The Secret Ingredient of Impactful Personalization: Customer Feedback

MEDALLIA.COM 2

Personalization is no longer just a buzzword or a

“nice-to-have” confined to marketing outreach.

Nowadays, to survive in a rapidly changing

world, customer-facing brands must put data-

driven personalized experiences along the entire

customer journey at the core of their strategy.

Those that do will not only survive, but thrive.

By helping numerous businesses optimize their

customer interactions, Medallia has found that

brands that create personalized experiences can

increase their customer experience scores by

up to 150 percent. They can also increase their

revenue two to three times faster than those that

do not personalize experiences.

3 key ingredients of personalization: know your customer, leverage the right customer data and take actionThe demand for personalization is growing.

A recent study suggests that customer

expectations for personalized experiences will

increase approximately three times from 2017

to 2020. So what is driving the demand for

personalized experiences? First, technological

progress and omnichannel business initiatives

have succeeded in opening up a vast landscape

of choice for consumers, and free movement

across channels. Customers need brands to

proactively help them navigate the shopping

experience in a way that best suits them.

Second, more than ever before, customers

expect companies to know who they are,

their preferences, and what experiences they

have had in the past. Third, customers are

progressively shifting from a desire to spend

money on goods to a desire to spend money on

experiences. In fact, customers increasingly seek

out “experiential” interactions where the journey

of engaging with the brand is a pleasure in itself.

But how can businesses meet these customer

expectations? We find that successful person-

alization requires three key ingredients: brands

need to have thought about who their customers

are, have the right data to support this thinking,

and take action to tailor experiences for

customers based on that data. The key here is

data, and specifically customer feedback data.

Next level personalization with customer feedback Personalization along the entire customer

journey requires better data than ever before. It

is no longer enough to know who a customer is

and what they have purchased in the past.

Customer experience feedback–data collected

from surveys, social media, and conversations

with customers–offers several fundamental

advantages over other types of data driving

personalization:

• It enables targeted action when tied to spe-

cific people, contexts, and touch points along

the customer journey

• It facilitates data-driven testing and innova-

tion as businesses can listen, act, and gauge

consumer reactions in real time

The impact of personalization on ecommerce

shopping experiences

Non-Purchasersincrease in

Net Promoter Score (NPS) of 75% to

150%

Purchasersincrease in NPS

of 15% to

35%

MEDALLIA.COM 3

• Understand how to meaningfully segment

their customers based on patterns in what

different groups of customers say about

their experiences. For example, feedback may

show that millennial customers experience

a digital interaction very differently from

Generation Z customers, leading the company

to recognize the value of analyzing these

two generational groups, previously lumped

together, as distinct markets with different

personalization needs.

• Design experiences, products, and services

tailored to the wants and needs of customer

segments they most value. For example,

feedback may reveal that new customers who

call a contact center place the most value on

agents spending ample time in explaining and

onboarding, while existing customers’ satis-

faction is most heavily influenced by speed

of issue resolution, leading the company to

design a separate support experience for each

group.

• Accelerate innovation and quickly gauge its

impact by customer segment. For example,

a retailer may test new smart fitting room

technology and use feedback to immediately

gauge shoppers’ reactions by gender identity,

customer loyalty tier, or annual spend, and

tailor rollout of the technology to best serve

the most valued customer segments.

Liberty Global, a large international telecom

provider, uses insights from customer survey

comments to understand meaningful differences

in the experiences of customers in different

product segments, and to more effectively tailor

experiences to each group. For example, the

company found that the overall satisfaction of

wifi customers was most strongly affected by

service reliability, and the overall satisfaction of

mobile customers was most strongly affected by

pricing. Armed with these insights, Liberty

Global improved messaging and product offer-

ings for each of these customer segments.

• It digs deep into customer comments to

uncover consumer thoughts and feelings that

empower brands to create emotional impact

that drives decision making, loyalty, and

self-perception

Three types of personalization fueled by feedback

Here we look briefly at three types of person-

alization, fueled by different types of data,

and discuss the role of customer feedback in

each: segmented, situational and individual

personalization.

1. Segmented personalization:

DESIGNING GREAT EXPERIENCES ACROSS

CUSTOMER SEGMENTS

Customer feedback provides segmentation

data such as demographic, behavioral, and

psychographic characteristics (e.g., millennials

vs. boomers, loyalty vs. non-loyalty members,

mobile vs. wifi customers) and empowers orga-

nizations to:

Segmentedpersonalization

Situationalpersonalization

Individual personalization

MEDALLIA.COM 4

2. Situational personalization:

ADAPTING TO CUSTOMERS IN ALL

SITUATIONS

Customer feedback provides deeper insights

into what is happening in the world around

customers (e.g., a weather event, bugs on the

company website, or the impact of holiday store

staffing levels), and how to react in a way that

makes customers feel understood and valued. It

enables organizations to:

• Quickly identify and resolve challenges

their customers are facing out in the field.

For example, an automotive company is

alerted about specific equipment issues by

surges in the frequency of particular keywords

or topics emerging in customer survey com-

ments, and thus takes personalized action to

mitigate negative impact for all potentially

affected customers.

• Understand how best to serve customers in

particular times, places, and contexts. For

example, a hotel brand may notice that certain

customer feedback topics, such as demand

for poolside sunscreen and bottled water,

surge during heat waves and thus proac-

tively meets those customer needs when the

forecast indicates hot weather is on the way.

Following a series of Colorado wildfires, USAA

used customer survey feedback to optimize the

claims process during crisis situations. Feedback

showed that members were frustrated with the

often months-long process of inventory and

assessment to get their insurance payments

following catastrophic events. Recognizing

an opportunity to make changes that would

provide more personalized experiences to

customers in challenging situations, USAA

changed the claims process. It gave customers

the option to receive 80 percent of the esti-

mated value of their personal property without

having to spend months inventorying all of their

belongings, and began using drones to assess

the scope of property damage, thereby acceler-

ating the adjustment process. Not surprisingly,

this innovation created an enormous value for

USAA and its customers, resulting in quicker

claims processing, lower labor costs and better

customer experience overall.

3. The end goal:

INDIVIDUAL PERSONALIZATION WITH

CUSTOMER FEEDBACK

While segmented and situational personalization

address large groups of people with something

in common, the challenge is to focus that infor-

mation down to create an experience that feels

tailored to the individual. At a basic level, human

interaction is the oldest and often the most

effective form of individualized personalization:

the friendly neighborhood grocer, the proactive

B2B account manager, the long-time family tax

advisor, and the empathetic store associate who

asks questions and talks a customer through

product features.

Feedback plays an important role in indi-

vidualizing experiences by enabling even large

organizations to listen to a customer, know them

as an individual across multiple interactions,

and create powerful emotional experiences. By

engaging in a two-way dialogue with customers,

brands empower the consumer – their most

Feedback plays a key role in individualizing experiences by enabling organizations to listen to a customer, know them as an individual across interactions, and create powerful emotional experiences

MEDALLIA.COM 5

valuable asset – with a voice that informs

product, services, and customer experience

decisions. This feedback-informed personaliza-

tion can pay rich rewards for the company, as

well. In a recent study conducted in collabo-

ration with the Stanford Graduate School of

Business, the Medallia Institute found that referral

campaigns with personalized messages for each

individual customer were 12 times more effective

at driving referrals than generic messages. The

act of asking for feedback not only strengthens

a brand’s relationship with its existing clientele,

but creates personalized experiences that drive

loyalty and advocacy.

The most powerful act of individual personaliza-

tion from feedback is that of closing the loop,

or an employee reaching out to a customer in

response to a piece of feedback. At Apple, store

managers call every detractor within 24 hours in

order to fix the issue or learn from their experi-

ence. A study found that this dialogue pays off.

Every hour spent calling detractors generates

more than $1,000 in customer lifetime revenue

or, a total of $25 million in additional sales every

year at Apple.

The barriers on the journey to further individual-

izing personalization, in a systematic way, are

largely technical. Advances in real-time access

to data, AI, and predictive analytics will lead to

new levels of individualization in the way brands

engage with their customers.

Personalization is about seeing the world from

the customer’s perspective and creating the

experiences they want. In an omnichannel world

The most powerful act of individual personalization from feedback is that of closing the loop

RECOMMENDATIONS

Companies that want to effectively personalize their customers' experiences should leverage customer feedback in the following ways:

Segmented Personalization

• Capture segmentation data and tie it to customer feedback

• Sort feedback by segmentation data, and compare satisfaction across char-acteristics and segments

• Test innovations by changing and modi-fying survey questions, and sampling specific groups

Situational Personalization

• Tie feedback to a particular time, place, or channel

• Identify emergent situations by surfac-ing topic and sentiment in written comments

• Highlight changes in customer experi-ence through reporting such as custom dashboards or push notifications

• Track and share best practice actions related to situations and contexts

Individual Personalization

• Tie feedback to individuals, ideally across multiple interactions

• Empower employees to access and act on feedback in the moment through intuitive reporting, analytics, and mobile access

• Close the loop with individual customers based on the feedback they have provided

of freedom and choice, brands must know and

proactively guide their customers. Feedback is

the ultimate fuel to create such personalized

experiences. Companies must ensure they are

capturing feedback and empowering individuals

and the organization as a whole to take action

based on what their customers want and need.

MEDALLIA.COM 6

Noah Rolff

Noah Rolff is Retail Principal and Director of Customer Marketing at Medallia. Prior to

coming to Medallia, Noah worked as a management consultant and led international

development projects in Latin America and Asia-Pacific. He has an MBA from the

UCLA Anderson School of Management, an MPhil from the University of Cambridge,

and a BA from UC Berkeley.

Emma Sopadjieva

Emma Sopadjieva is a senior manager of research & analytics in Medallia’s CX Strategy

Research group. Prior to coming to Medallia, she was a consultant for over five years

in Deloitte’s Financial Advisory practices in the US, the UK, and Spain. She has an MA

in international economics and management from the School of Global Policy and

Strategy at UCSD, and a BS in business administration and management from Bucknell

University.

ABOUT THE MEDALLIA INSTITUTE

The Medallia Institute provides quality research, insights, and education programs to equip business executives and

customer experience professionals with the insights and know-how to lead their organizations to compete and win on

customer experience. Medallia Institute findings are regularly published in respected business and academic journals.

Follow us @Medalliamedallia-inc. MedalliaIncblog.medallia.com