Personalization is a business case
For: decision-makers, managers
Read Time: 5 minutes
Saturday morning, in your weekly routine you step into the corner butcher shop. The butcher, in the back with a cleaver, welcomes you cheerfully. Are the kids okay? His memory and interest feel familiar. He sees you staring hesitantly at the display case of beef skewers. "Are you barbecuing?" Upon your confirmation, he suggests you also try the spicy chicken satay. New this week and a variation on last time. Gratefully you take his advice, pay for the skewers and the satay. You walk happily out of the store. Barbecue success guaranteed, a successful visit. The butcher in turn is satisfied. A pleasant contact, a good order and a satisfied customer. That's what he does it for.
Personal approach creates 10 to 30% added value
This is how we would like to treat all our customers, such shopping experiences everyone would like. Personal attention and timeliness create added value, with trust adding to that value. We call the latter customer satisfaction, although it can increase and decrease over time.
So why do we so often not have that feeling online? The problem lies mostly in limitations. Butchers are limited, their memory is limited, their customer base is limited. Organizations with large customer groups don't get that organized and have turned to mass communication. At best 'more or less segmented'. The lack of time, central knowledge, resources and vision, creates limitations.
That that personalized butcher's approach creates the most value, we often agree. How much value is that? Research by McKinsey (June 2019) on personalization on a large scale calculated 10 to 30 percent increases in sales and retention. "In addition, adopting personalization as a practice can have a long-term positive effect on customer satisfaction," the report noted.
The technology is no longer an obstacle
So why haven't we been applying personalization online for a long time? Good tools were simply lacking. For 30 years, marketers have been experimenting to address their large customer and prospect bases in a more personal way. It remained tricky with lots of hand-holding. Costly, time-consuming and error-prone. And still true today, incorrect, ill-timed or irrelevant use of personalization can lead to that recognizable uneasy feeling. The butcher who doesn't address you at all or by the wrong name and who offers the vegetarian a chicken satay would have been better off not saying anything. The online ad that continues to haunt you to the farthest reaches of the Internet gives you that creepy feeling that someone is watching you.
Technology, however, is no longer an obstacle. Sending a customer an e-mail that addresses them by name and offers a discount based on a previous purchase is just the beginning. It's now about tailoring communications to thousands of customers across multiple channels. That's where professional technology makes it possible for organizations to truly communicate with all of their customers on a personal basis. And thus build more valuable relationships.
When deploying technology, of course, choices remain important. All in all, McKinsey indicates that another 10 to 20 percent savings can be realized with today's technology because of efficiencies in marketing. In case you're interested in it, in this compact white paper you'll find, in addition to examples, a simple example of a business case.
Are we there? The number of marketing technology vendors adding value via personalization is at 7,000 to 8,000, according to multiple studies. Try choosing the right one from those. Making tactical decisions and implementing and integrating the right technology requires knowledge and coordination. But it starts with the strategic choice.
Aware strategic choice
Do you, as an organization, want to offer your customers more relevant customer experiences? Do you want to help prospects in their orientation at the right time, at their next step? Understanding data and analytics is the key value generator. That means, first of all, making personalization a priority and building the right capabilities. It doesn't have to be a long-term project that takes weeks or months. It does require a conscious decision by management to create a path. In that sense, the butcher from the first paragraph is still an example even for large organizations. He makes the decision to run his business this way, keep his customer base happy and continue to grow.
Personalization is an approach - not a philosophy - that focuses on delivering customized, meaningful and relevant customer communications. It enables a company to provide those experiences. It allows you to build lasting relationships with each customer. Which drives growth and retention. Exactly as the butcher does. With that, it's no longer just a marketing department decision. The CMO dragging the CTO/CIO as a "necessary helper. No, everyone, starting with the CEO, is carrying this dna. Because now that technology no longer has limitations, there are the people. People who are stuck in routines they are naturally reluctant to break. But also people who inspire others, people who work together, who test and try, who want to surprise their customers every day. All this is stimulated by a choice of personalization from management. Not complicated, but important.
Resistances
What keeps organizations from personalizing on a large scale? First, they have trouble finding and aggregating the most relevant data. There is insufficient knowledge about what is out there as well as what can be done. For example, opportunities are thought of too narrowly. Or it is considered a mega-project. Both unnecessary, because starting with less data that is actually activated delivers in the short term more results, enthusiasm and thus speed than a large project.
Also you may still be thinking in terms of fixed moments and schedules? The annual 'recruitment campaign in May' or the 'sale in November'. In this way, it is not the customer's behavior that becomes leading, but one's own schedule or habit. Triggers in the data determine the specific times when a message is valuable to a customer. That way, even apart from your regular schedule, you can surprise your customers at any time during the year.
One of the reasons personalization is a strategic decision is that as a company, you need to let go of your siloed way of working. Teams that work together can test much faster and have the knowledge needed, from business, IT, operations and service together. Small successes are replicated at lightning speed and allow you to grow by a factor of 5 to 10.
Costs, of course, are often an issue. Lack of a clear customer value calculation (CLV) over the years or short-term goals block investment in the future. And while every organization must make its own trade-off and assessment, you don't want to underestimate the longer-term value of (understanding) customer satisfaction. So calculate and assume your Customer Lifetime Value (CLV).
Investing in the holy grail, A.I. or common sense?
For many companies, personalization at scale is still a mystery. Personalization plays a crucial role in the entire customer lifecycle: acquisition, customer engagement, purchase and read frequency, cross-sell, and prevention of unsubscribes. But what role exactly? Of course you want a complete customer data platform, a CDP with 360-degree view of the customer. Don't wait for perfection that will predict your ideal world. An initial model can yield huge results. You start with personalized cross-selling with basic information from your ERP. Then you may be talking about a 100-degree customer view, but you're learning right away. Better than a long search for the 360-degree view.
By looking at customer behavior, you can often already identify key triggers. On those, you immediately set your first campaigns. Turning a lot of low-hanging fruit into action stimulates momentum in the organization. And it's still perfectly doable based on common sense.
As more data is built up, you can move on to seemingly complicated methods such as Advanced Analytics, Machine Learning and Artificial Intelligence. Data models can make complex calculations and learn new customer information daily. It's not complicated to add these to your personalization model at a later stage.
Conclusion
Personalization brings you value in the form of an average of 10 to 30% more sales, and 10 to 20% more efficiency in marketing. Added to this is the increase in loyalty, retention and customer satisfaction. We're talking 20 to 50% more return!"
Technology is critical to deploying personalization at scale if you make the choice to get to know customers better and engage them more with your organization. A flexible automation platform that acts as a decision tree for the customer should be central to this and can be activated in the short term. In the long term, structural added value lies in additional insights: the more data, the more comprehensive the customer view, the more accurate the predictions of the decision engine models.
Personalization is creating value by investing in customer knowledge.
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Personalization is creating value by investing in customer knowledge.
