The Psychology Behind Personalized Customer Experience

When the holiday season rolls around, my Grandma is a hometown celebrity. Everyone wants her famous Koulourakia, a popular Greek cookie served during Greek Easter and the holiday season. Many popular bakeries, grocery stores, and Greek restaurants sell Koulourakia with nearly the exact same recipe/taste for low prices, but for whatever reason, she’s always asked to bring her homemade cookies to each holiday party she attends (yes, my Grandma parties). For as long as I could remember, I’ve wondered, what’s so special about these cookies?

When I asked her years later, she told me that I was asking the wrong question. Like any grandmother who’s biased towards her own cooking/baked goods, she replied, “It’s not what’s so special about Koulourakia, Matt. It’s what’s so special about my Koulourakia.”

Customer databases and koulourakias

According to research conducted by the Harvard Business Review, when we experience an interaction with a product or service (something as simple as a Greek cookie), we “want to feel as if the interaction was the result of human agency rather than some abstract automation.” Even if a gift/product is physically the exact same, humans enjoy one more so when we’re aware of the authenticity and higher perceived value than those of which are impersonalized. 

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Make no mistake, automation is a necessity in the competitive digital era dependent upon operational efficiency. But businesses are often so hyper-focused on cutting costs and improving productivity, that they forget an imperative component that technological advantages (like automation) provide: the ability to make simple tasks easier so we can focus on personalizing experiences. That can be as complicated as utilizing a consumer database to predict customers’ individualized needs based on previous purchasing behavior, or as simple as sending a customer a post-purchase follow-up email. Personalization enhances customer experience, especially when any human component of the service is made apparent. 

Research by psychologist Kurt Gray shows that we enjoy a massage from a massage chair more when a human controls the massage mechanism than when a machine does. Another study of Gray’s shows that people prefer the taste of candy that others have selected for them intentionally (rather than randomly). Other work led by marketing professor Stijn Van Osselaer shows that people will pay more for products such as greeting cards, jewelry, scarves, knives that are handmade versus machine-made because they believe the handmade items are made with intentional love.

The science of giftology

John Ruhlin, author of Giftology, is a CX and Marketing expert whose clients include the Miami Dolphins, Caesar’s Palace, Atlantis Resort, and many more established brands across a wide array of industries. He shared some key lessons on Shep Hyken’s show Be Amazing Or Go Home on the psychology of gift-giving, as it’s related to personalization and the under-utilized marketing tool of product impression. 

“Giftology, the whole core of what we do is we help leaders think strategically about how they look in their most important relationships, but tied to ROI.” 

“If you want to drive more referrals, if you want to open more doors, get more access to CEOs, engage prospects, retain your most important people, [remember that] most people make their decisions on how they feel, emotionally, and then they justify logically. When you delight somebody they want to reciprocate… We’ve seen people 100x their referrals using the giftology system we’ve built.”

When Ruhlin met Shep Hyken, he sent him a knife and a letter that read “thanks for carving out the time to meet with me.” The knife was engraved “made exclusively for Shep and Cindy Hyken.” 

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Ruhlin shared his Marketing CX secret to this gift that sparked their personalized professional relationship: “If you give a nice enough gift [or experience] you subconsciously will never forget where it came from and every time you use the knife and Cindy uses the knife... you remember John Ruhlin. You’ve had that knife for over ten years, you use it once a day, that’s 3600 impressions.”

Operational transparency

When it comes to quality customer experiences, the goal for different departments of businesses (sales or customer service inquiries in the call center, targeted digital advertising, customized product development, etc.) is to create an experience that is as personalized for the consumer as possible. 

Not many people have the time or money to engrave gifts for every client or potential business partner. Rather, companies can benefit by simply increasing what Harvard Business School professor Ryan Buell calls “operational transparency,” indicating the human effort involved in their services, since regardless of a businesses’ service or how much of the process is automated, humans are involved at some touchpoint along the way. Highlighting the human touchpoints is a scientifically proven way to improve perceived personalization of service, and ultimately, overall sales. 

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Food delivery service, Caviar, for example, notifies customers at every phase of the order process, from when the order is received, the food is prepared, and the food is picked up for delivery, including the name of the delivery person, which ensures the customer knows their food is in good (human) hands. Other work by psychologist Veronika Job and colleagues shows that simple reminders of human involvement increase value. Business is skyrocketing for an ecommerce website, Etsy, a haven for handmade goods and crafts through an operational system that is largely automated, as well as its growing Amazon-branded competitor, Amazon Handmade. 

Whether it’s Etsy or Amazon products, my Grandma’s Koulourakia, or John Ruhlin’s engraved knife to Shep and Cindy Hyken, personalization is a psychological phenomenon that drives quality customer experience. Brands that combine digital automation and consumer psychology will generate the most personalized experiences for their customers, improve customer satisfaction, and generate more sales revenue.