Only 41% of consumers feel comfortable with companies and brands using AI to personalize their experiences

Twilio’s annual State of Personalization report highlights that companies around the world are enthusiastically embracing the potential of AI to deliver personalized customer experiences, but consumers remain skeptical. The report underscores the value of an AI-powered personalization strategy for brands looking to retain existing customers and acquire new ones. 62% of business leaders cite customer retention as one of the most important benefits of personalization, while nearly 60% say personalization is an effective strategy for acquiring new customers.

Consumers increasingly value personalization

Consumers are also increasingly emphasizing the value of personalization, with 56% saying they would buy again after a personal experience, up 7% from last year’s report. These findings clearly point to an increasing opportunity to build customer loyalty and increase the value of their lives by offering them personalized experiences.

The report also highlights how many companies are testing AI to differentiate themselves and drive business growth, but also provides guidance on how to do it right, starting with the critical need to increase consumer confidence in the technology.

However, there is a disconnect between this enthusiasm and consumers’ comfort level: only 41% of consumers are comfortable with companies using AI to personalize their experiences, and only half (51%) of consumers trust brands to keep their personal data safe and use it responsibly. To effectively utilize intelligence technology in a way that balances consumers’ current comfort level, companies must first establish a foundation of trust in the data used to deliver this personalization.

It’s important to note that AI-powered personalization is only as good as the underlying dataset, and without robust data, customer experiences are likely to miss the mark for consumers. It’s a real challenge: Half of companies report that getting accurate data for personalization was a struggle, up 10% compared to 2022, and 31% of companies cite low-quality data as a major barrier to leveraging AI.

Meanwhile, accuracy (47%), speed of real-time data (44%), and customer retention or repeat purchases (44%) were the most important measures of AI-powered personalization success.

To improve outcomes from AI and personalization in general, companies must invest in data quality, leverage powerful real-time data management tools, and continue to increase use of source data.

Companies are taking steps to address privacy concerns

Almost all companies surveyed (97%) are taking steps to address consumer privacy concerns, demonstrating their commitment to the responsible use of data. As companies continue to embrace AI to drive personalization and the customer experience, it’s important to remember that the quality of the underlying data is critical to success. By improving data quality and increasing transparency and privacy, companies can improve consumer trust in AI technology and deliver personalized and relevant experiences that meet customers’ needs and wants. Ultimately, this not only benefits companies but also improves customer satisfaction and loyalty in the long run.