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The Psychology of Personalized Retail Experiences–What Keeps Us Coming Back?

Personalized shopping experience

For a long time, researchers have found that humans prefer to be seen as individuals rather than as part of a herd.1 It's why we like monogrammed bags, personalized stationery and names on the back of jerseys.

From a consumer perspective, it may also be why we like to be chosen to attend an exclusive event, or receive an individualized sale invite. As it turns out, this concept of individuality is one of several driving factors when it comes to purchase behavior.

Your Brain While Shopping

To better understand what customers like, it helps to discuss what some researchers say are the reasons behind why consumers may or may not make a decision. In many cases, researchers believe that there is psychological reason why consumers' brains—and wallets—light up.

The notion of a "shopaholic"—someone who can't get enough shopping, often to the point of addiction—comes from a very real psychological underpinning. According to researchers, even a slight glimpse of what we desire on the web or in a shop can activate the area of our brains where dopamine receptors live.2

Simply put, dopamine is a "feel good" neurotransmitter that thrives on pleasure, impulsivity and gratification. Whether we walk into a store or click onto our favorite website, in the land of "shopportunity," just being within close proximity of a desired item reinforces its appeal.

Some psychologists say that people believe dopamine is released once the reward is obtained, but in fact, researchers have found the brain releases the chemical in anticipation of the reward.3 The more unpredictable the reward, the higher the dopamine levels. So, what does this tell us about today's shopping experience?

While people want access to information that is relevant only to them, dopamine won't be released with a constant onslaught of offerings. According to Doug Spitzer, partner and chief creative officer of Catch New York, a NYC-based marketing firm, brands can add a level of thrill to the personalization process when they gamify the shopping experience.

As more brick-and-mortar stores and online brands roll out apps and incentives that come with perks, gamifying the anticipation-reward process in a personalized way may be most lucrative.

"[Many brands] don't give the [reward] as money, they give it as a freebie," Spitzer says. Counting down to the freebie gives loyal customers a sense of achievement, he emphasizes, that is highly anticipated. What's more? "It's a fun experience."

Gauging Your Audience

Technology has revolutionized the way customers are rewarded and incentivized. Punch cards often get lost or are forgotten about, leaving room for slick apps, text coupons and social media incentives to take their place. But figuring out the sweet spot between delivering personalized information and respecting consumer privacy can be a challenge.

In 2016, a report by the World Economic Forum and Accenture found that over half of all customers want a more personalized experience.4 What's more, 70 percent of respondents explicitly stated that they expected brands to provide them with it.4 Anecdotally, we tend to favor the retailer that knows our preferences and can deliver the products, incentives and content that we want.

Yet harvesting data can also make consumers feel watched, violated or just plain irked. While 51 percent of respondents report a high willingness to share basic information, such as their name or age, and 49 percent were highly willing to share their purchase and loyalty program history, less than 10 percent reported any willingness at all to share financial or family information.4

Additionally, more than 35 percent of customer segments agreed that greeting a customer by name, providing recommendations based on customers health issues, and stopping a customer from buying an item based on outside information was, "creepy."4 Headline-making breaches, too, have drawn attention to the issues of privacy and the reality that sensitive information is vulnerable when placed into the wrong hands.

"Because we will soon have all information in our hands, we will need curation and thoughtful presentation of data based on context and what we've been up to," says an executive from a global tech company in the report.

Yet as the quote insinuates, there are ways to tap into the dopamine-fueled pleasures of shopping without violating consumers' trust. Hyper-personalization, for example, can be effective when the value proposition is made clear. In other words, customers need to know what they will get in return for sharing any personal information.

The report also recommends:

  • Attribute analysis to map individuals' desired communication based on "emotive and psychographic factors";
  • Event sequence analysis to map customer journeys before and after a purchase;
  • Collaborative filtering, which evaluates the level of preferred interaction based on several data inputs.4

Finally, the report advises businesses to take a flexible approach to personalization, regularly assessing technological and social shifts that move the needle on the desired form of interaction.

Technologies to Create Friendly Personalization

Despite growing access to consumer data and mounting privacy concerns, there are places that manage to still make shopping fun. Rewards programs are a good start, as well as physical or digital loyalty program cards that incentivize return visits.

Similarly, offering a birthday or randomized discount may give customers the feeling that they are seen or heard—that they are an individual—by their favorite merchant.

The bottom line is that asking for simple information might make customers more inclined to share additional information, providing brands the tools to be able to personalize the shopping experience—and provide the right level of anticipation to turn dopamine into dollars.

Closing the Gap Between You and Your Consumers

Do you want to close the gap between you and your customers? With the continual evolution of technologies and digital commerce, more ways to individualize consumer shopping and payment experiences are becoming available.

Now, you've put in the effort to unravel the complexities of creating new products and services, whether it be digital or not. But if you aren't ready to accept your customers' payments, you may be missing a big piece of the puzzle. Discover® Global Network can help you connect the dots between your business and the growing digital market. Connect with us.


1"The Desire for Unique Consumer Products: A New Individual Differences Scale," Cornell University, School of Hospitality Administration, 1997.
2"Neural Predictors of Purchases," Neuron, 53.1 (2007), 147-156.
3"Shopping, Dopamine, and Anticipation," Psychology Today, October 2015.
4"Digital Transformation of Industries: Digital Consumption," World Economic Forum, January 2016.


The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.