In the third blog of our five-part series on the changing face of customer engagement, we focus on the importance of personalization, particularly as an element of your digital strategy.
In our recent virtual roundtable, thought leaders from White Castle, Sam’s Club, Microsoft, Rakuten Ready, Digioh, Keurig Dr Pepper and Plexure discussed the challenges of staying connected with consumers in the wake of COVID-19. Building consumer trust through transparent, empathetic messaging was a key theme, as was deploying smart technology strategically.
An underlying motif in all our thinking about what to do now and extending into a post COVID-19 future is the importance of personalized marketing, and in particular how this personal touch is expressed digitally rather than through physical stores. In this blog, we share what this means in terms of your marketing strategy and how best to implement personalization.
Why consumers expect personalization
43% of U.S. consumers are more likely to make purchases with companies that personalize experiences. (Accenture study)
A personalized customer experience has become an expectation among consumers, and brands that deliver it prosper. From the Netflix algorithm that provides customized suggestions for your viewing to the Coke can with your name on it to Amazon’s highly optimized product recommendations, everywhere you look brands are catering to your unique needs and interests.
Consumers want to be treated as a market of one, i.e. brands no matter how big, complex or global should aim to deliver an experience relevant to ‘me’ across every touch point, from brick and mortar to digital, with digital having much greater relevance, particularly now.
It’s no wonder that when the Association of National Advertisers did their annual survey in 2019, ‘personalization’ was their marketing word of the year.
Four reasons to personalize your marketing
Personalization works because it provides only relevant, meaningful content and offers, thereby optimizing the customer experience. It enables consumers to utilize their time more efficiently in a world that is increasingly busy and cluttered. Forbes recently wrote about the 50 top reasons that show the power of personalization, but for this blog we’re going to focus on the four key benefits it delivers.
1. Personalization improves the customer experience
Customers are willing to trade information for a more personalized and engaging experience if they trust your brand to protect their data. Armed with that data you can provide an easier, faster and more rewarding experience than competitors not harnessing data in this way.
As touched on above, personalization makes the interaction with your brand more relevant and ensures the messages you push customers are meaningful. This reduces the amount of time a consumer might spend making a purchase decision, which eliminates a significant amount of friction in the buying process. As technology has enabled immediate gratification and results, consumer attention spans are reducing and correspondingly there are higher expectations around the effort that buyers are willing to expend. In short, the more you can make the experience about each individual customer, the more loyal they will be to your brand. Reducing buying friction = GOLD
2. Lowering the cost of sale and enhancing revenue
Personalization helps improve conversion rates because the AI and machine learning engines that power it predict what your customers want, thereby maximizing your marketing efforts and lowering your cost of sale. But it can also enhance revenue by targeting existing customers with tailored offers that can increase average transaction value, either through cross- or up-selling.
In the time of COVID-19, there is a heavy emphasis on delivering personalization via digital channels and executing contactless commerce at scale. This is a daunting task but is also table stakes for any business that wants to keep the doors open and customers served. It’s important to note that the ability to deliver a tailored omni-channel experience is crucial to growth over the longer term - the brands that emerge as winners will be those embracing digital transformation now.
3. Improving customer retention rates
Profitability is closely linked to a brand’s ability to retain customers, and personalization is the cornerstone of this. Interventions based on your knowledge of a customer can serve to smoothen the buying process and ultimately enhance brand loyalty and boost revenue. An example is responding to shopping cart abandonment with a special offer for that customer based on their purchase history, or becoming a virtual personal shopper by recommending products that align with your customer’s personal preferences and creating a situation whereby making a purchase is so easy it’s almost a given.
Personalization shows your customers that you know them, and in turn they feel recognized and valued. This kind of engagement creates loyalty as an experience, evolving from a transactional incentive/reward-based system into a mutually beneficial, two-way relationship.
4. Strengthening brand loyalty
Loyalty is fundamentally an emotional connection that motivates a consumer to purposefully choose your brand over another. This level of relationship with consumers is what brands should strive for because simply retaining customers (i.e. having them purchase from you more than once) tends to be transactional and based on price or availability rather than emotional connection. Central to achieving brand loyalty is crafting a cutting-edge, personalized experience that shows you care about meeting the individual needs of your customers.
87% of Americans are willing to have various details of their activity tracked in exchange for more personalized rewards and brand experiences.
The above article provides some salient points about why digital customer engagement strategies are so vital in creating brand loyalty. To summarize, the impact of product quality is starting to take a back seat to the quality and personalized nature of content, customer service and recommendations. Why? Because these are the things that breed familiarity and warm fuzzies, making consumers feel validated and rewarded. The number of competitors and therefore consumer choices is increasing, which means it is harder than ever to hang onto your customers. In the digital age, finding an alternative product or experience is as simple as a Google search, which makes relationships more fragile than ever. Harnessing the power of data and technology to create moments of magic that ignite loyal followers is the only way forward for brands that want to remain in business in the long-term.
Getting your personalization engine up and running
The benefits of personalization are well known but executing personalization strategies is not always straightforward because it involves a commitment to digital transformation, which touches every aspect of an organization. What this involves varies greatly from business to business, but at a high level involves four key areas:
The technology deployed to deliver effective personalization programs is only as good as the thinking behind it. A careful strategic approach is particularly key with personalization because the last thing you want is your communications coming across as unwarranted or irrelevant. Clarity on the target segments, their needs and what experience you will deliver with what result are all fundamental questions that must be addressed up front.
Not every business is able to develop a winning customer engagement strategy in-house. In many instances, bringing in the right level of expertise and experience is key. Sometimes this is to collaboratively develop a strategy, or simply an external set of eyes to sense check you are on the right path. Particularly in early personalization projects where it is often essential to engage external advice to help you move quickly but without undue risk. External experts help deliver the right solution using the right technology, but also give you the extra capacity required to execute personalization projects, which might fall often outside business-as-usual activities.
Personalization projects are complex and highly cross-functional in most organizations. Careful planning is required to bring all the parts of the business and external partners together to deliver the right outcomes. Good processes will ensure clarity around roles and responsibilities while keeping the customer at the heart of the project.
“Give me a lever long enough and I will move the world”
Technology is the lever that is the ultimate enabler of personalization. Any other effort will come to nil unless you can master the technology required to drive a customized customer experience at scale. Being able to leverage both internal data (e.g. customer intelligence, inventory, pricing etc) with external or contextual data (e.g. weather conditions, local events etc ) and then digitally orchestrate a seamless experience is what the right technology will empower you to do. Very often, the level of personalization required to execute successfully in the long-term does not come from an out-of-the-box solution and some degree of customization is required.
If you think about personalized marketing in terms of autonomous vehicles, the very first step is the ability to compile big data. Imagine the technology required to capture the almost limitless contextual scenarios to make driverless vehicles a reality. It needs an entire network of local, edge and cloud computing, connectivity and literally decades of data collection. And then once the data has been collected the right technology is needed to interpret that information and turn it into something useful that can be applied where and when relevant. Personalization is nothing new in marketing; back in the day there were parties being thrown over the excitement of being able to merge a first name into an email. This seems like the dark ages now compared to what’s available through connected contextualization combined with deeply personalized offerings.
Achieving a personalized future
While the imperatives for personalization are clear, achieving a customized approach to marketing your brand isn’t without challenges. Marketers cite issues like a lack of resources (time, money and people) to implement programs, concerns about the quality of data and consumer wariness of personalization as the major barriers and that doesn’t even take security in account.
What these concerns reflect is that personalization is something deeply connected to a business’ overall brand and digital strategies. What they also point to is the importance of using delivery partners with deep experience in customizing customer engagement to lower your risk while accelerating your progress.
COVID-19 has refocused us all on what’s really important in our businesses, which is connection with our customers. For many brands, the ability to personalize their approach and target ‘markets of one’ will be vital to their future, and something that they need to be working on today. COVID-19 isn’t the first economic challenge on a global scale, and it won’t be the last. The question is, will you be prepared?
If you’re keen to find out more about how technology can ‘power’ personalization, check out this infographic on how to add AI and ML to customer behaviour models.
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