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Study Finds Strong Correlation Between Hotel and Retail Personalization and Spending

By Tracey E. Schelmetic February 27, 2024

Most people appreciate attention and personalization, particularly when it comes to deciding on (and making) purchases. Poorly targeted marketing or customer service, however, can spur the opposite, it can feel frustrating and essentially time-wasting. And while marketers today have a great deal of our personal information (with which they could better personalize experiences), many of them are still struggling with the process.

Hotels and retailers are particularly challenged in building better customer experiences. Competition is stiff, and customers often make their ultimate decisions based on how they were welcomed and well they were treated during their stays or along their purchasing journeys.

Enterprise experience platform solutions provider Medallia, Inc. recently announced the findings of its new research report, “Understanding Personalization Efforts in the Hotel and Retail Industries.” The study, which was based on a survey of 1,749 hotel guests and 1,905 retail consumers, found a strong link between personalization and overall satisfaction, validating earlier research that showed 61% of consumers are willing to spend more with companies if they offer a customized experience.

The new study revealed hotel and retail brands have significant opportunities to improve and capture more revenue: Just 23% of consumers reported experiencing high levels of personalization after recent hotel stays, and only 26% said the same after recent retail interactions.

In addition, the research found that customers who rate the level of personalization they received as a 9 or 10 (on a scale of 0 to 10, with 10 being the most personalized) are far more likely to also rate their overall satisfaction as very high. Those who do not perceive their experience as being personalized report lower satisfaction ratings.

“It’s no surprise to see the clear link between personalization and satisfaction, but also not surprising to see brands struggling to keep up with consumer expectations for more customization,” said Andrew Custage, Head of Insights for Medallia Market Research. “The challenge for companies — especially in hospitality and retail, where consumers frequently engage across multiple digital, contact center, and in-person touchpoints — has always been capturing and understanding customer data fast enough to act on it. But generative AI technology is now making it possible for brands to automate insights and actions at scale to deliver more personalized experiences.”

Edited by Alex Passett
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