AI-Driven Hyper-Personalization in Digital B2C Customer Journeys: Case Study in the Life Insurance Sector

Abstract

Recent developments in AI and digital technologies have accelerated firms’ efforts to integrate AI into their operations and growth strategies. At the same time, customers increasingly expect firms to provide personalized digital services. One of the key contributions of AI is hyper-personalization which enables firms to tailor services for customers at the individual level. However, firms struggle to utilize and implement hyper-personalization not only because of technical challenges, but also because of difficulties related to balancing risks and benefits. Therefore, there is a need to understand the impacts of hyper-personalization and to identify where and how it should be applied in practice. Furthermore, as the concept of hyper-personalization is new for both academics and practitioners, there is a need to define its scope, boundaries and practical applications.

The objective of this thesis is to understand how hyper-personalization should be utilized in digital B2C customer journeys to enable increased sales and customer satisfaction, while balancing benefits with potential risks. The objective combines three needs: to understand the utilization of hyper-personalization in practice, to understand the impacts of hyper-personalization in the customer journey and to further conceptualize hyper-personalization.

The literature review explores the concepts of customer journey, hyper-personalization and AI. The literature review starts by examining the concepts of customer journey and customer experience, especially in the digital B2C context. Next, the literature review explores the concept of hyper-personalization and outlines its differences compared to traditional personalization and related terms such as customization. Finally, the literature review explores the concept of AI and analyzes how hyper-personalization influences the customer journey. Based on this theoretical background, a framework for a hyper-personalized customer journey is built.

The utilization and impacts of hyper-personalization in digital B2C customer journeys were researched with an interventionist research approach, conducted as a case study within the life insurance sector. The main data collection method was semi-structured interviews with personnel of the case company. In total, six interviews were conducted. The interviews examined four themes that were aligned with the research objective and questions: examining challenges that hyper-personalization could address, identifying hyper-personalization applications, distinguishing between suitable and unsuitable touchpoints for personalization and exploring the impacts of hyper-personalization. The results reveal multiple opportunities and applications for hyper-personalization across the customer journey. The results highlight that hyper-personalization should be applied selectively across the customer journey, focusing on touchpoints in which it supports understanding, simplifies decision-making and increases relevance. The study shows that hyper-personalization has the biggest impact on sales and conversion in the prepurchase and purchase stages, while the postpurchase stage impacts customer satisfaction and trust. In addition, the results identify the characteristics that make touchpoints suitable or unsuitable for personalization.

The empirical findings both support and extend the findings of the literature review. Hyper-personalization plays important roles across the customer journey, from supporting decision-making to enabling value co-creation. The framework built in this thesis supports understanding the concept and process of hyper-personalization, particularly in digital customer journeys. Furthermore, future research avenues are proposed based on the results of the thesis.