In an increasingly competitive and consumer-focused market, personalization has become an essential tool to attract and retain customers. In this scenario, companies like Netflix and Spotify have become global references, using artificial intelligence (AI) to offer unique and personalized experiences to millions of users.
Customization was key to the success of these platforms. She transforms the user experience from passive to active, creating a deeper connection with the content offered.Datafrom Outgrow reveal that 90% of consumers prefer brands that offer personalized experiences and are 40% more likely to view recommended items based on information shared with the brand.
You probably have already watched Netflix movies or series because they were in the "Because you liked..." or "We think you'll like this" tab. On Netflix, more than 80% of the programs watched are discovered through its personalized recommendation system. This not only increases engagement but also significantly reduces the subscription cancellation rate.
For Spotify, personalization goes beyond simply suggesting songs. The platform, a pioneer in creating unique experiences with the playlists "Discoveries of the Week" and "Newcomers Radar," has made these lists essential for discovering new artists and keeping users engaged, attracting millions of listeners. This personalization helped Spotify reach over 205 million premium subscribers in 2023.
“This personalized approach not only improves customer satisfaction, but also optimizes the use of the platform’s resources, directing users to content that is more likely to please them,” says Kenneth Corrêa, data and innovation specialist and MBA professor at Fundação Getúlio Vargas (FGV).
Impact on user retention
Personalization and recommendations have a direct impact on user retention. Netflix estimates that its recommendation system saves over $1 billion annually in customer retention costs. Spotify, with its personalized features, encourages regular use and reduces migration to competing services.
“Personalization creates a sense of added value and a long-term relationship with users, making the service increasingly valuable and difficult to replace,” says Kenneth Corrêa.
What can these entertainment giants teach other companies about personalization and recommendation?
Lessons on Personalization and Recommendation Using AI
Lesson 1:Deeply understanding your customers and using those insights to create personalized experiences can be a powerful competitive differentiator, regardless of your industry.
Lesson 2:Effective personalization goes beyond simply recommending products. It is about creating a holistic experience that continuously adapts to user preferences and behaviors, using data from various sources to make decisions at all levels of the business.
Lesson 3:Combining different AI techniques can create a much more robust and accurate recommendation system, capable of understanding subtle nuances in user preferences.
Lesson 4:Investing in personalization is not just about improving the user experience in the short term, but about building a long-term relationship that makes the service increasingly valuable and difficult to replace.
Lesson 5: While powerful, AI-based recommendation systems require ongoing monitoring, tuning, and ethical considerations to be truly effective and trustworthy.
Lesson 6:Data collection should go beyond the obvious. It is the combination of detailed user behavior data with contextual analytics that enables the creation of truly personalized experiences and informs strategic business decisions.
Lesson 7:Machine learning can be used not only to analyze user data, but also to deeply understand the product or service itself, thus creating a much more sophisticated level of personalization.
Lesson 8:When implementing AI systems for personalization, it is crucial to consider not only the technical effectiveness but also the broader ethical and social implications of their technologies.
Lesson 9:Personalization, when implemented well, creates a virtuous cycle of customer understanding and service improvement, leading to greater customer satisfaction and loyalty.
Companies from various sectors can apply these valuable lessons to create deeper and more lasting connections with their customers. "By investing in personalization and recommendation, using AI ethically and effectively, it is possible to transform the user experience and achieve a significant competitive advantage," declares Corrêa.
For the specialist, personalization is not just a passing trend, but a powerful strategy that, when well implemented, can lead to greater customer satisfaction, better retention, and sustained growth. "The future belongs to companies that know how to personalize their offers and experiences, creating real and meaningful value for each customer," he concludes.