It's been a tough period for consumer brands as inflation and high interest rates have tightened spending. Relevance has always mattered, but in a tighter fiscal environment, delivering tailored messages is even more essential.

The Evolution of Personalization: From CRM Segments to Real-Time Precision

In the 2010s, personalization largely meant broad-based segmentation. Marketers relied on CRMs, email lists, cookies and pixel tracking to sort customers into personas and deliver campaigns to these groups. While useful, this segmentation falls short of true individual-level personalization due to the sheer resources required to analyze each customer’s behavior and preferences manually. 

AI’s Revolution in Personalization: Micro-Level Relevance at Scale

AI has transformed what’s possible with respect to analyzing individual behaviors at scale. Both humans and AI can analyze when a specific customer is most likely to open an email; both humans and AI can identify products a consumer might love based on past purchases; both humans and AI can adjust the creative and messaging to better align with a customer’s demographic or psychographic profile. But only AI can do this at scale, executing this complex analysis across millions of customers. This micro-targeting enables brands to deliver relevant, timely content, increasing engagement by as much as 20% and conversion rates by 15-25%, according to McKinsey.

AI in Action: Brands Winning with Personalization

AI-powered personalization is already delivering impressive results across industries. Here are three companies using AI to connect with customers in innovative, impactful ways:

• Ulta Beauty: Personalized Outreach to Existing Customers

  • Who: Ulta Beauty, Inc. is a large US beauty retailer selling both mass and prestige cosmetics, fragrances, skin and hair care products. 

  • What: They have a wealth of first-party data, which they’ve leveraged to build an AI-driven engagement platform. 

  • Impact: The result is that “multilevel customer journeys that used to take days now finalize in minutes or hours.” They have also announced a plan to add reinforcement learning to the customer journey, so that their algorithms can improve based on the results of prior campaigns.

• Yves Rocher: Real-Time Product Recommendations for Website Visitors

  • Who: Yves Rocher is a French skin care, cosmetics and perfume company. 

  • What: To grow their online direct-to-consumer business, Yves Rocher implemented real-time product recommendations. First-time visitors trigger recommendations with their initial interactions, while return visitors have a richer history as a basis for personalization. 

  • Impact: This solution resulted in a “17.5x increase in clicks on recommended items within one minute and an 11x increase in purchase rates”.

• Mango: Faster, Cost-Effective Content Creation for Brand Awareness

  • Who: Mango is a Spanish fast-fashion company. 

  • What: They have embraced AI models to generate ad content more quickly. Mango CEO Toni Ruiz says, “it’s about faster content creation.” It’s also cost-effective – Bloomberg reports that the hourly cost of a human model is about the same as the monthly cost of a fashion focused AI image generator. 

  • Impact: Reducing time and costs allows Mango to run more tailored campaigns, resulting in a higher return on advertising spend and an expanded reach among consumers who see themselves reflected in the brand.

Implications for Business Leaders: Why AI-Driven Personalization Matters

AI-driven personalization offers a clear competitive advantage in driving customer engagement, higher retention rates, and ultimately revenue. The risks of not investing in AI-driven personalization are also significant. As more companies implement these capabilities, those who don’t will face brand decay, gradually losing ground to competitors who can meet consumer expectations more precisely and efficiently.

The Changing Role of Marketers: Elevate Strategy and Creativity

In last month’s newsletter, we explored a framework for understanding the future of human jobs in an AI-driven world, categorizing jobs as “processing,” “evaluating,” “deciding,” and “relating.” Marketing is one area where this framework is taking shape. AI is increasingly able to handle the “evaluating” and “processing” tasks of personalizing and execution. This leaves human marketers free to focus on “deciding” overall creative direction and investment levels, and on “relating”—shaping authentic narratives and fostering genuine connections with consumers.

Conclusion: The Time to Embrace AI-Driven Personalization is Now

For leaders of consumer brands, the question isn’t whether to adopt AI-driven personalization—it’s when. AI offers a scalable, powerful way to deliver the right message to the right customer at the right time. The brands leading this transition are raising the bar for the level of experience consumers will expect and therefore, the level of personalization required to drive growth.