The Cocktail Party Effect: How personalization gets customers hooked on your brand

Everyone’s chasing a personalized experience — but do you know why customers crave it?

Photo by Fabio Spinelli on Unsplash
  • The higher the investment, the better the returns: Companies with ROI of 2x or more said personalization made up at least 20% of their marketing budget.
  • Personalization drives long-term customer value: Brands that had the highest personalization ROI (3x or more) focused on loyalty as their top KPI. Companies with lower ROI targeted short term measures like average order value.
Photo by Scott Warman on Unsplash

What is the Cocktail Party Effect?

The Cocktail Party Effect was discovered in the 1950s by a British Cognitive scientist named Colin Cherry.

How do our brains decide what information to pay attention to?

The Cocktail Party Effect states that people focus on information relevant to them. According to a study published in the journal Brain Research, a key trigger for “tuning in” is when people hear their name.

What is “true personalization”?

Personalization isn’t about getting your customer’s first name right then spamming them with impersonal ads. As Seth Godin says:

Photo by Brooke Lark on Unsplash

How to apply the Cocktail Party Effect to your customer experience

1. Get specific about your customer’s world

In a recent study, Accenture found the personalization tactics that have a direct effect on buying behavior:

  • Know my past: 65% of customers prefer to buy from a retailer who “knows their purchase history.”
  • Know what I want: 58% of customers prefer to buy from a retailer that recommends options based on their past purchases.

Example of the Cocktail Party Effect in action: Monica Vinader

In this email from jewelry brand Monica Vinader, the brand uses customer data in a smart way.

Source: Campaign Monitor

2. Personalize your marketing’s visuals, copy, and message

In its 2018 eCommerce Quarterly Report, Monetate discovered that just three pages of personalized content can double conversion rates. Monetate also found that the value of personalization compounds with each experience.

Source: Monetate eCommerce Quarterly Report

3. Go deeper with data — and be transparent

Your ability to personalize effectively is directly tied to the state of your brand’s data.

An example of the Cocktail Party Effect in action: EasyJet

EasyJet, a British low-cost airline, made a company milestone relevant for their customers.

Source: Campaign Monitor

The bottom line

Personalization might be a top priority for brands, but most haven’t achieved their ambitions.

Behavior change strategist. Use science and psychology to improve design, CX, UX, marketing, habits — subscribe at https://choicehacking.com/freenewsletter/

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store