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Why Preferences are the Future of Personalization

In a world where every move has been tracked for a decade and the world's most valuable companies have most of our personal data already, it may be overly optimistic to say that the future of online experiences are going to be more in our control and more reliant on giving people choices.

But we're making the claim now.

Even in a digital-first world, people still need authentic personal interactions. Companies that provide more personalized interactions online have been outgrowing everyone else for the past decade, and it has changed the expectations people have for digital experiences. We have become accustomed to incredible personalization from technology leaders like Netflix, Yelp, Stitch Fix, Google, Nike, Amazon and more. People have come to expect personalization and reward companies that do it well

And we should have more personalized experiences online. However, the challenge is data. Personalization today is mostly built around observed data. Every company watches everything you do online and then they try to guess what you want based on what other people like you did in the past. While this great for companies that have a ton of data and resources to analyze, understand, build, and iterate experiences at scale - it's pretty much impossible for anyone else to keep up. Not to mention, the data is becoming harder to get as laws, technology, and human behavior trend more towards privacy.

So what are we supposed to be doing about this conundrum between personalization and privacy?

Enter... Preferences

The solution is to use customer preferences to create better personalization. In general, a preference can be any customer attribute that influences a purchase; such as context, characteristics, needs, values, interests, budget, quality, and more.  Brendan Witcher at Forrester has a great new model for these characteristics and how to think about them (gated). Preference information is actually far better and more useful than behavioral or demographic data - because it's not an assumption! You ask people directly what they want and reward them for sharing it with you!

Preference-based personalization is the antithesis of existing “personalization” because it relies on understanding what people want by asking directly rather than making assumptions based on behaviors and demographics. The paradigm shift is that we need to move away from "can I suggest a product based on what people like you have purchased," to a perspective of “what would you like today?"

Now, you are probably thinking, “That sounds great, but how do I get a person’s preferences?”  This is actually the best part of the idea!

Don’t Guess, Just Ask.

Being preference-first means you care more about what a customer tells you they want more than everything else you know about them. The best way to know what someone wants is to ask them. 

The good news is that asking comes with TONS of benefits. 

 

Asking is easier.

Experiences that focus a clear, concise question and an obvious reward for answering are a lot easier to design than ones that are designed to “trick” or “gamify” user participation. Also, you can make these experiences really small - like a single click.

Lower effort, clear reward and simpler design = more engaging.

 

 

Being trustworthy gets you better data.

Giving people transparency over how their data will be used and a real choice to share does wonders for data reliability. Transparency, choice and control build trust, which makes a person more inclined to answer truthfully. In addition, rewarding participation instantly WITHOUT asking for ID/Email/Phone Number makes the value clear to a customer without much cost.  For sure, some people will avoid being honest, but it’s definitely going to be more accurate than assumptions based on behaviors. 

Transparency, choice, and control = higher quality, more accurate data.

 

You can use preferences instantly.

With behavioral and demographic data, someone has to spend weeks or months analyzing the data, finding correlations and statistically significant relationships and building cohorts that can then be used to design experiences that might capture some portion of that cohort. 

The best thing about preferences is that they can usually be addressed immediately.  Immediately is, coincidentally, also the best time to help customers who are browsing for answers. Since you aren’t making assumptions about what they want, you don’t have to think about it, analyze it, or make contingencies if you get it wrong. If someone tells you their budget or what they need - you can use that information right away to filter results. 

This gives you the powerful ability to immediately serve up the best content or product for that need. And the more preferences you can collect, the more personalized and relevant your experience can be!

 

How to Get Started Today

The two biggest things to remember are trust and value exchange.  You have to trustworthy in the way you set and meet expectations, and you have to create value for the customer at every interaction.

People will not give you valuable information about themselves unless they trust that the value they get in return will be greater. This is essentially the same economic and social principle that underlies any transaction. The customer data is more valuable to you, the brand, and your expertise/product/time is more valuable to them. Focusing on exchanging value in a trustworthy way creates a win-win. Progressively creating these types of mutually beneficial experiences over time builds trust and loyalty that results in higher purchase rates and retention. 

To get started, just think of the preferences that are most valuable to you and how you can earn them online. Check out this blog for more information on that topic. 

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