Personalization Done Right

The five dimensions to consider—and how AI can help by Mark Abraham and David C. Edelman

From the Magazine (November–December 2024)

Karen Knorr

Summary.

More than 80% of respondents in a BCG survey of 5,000 global consumers say they want and expect personalized experiences. But two-thirds have experienced personalization that is inappropriate, inaccurate, or invasive. That’s because most companies lack a clear guidepost for what great personalization should look like. Authors Mark Abraham and David C. Edelman remedy that in this article, which is adapted from Personalized: Customer Strategy in the Age of AI (Harvard Business Review Press, 2024). Drawing on decades of work consulting on the personalization efforts of hundreds of large companies, they have built the defining metric to quantify personalization maturity: the Personalization Index. It is a single score from 0 to 100 that measures how well companies deliver on the five promises they implicitly make to customers when they personalize an interaction. The authors argue that personalization will be the most exciting and most profitable outcome of the emerging AI boom. They describe how companies can use AI to create and continually refine personalized experiences at scale—empowering customers to get what they want faster, cheaper, or more easily. And they show readers how to assess their own business’s index score.

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The Spotify app knows what you want to hear. It uses AI to process a vast array of your engagement data, including the songs, podcasts, and audiobooks you’ve listened to, when you listened to them, and what led you to them. Its library is tagged by genre, era, tempo, mood, and a long list of other characteristics. The tags allow Spotify to collate playlists based on your listening habits. The app is always learning, constantly running micro tests with user groups. Spotify attributes a large part of its success to its personalized recommendations—its user base and revenues have both increased by 1,000% in the past decade to more than 600 million users and $14 billion, respectively.

Read more on AI and machine learning or related topics Customer experience, Customer strategy, Continuous learning, Consumer behavior and Data management

A version of this article appeared in the November–December 2024 issue of Harvard Business Review.

Read more on AI and machine learning or related topics Customer experience, Customer strategy, Continuous learning, Consumer behavior and Data management

Personalization Done Right

Summary.

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