A recent Pivotree customer survey shows that Personalization (78%) is a top three tactic for digital transformation initiatives, along with Understanding Your Customers (78%) and Having a Strong Data Management Strategy (50%).
It’s a worthy strategy. A study by Forrester found that “77% of consumers have chosen, recommended, or paid more for a brand that provides a personalized service or experience.”
Although businesses are working on personalization strategies, many customers still feel that there’s a lot of room for growth. Consider these stats from Forrester Principal Analyst Brendan Witcher:
- 90% of organizations say they are focused on personalizing customer experiences;
- Yet only 40% of shoppers say the information they get from retailers is relevant to their tastes and interests.
Clearly, there is a disconnect. Witcher adds, “The ugly truth is that most retailers haven’t done the unsexy work of understanding how to use the data.”
I think there are three ways companies are missing the mark: Focusing too much on segments; making it all about the product; and not operating as data-led. Let’s explore each area, and look at how organizations can correct their course toward true personalization.
#1: Shift from Segments to Individuals
The fact that the top three tactics are Personalization, Understanding Your Customers, and Having a Strong Data Management Strategy makes perfect sense. They really work together hand-in-hand. Personalization is, in fact, impossible without the other two.
Here’s where things get off track: Customer “segmentation” has guided personalization efforts for far too long. Shopify defines this practice as, “the process of dividing customers into groups based on common characteristics so companies can market to each group effectively and appropriately.”
The hard truth, however, is that personalization based on segmentation often provides the “wrong” experience for most of your customers. Often, it’s more about what the company wants to push vs. what the customer wants to receive.
Companies must begin to shift their mindset. Instead of “personalizing” their marketing, businesses should “individualize” their communications and offers. Individualizing means it must be “created for the individual, at the moment they need it, and there is no other identical instance of that communication out there.”
Getting to an individualized level of personalization requires listening to customers instead of just pushing messages out and waiting for results. Companies must also build their customer profiles based on multiple attributes. Individualization is all about the multiple layers that represent your customer: their belief systems, affiliations, health priorities, physical attributes, demographics, relationships, career, social behavior, and more.
If you’re doing things right – i.e., acquiring and tracking customer data across a variety of channels – you’ll end up with an infinite amount of information. This makes consolidating the data into a single version of truth an even more crucial step.
#2: Make It About the Experience, Not the Product
Today’s customers don’t just want another product recommendation – they want to believe you can make their life better. They want to feel that companies care about their experience beyond a surface level.
I saw this first-hand recently. My grocery store sent me an email two weeks before my wife’s birthday. It reminded me of the date and asked if I would like to purchase her favorite items. I was able to quickly customize flowers, a card, candles, and cake, then chose a pick-up time with a single click. They also knew we enjoy red wine, and I was happy to accept the upsell. This experience went beyond personal – it was intuitive and individualized, and I loved it. Happy wife, happy life, right?
How did they get this personal? They knew me, my relationship status, birthdates, what products we’ve purchased per occasion, where we shop, and that we like to pick-up our groceries at certain times.
To get to this level, retailers and brands must proactively and continuously gather customer data. Forrester suggests that the golden rule of personalization is to be overt when collecting data, but covert in using it to deliver personalization.
The good news is that customers have proven they will freely give personal details in exchange for value. As consumers gain more rights to their data privacy (from GDPR, for example), it will be even more crucial to add real value. Segmentation and frivolous product offers will only result in customers pulling away access to their private data.
#3: Be Data-Led, Not Data-Driven
History shows that customers make decisions fast, and the result can be disruptive. Companies can spring to life (Uber) or virtually disappear (Blockbuster).
Being data-driven is no longer enough. The enterprises that thrive in this dynamic environment are those that are data-led. This involves listening to customers, being open-minded, and getting rid of preconceived notions.
Having data alone doesn’t guarantee actionable insights. How do you draw out intelligence from huge piles of data? There is intuition involved, and you need the right tools to bring together physical and digital experiences.
What Do You Need to Be Data-Led?
First, you need a strategy and roadmap to get there.
This is not a one-and-done initiative. It’s an ongoing journey. You need to be able to change with the market and consumer demands. Look at what resources you have, what experiences you want to provide, and what type of company you want to be.
Second, you need to think about technology fundamentals.
What will you add that can give you a quick ROI, so you can continue to justify tech investments? What foundational pieces do you need to be agile and fast? Do you want to be an innovator/leader, fast follower, or slow follower? There are merits to all approaches, but you need to choose a path.
Third, you must be able to collect and analyze data.
Master data management (MDM) is foundational – it allows companies to capture and cleanse data across domains, and connect relational data from other sources. All of these data points add to a richer understanding of a customer and their preferences.
Finally, incorporate analytics.
Just because you have data doesn’t mean you know your customers. True individualization requires data capture, data management, analytics, and real-time feedback to and from customers about what is (or isn’t) working. The ability to connect and incorporate the latest-and-greatest technology tools is key for understanding data patterns in real-time, and delivering highly-individualized experiences that wow customers and drive up sales.
Ready to Get it Right?
Personalization is such a big topic that “success” can be difficult to define. Yet when companies get it right – you feel it. When companies get it wrong – you feel it.
A customer that spends thousands of dollars a month with a retailer can switch to a competitor in an instant, based on one bad experience. At the same time, research shows that a single point increase in CX metrics can drive millions in sales. What side of the spectrum will you land?
Part of the Pivotree advantage is that our team of experts looks at personalization from various spectrums and states – ecommerce, MDM, mobile, as well as all the ways you analyze data for actionable insights. We understand that it’s not just about technology – it’s about process, ideology, change management, and beyond.
To discuss how our team can bring your company into the next era of digital transformation, contact us here and one of our MDM experts will be in touch.