Businesses that create personalized experiences by integrating advanced digital technologies and proprietary data are seeing revenues increase by six percent to 10%, according to new research by The Boston Consulting Group.
That’s a rate of increase two to three times faster than those companies that do not create personalized experiences, the study said. Personalization leaders stand to capture a disproportionate share of profits while slow movers will lose customers, share and profits, the firm said.
BCG expects that over the next five years in three sectors alone—retail, health care and financial services—personalization will push a revenue shift of some $800 billion to the 15 percent of companies that get it right.
“In many consumer categories, high-value customers drive 70% or more of the value for companies,” said Mark Abraham, a BCG partner. “Brand individualization unlocks the ability to enhance loyalty with these and other customers by tailoring the brand experience to each contextual user journey.”
The BCG survey of personalization programs at more than 50 companies in 10 industries underscores the potential value that can be achieved but also highlights the execution challenges. Two-thirds of respondents said they expect at least a 6 percent incremental annual revenue lift from personalization, with companies in several sectors—apparel, financial services, grocery and wholesale clubs, and technology—anticipating increases of 10% or more.
About one quarter of companies in those sectors have already achieved revenue increases of six percent or more.