25 Feb How algorithms create lifetime customer relationships
Like a line from a coming-of-age teen movie, the phrase ‘she just gets me’ comes to mind when talking about the impact a good algorithm can have on the relationship between a business and their customers. Don’t worry, this is not a post about the component parts of algorithms (I wouldn’t know where to start!), moreso the impact they are having on customers.
Undeniably, giants Google, Amazon and Facebook have ensured that whether we like it or not, algorithms have been the defining force in shaping how and what we consume online over the past decade. Algorithms got a lot of bad press last year thanks to Cambridge Analytica abusing them for evil gain, but there are always a few bad apples which do not represent the majority.
Some of the most innovative companies and new initiatives of the past few years have been driven by a relentless pursuit to personalise the experience for individual customers and when big business can achieve personalisation on a mass scale it creates brand love and trust, something no amount of advertising can achieve. Here are 3 of the best:
Spotify’s Discover Weekly playlists
A handful of organisations have successfully normalised personalisation to such an effect that we’d miss it if it wasn’t there anymore. Spotify is one such pioneer and their algorithm learns from users listening behaviour to recommend new artists and songs and like any good algorithm it gets better with time. As one fan wrote on Medium, “It makes me feel seen. It knows my musical tastes better than any person in my entire life ever has, and I’m consistently delighted by how satisfyingly just right it is every week, with tracks I probably would never have found myself or known I would like”. Discover Weekly was so successful for Spotify it spawned many other algorithm-driven features and redefined the direction of the platform in the last 3 years.
American Express Offers
Having access to ALL your credit card spending data is a pretty solid platform for personalisation but Amex Offers has skillfully navigated that delicate balance of adding sufficient value to the cardmember so as not to draw attention to the fact that they have the data! Their algorithm ensures a mix of offers for regular retailers, lapsed retailers and new retailers, communicated via owned channels like cardmember areas online, email, app and social media. The algorithm is behind the continued success of the programme, keeping Amex, merchants and cardmembers happy. The elusive triple win.
Stitch Fix
Algorithms drive clothing aggregator Stitch Fix’s every move. By soliciting 2.9 million customers’ feedback and precisely measuring every aspect of the clothes it sells, Stitch Fix can offer personal styling at scale. More than a billion customer ratings train the company’s algorithm to understand an individual customer’s personal style. Like with Spotify customers are provided with a range of goods and their subsequent ranking and purchasing behaviour hones the algorithm to continuously refine the customer’s taste profile. The US business has been so successful they are about to launch in the UK.
The holy grail for businesses and their marketers is to have customers who would miss them if they were gone. Smart algorithms which continually learn customer behaviours and apply that knowledge to deliver enhanced customer experiences via owned channels, have to be celebrated as the future norm.