In an increasingly competitive and consumer-centered market, personalization has become an essential tool for winning and retaining customers. In this scenario, companies like Netflix and Spotify have become global references, using artificial intelligence (AI) to provide unique and personalized experiences to millions of users
Personalization 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. DataOutgrow reveals 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 have probably already watched the movies or series on Netflix because they were in the "Because you liked" tab…"or 'We think you will like this'". 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, pioneering in creating unique experiences with the playlists "Discoveries of the Week" and "New Releases Radar" 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, analyzes the data and innovation specialist and MBA professor at Fundação Getúlio Vargas (FGV), Kenneth Correa
Impact on user retention
Personalization and recommendations have a direct impact on user retention. Netflix estimates that its recommendation system saves more than $1 billion a year in customer retention costs. Spotify, with its customized 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 these entertainment giants can teach other companies about personalization and recommendation
Lessons on Personalization and Recommendation Using AI
Lesson 1:Knowing your customers deeply and using those insights to create personalized experiences can be a powerful competitive advantage, regardless of the sector of activity
Lesson 2:Effective personalization goes beyond simply recommending products. It is about creating a holistic experience that continuously adapts to the user's preferences and behaviors, using data from various sources to make decisions at all levels of the business
Lesson 3:The combination of 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 5Although powerful, AI-based recommendation systems require monitoring, adjustment and ongoing ethical considerations to be truly effective and reliable
Lesson 6:Data collection must go beyond the obvious. It is the combination of detailed data about user behavior with contextual analysis that allows for 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 offered, thus creating a much more sophisticated level of personalization
Lesson 8:When implementing AI systems for personalization, it is crucial to consider not only technical effectiveness, but also the broader ethical and social implications of their technologies
Lesson 9:Personalization, when well implemented, creates a virtuous cycle of customer understanding and service improvement, bringing the greatest customer satisfaction and loyalty
Companies from various sectors can apply these valuable lessons to create deeper and more lasting connections with their customers. "When investing in personalization and recommendation", using AI in an ethical and effective way, 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 another 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, concludes
