Personalization Psychology – Why We Prefer Personalized Experiences

Personalization Psychology - illustration of a brain

Personalization is everywhere. There’s probably a personalized email in your inbox right now from a store you have purchased something from. If you use Netflix, you will get emails every week telling you that “something you might like” is now on the service. You may even have listened to something this morning that was recommended by the music streaming service you subscribe to.

But why do we like personalized experiences? What is it about personalization that generates better results for all sorts of organizations?

This week we look at personalization psychology. The “why” of personalization rather than the “how”. Is there a dark side to personalization we should all be aware of? What are the implications of that?

So let’s take a look at why personalization works so well on our simple human brains.

Personalization psychology - A typewriter with "psychology" typed on some paper.
Photo by Markus Winkler on Unsplash

Why Do We Like Personalized Experiences?

Although there are a lot of complexities at work, a study by the University of Texas highlighted two key factors. “Consumers desire for control in media consumption” and also “information overload”.

Personalization Psychology 101 – Desire For Control & Relevance

It is important to note here that the first factor highlights a “desire for control”. Not actual control. In the arena of media consumption we have really surrendered a lot of control to algorithms that target engagement. But at the same time we still “feel” in control when we consume the media that we consume. That feeling of control is an important reason why we like personalized experiences. A lot of personalized content actually does not give much control to the user. But when we see, for example, the list of PlayStation games that you might have played this year it gives a sense of control and, more crucially, personal relevance.

In the eCommerce context the study notes that “an increase of perceived control was linked to pleasantness in service and consumption experiences”. Put simply, people like to be in control. Even if they actually are not in control. 

The study also suggests that “customized online environments also have the potential to increase consumer enjoyment by decreasing information overload”. Which brings us to the next reason why we like personalized experiences.

Personalization Psychology 101 – Information Overload

We get bombarded with more information than ever before. The University of Texas study suggests that our ability to process stimuli becomes increasingly difficult as information loads become greater. The added information load makes negative outcomes more likely. By contrast, personalization cuts down the amount of stimuli presented to a user with highly relevant, targeted information.

A more recent study from Wuyi University indicated “that information overload might damage the [online consumer] decision process”. This is one of the key reasons why personalization works so well in online marketing. With a personalized offering, the decision process can be easier for many users. Which is a big driver behind the increased conversion rates in personalized marketing campaigns. A RedEye report from 2017 found that when companies applied both A/B testing strategies and website personalization, 84% of those companies saw an improvement in conversion rates.

Cutting information overload significantly improves customer decision making, which leads to better outcomes for online businesses.

Personalization psychology - Image of a cocktail party
Photo by Kelsey Chance on Unsplash

Your Name, Your Brain & Cocktail Parties

So “cutting information overload” and a “desire for control” are two key reasons why people like personalized experiences.

One other factor is something called the “cocktail party effect”.

Put simply the cocktail party effect refers to how we can focus on one particular stimulus at the exclusion of others. So if you are at a cocktail party, there is a lot of ambient noise. But when someone mentions your name you filter out all the ambient noise and focus your attention on the person who is mentioning your name. This is controlled by your brain’s Reticular Activating System. Without going into details, this is how your brain orients itself towards information or data you are interested in.

So there is a reason all those personalized emails use your name, it’s to make your brain pay attention to the email, so you open it. The best personalized content serves needs that the user has at that moment. Which makes the user pay attention to the information presented very, very quickly.

An image with fact/fake to illustrate disinformation.

The Dark Side Of Personalization Psychology (And Why It Might Get Darker)

There is a darker side to personalization and we see its effects in the world around us.

The COVID-19 pandemic has caused a very sudden shift towards digital. Mckinsey estimates that “companies have accelerated the digitization of their customer and supply-chain interactions and of their internal operations by three to four years.” Lockdowns kept us at home and online far more than we were previously.

Unfortunately this has left room for unethical practices. These practices were around before the pandemic, but with the pandemic keeping us online for longer we are much more vulnerable to them.

The strategies outlined above that have been used in marketing are also applicable to disinformation. Most recently we have seen anti-vaccine sentiment stirred up by shady operators for financial purposes, which is not new or exclusive to the pandemic. By using powerful targeting techniques, with a big budget, you can get your talking points taken up by millions of people. 

This is likely to increase over the next few years, specifically with regards to “climate denial” or “climate acceptance” content. A lot of money is likely (or will continue) to be spent by vested interests on personalized campaigns questioning the effectiveness of “net zero” policies. Google has already begun to take steps in this area to minimize the damage.

For more information, you can read our post on Google’s policies around personalized advertising.

Yellow figure in a crowd to illustrate personalization

But Personalization Is A Net Positive

Despite some of the darker aspects of personalization described above, it is clear that it is here to stay. It is also clear that users find personalized experiences more positive. It helps us to make quicker decisions, cuts down information overload and leads to positive business outcomes for companies active in the crowded digital space.

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Talk to MAQE

If you need help with personalization strategies for your business, talk to MAQE. We specialize in personalized commerce, with a decade of experience helping businesses in a variety of industries. Get in touch via [email protected].