization

AI hyper personalization benefits businesses and clients alike. With this tactic, companies can reach current customers and prospects on a more personal level, enhancing the overall experience.

5 ways hyper-personalization benefits businesses

1. Higher conversion rates: Nearly 60% of business leaders consider personalization an effective strategy for acquiring new customers. When you use data to target customers with personalized ads and marketing campaigns, people are more likely to understand how your business meets their specific needs.
2. Increased customer satisfaction and retention: Personalized experiences result in 56% of consumers becoming repeat buyers. Communications and products that are tailored to a specific individual are more relevant and enjoyable, boosting customer satisfaction and improving retention.
3. More customer referrals: Customers are 78% more likely to recommend a company to friends and family when it provides personalized experiences. When satisfied users promote you to their network, it brings in new business and increases your reputation.
4. Increased revenue: Across sectors, hyper-personalization generates a 10-15% revenue increase, with fast-growing companies deriving 40% more income than competitors from the tactic. Higher conversion rates and greater retention from hyper-personalization adds up to an overall increase in revenue.
5. Better engagement: Hyper-personalization can highlight features of a product that have a higher chance of appealing to each customer, which increases engagement. It guides users to interact with a product more often and engage in new ways.
6. Improved resource allocation: Hyper-personalized messages and products are a better use of resources because they’re more likely to drive short- and long-term business value. Generic experiences don’t resonate with customers as effectively, and generally deliver a lower return-on-investment (ROI). However, tailoring experiences to the recipient allows businesses to get the most out of every asset they create rather than spending money on strategies with a lower probability of success.

3 ways hyperpersonalization benefits customers

1. More targeted messages and products: Hyper-personalization leads customers through journeys that are tailored to their specific concerns and interests. This helps make sure that customers only receive and engage with relevant messages and product offerings.
2. Faster discovery process: Customers are more likely to find products and services they’re interested in with personalized advertisements and recommendations. By using data to identify consumer preferences, hyper-personalization can provide solutions to unique problems and specific desires.
3. Greater product value: Personalization makes recommendations based on customers’ data to help them get the most out of what they already have. This increases the value of the product for the end user.

Related read:Why accounting firms need to overhaul the client experience

Key components of a successful hyper-personalization strategy

Now that we’ve covered its many benefits, let’s explore how to implement hyper-personalization in your business by better understanding the key components of an effective strategy:

High-quality data

High-quality data provides a thorough and accurate understanding of your target audience, resulting in more effective hyper-personalization. When data is continuously collected and analyzed in real-time, you can tailor solutions to your audience’s most recent preferences. This enables you to deliver valuable experiences at every touchpoint.

Machine learning

By learning and improving from large amounts of data over time, machine learning models develop better and better hyper-personalization results. ML is an important component of AI algorithms. Beyond building a single, static customer profile, ML is able to regularly adapt and incorporate new data for constantly up-to-date and accurate information.

Automation

Automation makes it possible to produce a large amount of customized messages and recommendations. By taking over tedious, repetitive manual tasks (e.g., tailoring thousands of marketing materials based on AI analysis), this technology plays a crucial role in executing effective hyper-personalization strategies.

Related read: Transform your business with AI workflow automation

Data and privacy policies

When using customer data, policies to protect consumer rights are integral for building trust and upholding your reputation. While many individuals prefer hyper-personalization in marketing, only 51% trust brands to protect their data and use it responsibly. This highlights the need for companies to be deliberate and transparent about how they protect information that supports tailored communications and services.

Marketing expertise

A comprehensive understanding of hyper personalization in marketing helps shape a strong strategy for attracting new and repeat customers. Many companies see great value in using hyper-personalization for marketing and advertising purposes. Businesses can enlist marketing professionals to leverage hyper-personalization in more creative, strategic ways.

Customer feedback

Collecting feedback from customers allows companies to assess hyper-personalization strategies and identify opportunities for improvement. It’s important to understand how the tools you use are performing in the real world, with real customers. This way, you can evaluate the impact of personalization and measure clear ROI.

What is the future of hyper-personalization?

While no one knows where hyper-personalization is headed, it’s an advantageous strategy for businesses seeking to deliver exceptional customer experiences. Like traditional personalization, it makes use of consumer data, but it leverages AI and real-time information to make customer targeting as granular as possible.

Hyper-personalization is a beneficial tactic for nearly every business across industries. However, companies need a solid foundation of data, AI, automation, and human expertise to be effective. High-quality data makes it possible to target customers with accuracy, driving the experiences they want, while automation provides a scalable way to turn real-time audience insights into customized assets. It’s also important to respect customers’ rights to privacy and establish policies to ensure their data is never misused or collected without their consent.

Done right, a hyper-personalization strategy can be a powerful, scalable solution that takes your company to new heights.