San Francisco, USA / Manila, Philippines — Twilioa customer engagement platform that drives real-time personalized experiences for today's leading brands, has released its annual “State of Personalization Report,” a compilation of perspectives and predictions from business leaders across 12 countries and various industries.
Now in its fifth year, the report highlights how shifting consumer demands are driving business leaders to focus on predictive, emotional intelligence and delivering highly personalized customer experiences. AI is at the heart of this shift, with companies leveraging more dynamic models and metrics, increasing interoperability between tools such as customer data platforms (CDPs) and data warehouses, and prioritizing data privacy and ethical use of AI.
As AI becomes more prevalent across industries, Twilio research shows that 89% of respondents believe ethical use of AI can be a competitive advantage for their business, and more than half (54%) of business leaders say they address consumer concerns around data privacy and ethical considerations of AI by implementing robust privacy controls. In Twilio's recent State of Customer Engagement Report, nearly half (49%) of respondents said they would trust a brand more if it openly disclosed its use of customer data and AI-powered interactions. By carefully balancing innovation, transparency, data privacy, and ethical best practices, organizations can maintain consumer trust while leveraging AI to deliver better customer experiences.
“Personalization is a necessity in the marketing world. Today's consumers not only expect brands to understand them, but to predict their needs, and AI is making that possible,” he said. Robin Grokol, vice president of product management at Twilio“Our latest State of Personalization report finds that the majority of business leaders are moving from reactive to predictive personalization to meet increasingly sophisticated and dynamic consumer demands.”
Gen Z's preference for more personalized products has fundamentally changed how brands market.
The report also revealed that Gen Z (ages 18-27) are setting trends that will shape the future of engagement. A digital native generation that grew up immersed in technology, Gen Z is disrupting the traditional marketing funnel with significant purchasing power and unique preferences, including high expectations for authenticity, transparency, and engagement on their terms. It's clear that businesses are getting the message, as 85% of businesses now plan to adjust or optimize their marketing strategies to address the unique needs and preferences of Gen Z consumers.
Predictive personalization, emotional intelligence, and other key trends are transforming personalization
To align with Gen Z consumer demands, 86% of business leaders expect a major shift from reactive to predictive personalization across industries. Brands are turning to using AI/ML to create experiences tailored to individual needs and preferences and predict what consumers will do next. This proactive approach allows brands to proactively engage with customers at the right time with the right message.
Artificial intelligence gives companies the ability to process large amounts of data in real time, providing the insights they need to build dynamic engagement with their customers. This will fundamentally change the way brands interact with their customers. As part of this change, 82% of leaders emphasize the importance of building emotional intelligence — the ability to respond to human emotions — into AI systems. Additionally, 80% of marketers plan to adopt more sophisticated metrics (customer lifetime value, emotional engagement, brand affinity) to measure the effectiveness of personalization beyond traditional engagement and conversion rates.
The report found that from marketing to customer service, AI will become a silent partner, helping businesses meet consumer expectations and leverage data-driven insights for targeted personalization. Additional findings include:
- 73% of business leaders agree that AI will transform personalization and marketing strategies.
- 58% of business leaders believe AI chatbots will be the most impactful AI-driven personalization technology over the next five years.
- 59% of companies surveyed expect their teams to use AI on a daily basis by 2025.
- 72% of companies use a customer data platform (CDP) for personalization, and 48% use a data warehouse. The strength of a CDP working with real-time customer data blends seamlessly with the robust, scalable environment of a data warehouse to provide a dynamic approach to personalization.
To learn more about how AI will impact personalization, read the full report here.
