Personalized communication prompts better and faster response and engagement. That’s why personalization is on every CMO’s agenda. In a Forrester survey, 68% of firms stated that delivering personalized experiences is a priority.
These firms are chasing the benefits of personalization. According to KIBO eCommerce, personalization increases order values by 40 percent and improves conversions by as much as 600 percent. In a study for Campaign Monitor, 62 percent of respondents said personalized subject lines prompted an email open. Hubspot found that personalized calls-to-action (CTAs) resulted in 42 percent higher conversions. Personalization is also thought to drive brand preference, increase purchase frequency, and spike customer loyalty and brand advocacy.
The ability to personalize interactions, frequency, messages, and channels is much more challenging because it requires a change of mindset, an investment in technology, creation of more varied messages, and a willingness to consider a wide range of variables representing each individual’s idiosyncratic customer journey.
Personalization is a double-edged sword. Getting a generic or badly personalized message is a huge turn off. For example, I’m a heavy Open Table user. After making more than 100 reservations, they should know the kinds of foods I like, the level and price range of restaurants I prefer, the frequency with which I dine out, the number of people in my party, the dollar value of my checks, and my favorite methods of payment. So when they send me a “personalized” recommendation that simply lists two restaurants in my zip code, I’m more annoyed than impressed because they have my data but don’t effectively use it. They’re just phoning it in.
Similarly the “AMEX Offer for Daniel” that I got by email has nothing to do with the hundreds of thousands of dollars in distinct spend categories that I racked up on the card since joining in 1983. My personalized offers are generic. They have more to do with my proximity to their merchants. It’s a masquerade. My “personalized offers” have nothing to do with me.
Consider the flip side. Walgreens, who is all over me, sends me a postcard with coupons and incentives with pictures of items I previously purchased. These guys know me inside and out, given all the prescriptions I fill at the store right outside my front door. They are paying attention. They want me to come in more often and buy more stuff. The value I receive for stuff I actually buy and use makes the frequency of their communication more tolerable.
Consumers understand and accept data collection as a fact of life. In fact, they expect a quid pro quo. In return for giving up personal information, they want deals, coupons, special or early access, rewards or points, and inside information.
People want to be recognized. It’s as if they are saying, “Use what you know about me to keep me up-to-date, treat me special, and tell me about things I like or care about.”
The key to mastering personalization, which for many retailers is the only strategic defense against encroachment or destruction by Amazon, is compiling the so-called “Golden Record” also called mapping identity or identity resolution. This is the ultimate collection of data about an individual that spans psycho-demographics, contact information, media and channel use or preference, purchase history, and favorite or frequented locations. This data trove can even include predictive models or propensity scores. This requires investments in strategy, creative, and technology.
When consumers ask brands to “know me,” they expect that the sum total of interactions plus the tone and tenor of the relationship will be used to super-serve them. When it’s a half-assed or bad attempt, personalization becomes a relationship killer.
My friend, Bert Shlensky, president of startupconnection.com, put it this way, “The more you can make someone feel like a valued individual, the more they are going to prefer you over the place next door. At the end of the day, dealing with people on a personal level is the key to creating relationships and building loyalty that can last for decades.”
The stumbling blocks for many firms seem to be privacy anxiety about the use of data, investment, access or use of technology, and resistance to the idea of customized creative. Many brands claim that personalization is too difficult organizationally, too costly, too technically complex, and too hard to get it right.
A study by BlueVenn for The CDP Institute found that 56% of retailers don’t collect behavioral data and 46% don’t collect transactional data. So it’s no wonder that more than half of retailers (57%) do not have a single consolidated view of their customers and 40% don’t send personalized emails or dynamically serve personalized web content.
Jon Miller of Engagio understands the personalization process in three layers: context, orchestration, and interaction. He argues that markets need to aggregate data on a single platform to create a “single point of truth” vis-a-vis customer identity. The customer data platform (CDP) is the central nervous system of personalization.
To orchestrate the process and decide who gets which message, when, where, and how often, Miller points to AI and machine learning. This is the brains of the operation that ferrets out nuances, determines segmentation, and accounts for individual variations.
Then, automation tools like Marketo and others become the muscles of personalization, synchronizing, and deploying email, direct mail, SMS, social, display, and retargeted messages. Content, frequency, and customer experience drive consumer resonance and response.
The net impact of this 3-stage approach to personalization will be to signal a higher level of interest, recognition, and understanding between brands and their constituents. There is significant evidence that relevance, utility, and value unlock customer relationships, drive business, and cement loyalty.
Personalization is about using easily recognizable data points to improve response and engagement and build or extend loyalty in hyper-competitive markets. Business value should drive thinking about strategy and the technology needed for implementation. At this stage, personalization is a mix of art, intuition, and science.
Danny Flamberg, EVP Managing Director of Digital Strategy and CRM at Publicis based in New York, has been building brands and building businesses for more than 30 years.Prior to joining Publicis, he led a successful global consulting group called Booster Rocket, as Managing Partner. Before becoming a consultant, he was Vice President of Global Marketing at SAP, SVP and Managing Director at Digitas in New York and Europe and President of Relationship Marketing at Amiratti Puris Lintas and Lowe Worldwide.
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