61% of consumers will spend more for personalized experiences

In a research study of 1,749 hotel guests and 1,905 retail consumers, research company Medallia found a strong link between personalization and overall satisfaction, validating earlier research that showed 61 percent of consumers are willing to spend more with companies if they offer a customized experience. However, the study revealed hotel and retail brands have significant opportunities to improve and capture more revenue: Just 23 percent of consumers report experiencing high levels of personalization after recent hotel stays and only 26 percent say the same after recent retail interactions. Medallia released these findings of its new research report, "Understanding Personalization Efforts in the Hotel and Retail Industries."

The study also found customers who rate the level of personalization they received as a 9 or 10 on a scale of 0 to 10, with 10 being the most personalized, are far more likely to also rate their overall satisfaction as very high. Those who do not perceive their experience as being personalized report lower satisfaction ratings.

“It’s no surprise to see the clear link between personalization and satisfaction, but also not surprising to see brands struggling to keep up with consumer expectations for more customization,” Andrew Custage, head of insights for Medallia Market Research, said in a statement. “The challenge for companies—especially in hospitality and retail, where consumers frequently engage across multiple digital, contact center and in-person touchpoints—has always been capturing and understanding customer data fast enough to act on it. But generative AI technology is now making it possible for brands to automate insights and actions at scale to deliver more personalized experiences.”

Other key findings from the new report include:

1. The greatest opportunity to maximize personalization for hotel guests is during the stay itself.

  • Guests are less likely to find personalized experiences at this stage of the customer journey—features of personalization possible during the hotel stay averaged only a 46 percent recall rate, but other parts of the journey like interacting with customer service, during the booking, post-stay, and during the check-in and check-out processes all averaged higher.
  • Hotels can offer greater personalization when rewarding guests based on their status by allowing guests to make customized selections during the booking process, giving them more opportunities to provide feedback and allowing them to choose the support channels they prefer when they need customer service.

2. Retailers deliver more personalized experiences at certain touchpoints than others.

  • Retailers provide more tailored interactions for mobile app users, web visitors, loyalty program members and customers who interact with a brand’s customer service team. These individuals are much more likely to report higher levels of personalization compared to non-loyalty program members and customers who interact with retailers in person.
  • These personalization gaps highlight an opportunity for retailers to step up and win a greater share of business and loyalty. The majority of retail customers agree that customized, personalized and quality service leads to them choosing a brand more often and spending more when doing so.