The Psychology of Personalized Marketing Ft. Generative AI

Generative AI is a master of personalization for some reason(s) and makes money from it. Here’s why.

If there’s one thing that generative AI has proven to be second to none, it’s the ability to process a large amount of data and customize its responses instantly and accordingly.

But without the marketing psychology, there’s no way this technology continues to be integrated into the system for enterprises and receive funds to further capitalize on its power.

Here are some of the psychological theories used in marketing that generative AI has mastered.

The Principle of Relevance

Humans are inherently drawn to information and experiences that hold direct relevance to their lives, interests, and needs. Personalized marketing taps into this psychological principle by presenting content, offers, and messaging that align with an individual's preferences, behaviors, and previous interactions. 

When consumers perceive a brand's communication as highly relevant, they are more likely to engage, fostering a stronger emotional connection and increased brand loyalty.

The Need for Individuality

Each person has a fundamental desire to feel unique and valued as an individual. Mass marketing campaigns, while efficient, often fail to address this innate human need. Unlike regular marketing for the masses, personalized marketing respects and responds to each person's want to feel special by treating them as an individual with their own particular likes and traits. 

This tailored approach makes consumers feel seen, heard, and valued, cultivating a sense of brand loyalty.

The Endowment Effect

The endowment effect is a psychological phenomenon that causes individuals to place a higher value on things they perceive as their own. Personalized marketing uses this idea by making special experiences that feel made just for each individual customer. 

When people feel that a product, service, or offer is personalized specifically for them, they are more likely to think it is worth more, making them more interested and more likely to buy the products and services.

Reciprocity and Trust

Personalization can foster a sense of reciprocity between brands and consumers. By investing time and effort into understanding and catering to individual preferences, brands demonstrate a level of care and commitment that can inspire feelings of trust and loyalty in return. 

Consumers who feel valued and understood by a brand are more likely to reciprocate that sentiment through increased engagement, advocacy, and long-term loyalty.

Cognitive Fluency

Personalized experiences align with a person's existing knowledge, preferences, and thought processes. This makes the information easier to understand without much mental effort.

The easy, enjoyable experience reinforces positive feelings about the brand, increasing the likelihood they'll engage with that brand again in the future.

Use cases on successful marketing psychology

Spotify’s DJ

One of the best use cases must be Spotify’s personalized playlists and recommendations. It recently has even come up with the new feature Song Psychic which screams “for you”.

Looking at large amounts of user data via. Generative AI helps Spotify understand each person's individual likes and behaviors. This information allows them to provide personalized playlist recommendations and targeted ads to each user. 

Using machine learning, Spotify can accurately predict what each person will prefer, resulting in more interesting and relevant marketing that speaks directly to their interests.

Amity Bots : Enterprise AI Agent

As an generative AI-powered sales assistant, this AI-agent bot understands customer needs. It can search for products that customers want and compare those products in terms that customers care about. 

It then recommends the most relevant products and promotions personalized for each customer. Throughout this process, enterprise AI agent communicates in an easy to understand, concise manner tailored to the individual customer's preferences.

Such technology has been proved by 6 leading enterprises in Thailand, serving as different personas catered to different needs.

Visit our website for more information and weekly AI updates!