BOSTON—For those in optical retailing, here’s a worrying prediction from the Boston Consulting Group (BCG): over the next five years in three sectors alone—retail, health care and financial services—“personalization” will drive a revenue shift of an estimated $800 billion to the 15 percent of companies that get personalization right.
A “personalized experience” is distinguished by its focus on a one-to-one marketing approach with customer-specific messages that are fully integrated and customized across all communications channels, according to BCG, a management consulting firm and business strategy advisor. In part because of the hurdles that must be overcome to reach this optimum level of personalization, only about 15 percent of companies can be considered “true personalization leaders,” the firm noted.
BCG estimates that about 65 percent of brands and/or companies are still relying today on segmented marketing or even a mass-market approach.
“Personalization is causing a seismic shift across the landscape of consumer-facing brands, and we are only starting to feel the shocks,” the consulting firm noted in a recent article, “Profiting from Personalization.” The report can be downloaded here.
“Brands that create personalized experiences by integrating advanced digital technologies and proprietary data for customers are seeing revenue increase by 6 percent to 10 percent, according to our research … As a result, personalization leaders stand to capture a disproportionate share of category profits in the new age of individualized brands while slow movers will lose customers, share and profits.”
BCG’s projections and analysis are based on a survey of personalization programs at more than 50 companies in 10 industries.
“In many consumer categories, high-value customers drive 70 percent or more of the value for companies,” Mark Abraham, a BCG partner, said in a statement. “Brand individualization unlocks the ability to enhance loyalty with these and other customers by tailoring the brand experience to each contextual user journey.”
For market-leading brands and companies to maintain or expand share, BCG recommends that the companies “reimagine their business with an individualized value proposition at the core, merging physical and digital experiences to deepen their customer connections.”
In such a scenario, brand individualization is at the forefront of strategy and has influence over all other business tactics, including marketing, operations, merchandising and product development, according to the consulting firm.