Has Anyone Quantified the Impact of Personalization? (1 of 4)

← Back to all posts

AI-driven personalization (I’m primarily going to use “personalization” going forward) is dominating online and offline discussions about marketing these days, so it got me to wondering: if the blanket pronouncements you read about the benefits of personalization make sense within and across verticals, what is the actual potential upside of personalization? It can’t be infinite, and has to be some function of category growth and innovation, and one competitor’s ability to gain preference or steal market share from another.  Let’s come back to that, and start by exploring what we can find that has already been written about the upside of personalization.

A cursory Google search reveals that there are plenty of attempts to provide qualitative descriptions, but it returns very few hits specifically about the quantitative benefit of personalization, especially any that provide a strong fact basis for the projections.  In many cases, the various authors issue statements with metrics attached, but rarely with a citation and without cautioning that these are generalities and may not, in fact do not, apply to all situations.

Interestingly, the most commonly cited statistics about the impact of personalization, even today in 2025, seem to reference a McKinsey & Company article published way back in 2016 (!!) (https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/marketings-holy-grail-digital-personalization-at-scale), long before the launch of Gen AI tools like ChatGPT and Gemini changed the landscape. (In fact, some of the 2016 stats are actually taken from yet an earlier article published by McKinsey in 2015 in the Harvard Business Review ! (https://hbr.org/2015/11/how-marketers-can-personalize-at-scale):

“We know that personalization can deliver five to eight times the ROI on marketing spend, and can lift sales by 10% or more.”

It doesn’t say how we know that, or over what period of time, and no one seems to have verified that more recently, so all the subsequent references are just taking it on faith…  The 2016 article focuses on the upside of producing personalized content at scale; below are some takeaways:

• Thesis: “Done right, personalization enhances customers’ lives and increases engagement and loyalty by delivering messages that are tuned to and even anticipate what customers really want. These benefits to the customer translate into benefits for the company as well.”
• Key metrics provided: “Personalization can reduce acquisition costs by as much as 50 percent, lift revenues by 5 to 15 percent, and increase the efficiency of marketing spend by 10 to 30 percent.”

Those stats are repeated as truth in many other places.  For example, here’s a more recent article from late 2024 (https://www.mytotalretail.com/article/maximizing-holiday-sales-with-the-power-of-ai-driven-personalization), one among many that cite those exact data points without noting that they were originally offered 10 years ago:

“One strategy proving to be a game-changer for retailers is artificial intelligence-driven personalization, which allows businesses to use customer data and create tailored experiences at scale. This approach helps brands break through the holiday clutter with relevant offers and experiences that resonate with individual consumers. Personalization has also been shown to reduce customer acquisition costs by as much as 50 percent, according to McKinsey, making it a powerful tool for driving sales growth.” (emphasis added)

It is almost like few have tried to quantify the impact of personalization since 2016.  Even McKinsey itself, in 2023 (https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-personalization), cited those metrics from their own 2016 article, and then other articles have referenced the 2023 McKinsey publication.  (This is a research method called “secondary referencing”, apparently somewhat frowned upon…)  Nobody questions where the original data came from, certainly not whether those data points are still relevant in the new age of AI-driven personalization; they do seem to be metrics that are embedded in the collective consciousness because they have been repeated so often that they have become the de facto standard.

Searching further, one can find a few other prominent firms that have recently published articles positing the amazing returns that are possible from personalization, often citing the same stats. Here are a couple:

RR Donnelley (https://www.rrd.com/resources/blog/10-personalization-statistics-you-need-to-know-why-personalized-marketing-is-the-way-to-go) suggests that “Hyper-personalization is all about analyzing online and offline behavior, search history, lifestyle, buying patterns, preferences, etc., to derive the optimal product or solution options for a unique consumer.” and provides a summary of metrics from other sources:

• “According to BCG, companies with stellar personalization strategies achieve improved marketing efficiency, higher digital sales, and long lasting customer relationships. They also see a boost in their growth rates by 6% to 10%.”
• “97% of marketers witnessed a rise in business outcomes as a result of personalization — and nearly one fourth of marketers achieved a spike in revenue higher than 20% due to personalization.” (Salesforce)
• “70% of brands that rely on advanced personalization bagged 200% ROI and more from their efforts. 51% of marketers assert that personalization across multiple touchpoints increased ROI by 300% and more.” (KO Marketing)

Boston Consulting Group (BCG) itself centers an entire practice around personalization (more about that in the second in this series…) (https://www.bcg.com/capabilities/marketing-sales/personalization)

• “Personalization is driving big numbers across sectors. Financial services companies are using personalized marketing to increase revenue by more than 30%; health care organizations are improving ROI up to 300%; and retail brands are increasing incremental revenue by $1 billion over three years.”
• “Leaders in personalization grow revenue 10 percentage points faster annually than laggards and enjoy higher customer satisfaction scores.”

A British consultancy called EcommerceBonsai collated “55+ Personalization Statistics for 2025 (+ Facts And Trends)” (https://ecommercebonsai.com/personalization-statistics), most of which discuss consumer perceptions and adoption rates, and of course, include multiple references to those McKinsey stats from 2016:

• “Companies that use advanced personalization see returns of $20 per $1 spent” (https://liveclicker.com/resources/report/the-value-of-personalization-optimization-for-retailers - except you can’t download the source report!)

And finally, McKinsey again (https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying).

• “Personalization drives performance and better customer outcomes. Companies that grow faster drive 40 percent more of their revenue from personalization than their slower-growing counterparts.”
• “…our research found that companies that excel at personalization generate 40 percent more revenue from those activities than average players.”

Are these two statements different ways of saying the same thing, or making two different points that just happen to have the same percentage value?  In any event, it certainly gets one thinking.  Could outsize growth really be this easy, you just need to put some resources behind AI-driven personalization best practices? (Or hire McKinsey or BCG to help?) That would make stellar results the province of anyone who makes such an attempt to personalize their marketing communications.

If this were true, ceteris paribus, then if all competitors in a category implemented the same degree of personalization, it should drive huge category growth.  But it is hard to pinpoint a consumer category where we’re seeing that kind of growth today, and it begs the question, given the certainty surrounding the pronouncements of these consulting firms, “why not?”  Are the outsize returns some companies may be seeing simply the short-term result of time-shifting, akin to a promotional pull-forward effect, or does it reflect temporarily taking share from competitors? Or category leadership? Or maybe something else?

What we’re left with are a couple of generally accepted stats, suggesting that personalization:

• Reduces acquisition costs by as much as 50 percent
• Lifts revenues 5 to 15 percent
• Improves efficiency of marketing spend by 10 to 30 percent

Are these stats real? They were originally published 10 years ago. We don't know the timeframe underlying these stats – is this over the short-term or the long-term?  Reviewing economic performance over the past few years, it is difficult to find hard evidence to definitively say that personalization is providing a sustainable competitive advantage of this magnitude, even for “leaders”, or leading to outsize category growth, meaning these numbers are hard to accept at face value.  And so we have to dig deeper, which we will do in Part 2.

View original on LinkedIn