The Personalization Paradox: Consumer Willingness Versus Industry Performance

Even though consumers express a willingness to invest in personalized experiences, the reality falls short, with only 23% of hotel guests and 26% of retail consumers reporting high levels of personalization in recent interactions. This significant disparity suggests untapped potential for revenue growth in both industries. Medallia's latest report, "Decoding Personalization in Hospitality and Retail," highlights a crucial correlation between personalized experiences and overall satisfaction.  

“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. 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,” said Andrew Custage, Head of Insights for Medallia Market Research.

The report emphasizes that customers who perceive a high level of personalization (rated 9 or 10 on a scale of 0 to 10) are significantly more likely to express very high overall satisfaction. In contrast, those who do not feel their experience is personalized tend to give lower satisfaction ratings.

Key findings spotlight opportunities for improvement in the hospitality sector, indicating that the greatest potential for personalization lies during the stay itself. Despite a mere 46% recall rate for personalized experiences during the stay, other touchpoints in the customer journey, such as customer service interactions, booking processes, post-stay engagements, and check-in/check-out procedures, demonstrated higher averages.

For retailers, the report identifies specific touchpoints where personalization shines, including mobile app usage, website visits, interactions with loyalty programs, and engagement with customer service teams. These areas show higher reported levels of personalization compared to in-person interactions, presenting a strategic opening for retailers to enhance their share of business and customer loyalty.

This month, Medallia has also introduced Medallia Agile Research, a revolutionary self-service advanced market research tool, as well as four new AI innovations to transform the personalization of customer and employee experiences.