Here’s the formula companies like Netflix, Uber, and Spotify will use to capture $2T in growth over the next decade

These companies have mastered personalization at scale, enabled by AI. · Fortune · Getty Images

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Think about the last time you listened to music on Spotify, watched a movie on Netflix, hailed a ride on Uber, or ordered food via DoorDash. These companies have millions of digital customers—and billions of interactions with them. They are using the insights from this data to rapidly optimize each customer’s next experience.

In the age of artificial intelligence, competitive advantage is increasingly determined by a company's ability to deliver personalized experiences at scale. We call this phenomenon the “personalization advantage,” which can be expressed by a simple formula:

P = n × v2

  • P represents the competitive advantage of personalization.

  • N is the volume of interactions from which the company can learn.

  • V is the speed of learning, which has an exponential impact.

The Personalization Advantage formula illustrates why these companies are winning: they have both scale (n) in terms of customer interactions and speed (v) in learning from and acting on these interactions.

Personalization is not just customization—it’s about using customer data to deliver experiences tailored in real-time, evolving with each interaction. Whether it's a website suggesting products you didn't know you needed based on prior behavior, a call center agent knowing your shopping history with the company, or a sales associate remembering your preferences, the key is scaling these interactions across millions of customers and constantly learning from them.

Personalization is creating experiences at scale that get fine-tuned with each successive interaction, empowering customers to get what they want better, faster, cheaper, or more easily. The difference lies in the way personalized communications build on everything the company learns about the customer over time, and about how other customers like them behave. In our experience across industries and consumer contexts, this is what makes personalization truly effective. This effectiveness is directly linked to the Personalization Advantage formula. The more interactions a company has (n), and the faster it can learn from them (v), the greater its personalization advantage (P) becomes.

It is enabled by the many different forms of AI available: machine learning, generative AI, agentic AI, and others, often combined together. Business is now effectively at the point where competitive advantage will be based on a company’s ability to relentlessly capture, analyze, and utilize customer data, at a massive scale, with every possible contact—and on how it uses that data to understand, shape, personalize, and optimize each customer’s journey.

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