Personalization, Marketing

The “Dopamine Effect”: The psychology behind personalized marketing

Published on June 15, 2020

The fifth and final blog in our series covering the changing face of consumer engagement examines the “dopamine effect” - how it plays into the psychology behind personalized marketing and how big data can help brands leverage this reaction.

Throughout this series we’ve examined how customer engagement is changing, the seismic shift in consumer expectations of brands, and the importance of personalized marketing as a measure to remain relevant in this evolving landscape.

To recap, personalization can create magical moments for consumers by anticipating what they want and delivering it precisely when they need it, taking surprise and delight to the next level. However, while personalization is an incredibly powerful driver of conversion rates and repeat customers, it’s not an easy feat for brands to successfully pull off without the right expertise and technology. Technology enables brands to create that truly tailored customer experience, but for many businesses the challenge is in developing the right strategies and coordinating the resources to execute them. This is why finding the right personalized marketing partner is so critical.

Dopamine: The driving force behind ‘purchase pleasure’

There’s a chemical in our brains called dopamine, and it’s a marketer’s best friend. Dopamine carries information between the neurons in our brains and is known as the “feel good” neurotransmitter. It has this name for good reason; dopamine is triggered when certain things occur, such as eating food we really love to satisfy a craving or having people like a social media post. The result of the dopamine hit is a strong sense of satisfaction and pleasure. Shopping is another activity that triggers a dopamine-fueled sensation. That feeling of intense satisfaction we get when we make a purchase is a direct result of a nice big release of this feel good chemical.

At Plexure, we call this sensation “the dopamine effect”.

It’s no surprise then that the term “retail therapy” has become so well-used—because making purchases is undeniably pleasurable. And it’s not something that only happens once the purchase is made, either. Dopamine starts to take effect as soon as shoppers consider making a purchase, because they imagine how it will feel to own the object they’re looking at. Bring in things like discounts, deals and product recommendations with particular personal relevance, and the effect is significantly heightened.

What this means for marketers

Dopamine is a driver of human behavior. Our brains view it as a reward, thereby encouraging the activity to be repeated again and again. Reward and reinforcement are the things that establish personal behaviors, which is what makes us gravitate towards these satisfying experiences.

So, where marketing is concerned, we want to harness the dopamine effect to drive positive, lasting and rewarding relationships with consumers. This is where personalization brings enormous benefits; the more personalized the marketing content, the more meaningful it is to the individual and therefore the more likely it is to trigger a dopamine release and bring pleasure.

Is this just some cheap marketing trick to drive shopping addiction? No, quite the opposite. In a world where digital channels have put the consumer firmly in control, leveraging the dopamine effect is increasingly difficult unless brands are making highly relevant and valuable offers at the right time.

That’s where Plexure comes in, helping brands pinpoint consumer desire. Our intelligent platform powers mobile customer engagement by harnessing data to create personalized, dynamic marketing campaigns. It’s all about supercharging people’s everyday experiences by connecting consumers with what they need and desire—often before they know it themselves.

Using data to trigger the dopamine effect

Now that we know what the dopamine effect is and how powerful a marketing tool it can be, the next question is how to trigger it.

The short answer is: Data.

The longer answer involves all types of data, including customer preferences, past behavior, demographics, and so on. There are also contextual and environmental data to consider, which includes things like location, weather, local and world events, and more.

The key here is to bring all this data together to create a picture that tells you exactly who your customers are. This way, you’re able to provide exactly the right messaging at precisely the right time. Messaging is paramount, which is why brands need to be using personalization. In general, consumers do not like aggressive sales, but they do enjoy learning about brands before choosing to support them, and they do enjoy content that adds value, informs or entertains.

Armed with this knowledge, brands should be aiming to pinpoint what their customers want and make intelligent, data-driven decisions at every stage of the customer lifecycle to drive behaviors and uplift conversion rates.

All of this can be facilitated through the Plexure platform, which includes artificial intelligence, machine learning, business intelligence, and cognitive analytics.

Some of the analytics involved include:

Transaction analytics: Analysis of data from in-store point-of-sale systems, mobile payments and e-commerce checkouts. With this data, it is possible to understand, predict and influence consumer buying behavior.

Digital campaign ROI analytics: A measurement of marketing campaign performance, ROI analytics collect data on app activity, redemptions, tray and basket value, loyalty status, device interaction and more. This allows you to pinpoint which areas of your digital campaign are performing well and which need improvement.

Segmentation analytics: These are contextual, cognitive analytics that provide real-time insights into various customer segments like expected lifetime value, loyalty, buying behaviors, responsiveness, connectedness, location, media preferences and other factors that are useful for ongoing one-to-one segmentation.

Bringing it all together: the dopamine effect, data, personalization, and marketing

We know that humans are programed to seek activities that bring pleasure, like shopping. We know that personalization can influence consumer behavior and trigger dopamine. And, we know that data is an essential component of personalization.

The next step is to apply these learnings in a marketing context.

If personalization is at the heart of triggering the dopamine effect, then the best place to start is at the marketing activities that are best suited to personalized customer experiences.

Offers and recommendations: This is essentially the old-school retail concept of putting the most tempting products in the store window to entice customers in, except with the added value of being executed through digital channels, personalized for each individual person, and timed to perfection. It helps consumers imagine their life with the particular product featured in the offer or recommendation (which happens to be something we know they will like because the data we collect tells us so) and triggers dopamine, which instigates the purchase process. The result? Purchase pleasure. And, if you repeat the process, you repeat the result.

Loyalty programs: This plays to the reward aspect of the dopamine effect. Humans get pleasure from making a purchase, but this is significantly amplified if there is some sort of deal wrapped up in the transaction. Loyalty programs reward consumers for repeat purchases by providing something in return. Personalizing the rewards to suit the customer’s individual preferences makes the dopamine effect even greater because it makes loyalty an experience instead of just a transaction, and this creates an even more loyal customer.

Gamification: The elements of games such as points scoring and leaderboards lend themselves beautifully to triggering dopamine. Humans are competitive beasts by nature and games are an age-old way of arousing this part of our personalities. In marketing, gamification is an incredible way to encourage customer engagement. Taking the game to the next level by customizing certain game elements or rewards in alignment with the individual’s preferences will make the game even more alluring, thus triggering dopamine and keeping the customer’s heart and mind firmly committed to the brand.

The face of customer engagement is changing rapidly—and in fact, with the challenges of COVID-19, the rate of change has accelerated. Right now, making the shift to personalized marketing is crucial for brands that want to stay competitive. Plexure is the platform that enables brands to drive this change.

To learn more, schedule a platform demo with one of Plexure’s customer engagement specialists.

Where marketing is concerned, we want to harness the dopamine effect to drive positive, lasting and rewarding relationships with consumers. This is where personalization brings enormous benefits.

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