There’s no doubt personalization is a critical part of the modern-day customer experience. And most brands and business owners fundamentally get that, but actually achieving it is another story.
For instance, according to a post-pandemic survey published by Salesforce, more than two-thirds of consumers expect brands to understand their unique needs and expectations, and 91% base repeat purchase decisions on a great customer experience, but only one-third say brands actually do a good job in delivering personalization. While this is just one example, this massive disconnect is representative of a broader consumer sentiment.
This begs a couple of questions; why is there such a gap when it comes to personalization and how can brands begin to close it –– and do so consistently?
What personalization is and what it isn’t
Let’s start with a working definition. Oxford Languages defines it as“the action of designing or producing something to meet someone’s individual requirements.”
Though “delivery” should be added to this definition, this is a solid definition that leaves no ambiguity. Personalization isn’t about segmenting your audience or creating personas. It’s about speaking to each individual member of your audience about what each of them wants or needs. Simple to understand, but incredibly complex to execute at scale.
An entire category of technology called marketing automation was created in the late 90’s with the objective of automating the delivery of personalized content. The category has since evolved considerably from the early days when mail merges and drip campaigns were the ‘state of the art.’
Consumers have also become much more sophisticated in their awareness of and expectations for what truly constitutes personalization, in large part because of how global powerhouses like Amazon and Netflix have leveraged big data and AI to deliver personalization on demand and at massive scale. That personalization creates the kind of customer experience that builds and fosters loyalty and repeat business. Indeed, it’s difficult to identify a consumer product or service segment that isn’t at least partially in competition with Amazon.
So broadcasting the same message to your entire audience or relying on basic ‘if-this-then-that’ logic just doesn’t cut it anymore. Your customers are smart enough to recognize when you’re talking at them, not to them, and will be more and more likely to tune you out. Or in the worst case, opt out of hearing from you altogether.
Why true personalization matters
Simply put –– we are in the midst of a perfect storm of circumstances that have made acquiring new customers more competitive and expensive than ever.
First, the digital marketing signal-to-noise ratio has fallen off a cliff –– meaning it is extraordinarily hard to get your marketing message to stand out above the chorus. For example, in 2012 Facebook reported $4B in advertising revenue. Last year, that number jumped 2,000% to $84B. Chances are you’re advertising on Facebook, and if so, you’re already feeling that impact, regardless of whether you’re a digital-first or a brick-and-mortar business.
Second, the accelerating focus on consumer privacy over the last year has driven a significant increase in restrictions on the sharing and use of third-party consumer data, ranging from restricting cross-app tracking on iOS to phasing out third-party cookies in web browsers over the next 12-18 months. There are already emerging trends in email to obfuscate consumer email addresses and block recipient IP addresses, all of which will render email marketing a much less effective acquisition channel. These changes are at best weakening, and at worst dismantling, the very foundations of the digital marketing infrastructure that has fueled the last two decades of growth. This isn’t a ‘what if’ anymore. It’s happening.
The punch line? As customer acquisition continues to become more difficult and costly, customer retention will in turn become more critical to the continued growth and survival of every business.
And spoiler alert –– personalization is the key to retention.
The principles of personalization
There are no silver bullets to executing well on personalization, but in the context of an effective customer engagement and retention strategy, here are five principles to base your approach:
- Know your customer. This is foundational, but in many ways, it has been overshadowed in digital by the quest to create high-volume flywheels of frictionless transactions. There are no excuses for not knowing the most important things about your customers anymore. You capture data about them with every interaction. When did they first do business with you? How often do they come in or purchase? When was the last time they were in? What do they purchase most frequently? Even without the vast analytical capacity of Amazon, basic data points such as these can help you build an accurate and comprehensive picture of each of your customers.
- Technology is strategic. No matter what business you’re in, technology is a strategic necessity to be able to understand and create value for your business from the data you collect. And it doesn’t stop with just your point-of-sale or scheduling system. There is an increasing number of solutions out there designed for businesses of every size to create authentic, personalized touchpoints based on the data you collect that show your customers you understand what they want and are excited to provide it for them. Employing a loyalty platform is a step in the right direction, but the ability to turn those from passive points-collection programs to a proactive motivator for visits and purchases is the real holy grail.
If you’re not embracing the technology that will arm you to put the data mentioned above in play, then you’re just asking for one of your competitors to steal your customers. And they will.
- Context is key. There’s a fine line between useful and annoying. In a mobile-first world, context is even more important because of the additional variables that come into play. Context not only includes the basics like customer profile data and transaction history, but also variables such as location, time of day or even the weather outside. Taking it a step further, patterns in these variables over time provide invaluable insight into each customer’s habits and preferences, which further inform how best to personalize and in which moment to deliver each future touchpoint with that customer.
Bottom line –– if context isn’t central to every engagement you create with your customers, the chance you’re wading into annoying territory goes up, and the probability that your customers will tune you out or turn you off rises right alongside.
- Always deliver value. All marketing is an interruption at some level, and so if you’re going to ask for someone’s attention, then you had better be delivering value along with that interruption. Of course, context is always central to providing value because it is the best barometer to determine exactly what value your customers are likely to want to receive from you in that moment. That value could take the form of anything from helpful information to a timely and relevant offer to a simple ‘Thank you for being our customer.’
It doesn’t end with the marketing message, though. Ultimately what you deliver to your customer has to be as good or better than what you’ve promised, otherwise, you’ve crossed the fine line to annoying. If you’re already on top of #3 above, however, then you’ll be in good shape.
- Ask for permission. Top marketing thought leader Seth Godin introduced the notion of permission marketing in 1999. The concept has roared back into the foreground more recently in the digital marketing world because of the increasingly stringent restrictions on access to and use of third-party consumer data and the requirement to opt-in. This is no longer optional. To establish and maintain the trust with your customers to execute on data-driven personalization, all of that data must be shared through opt-in permission for every customer. It’s an additional hurdle to cross in the beginning, but doing so pays huge dividends over time. And staying on the right side of regulators is never a bad strategy.
Personalization in practice
None of the principles above should be surprising, and we now have access to more tools than ever before to put them into practice. To get your personalization wheels spinning, here are a few examples:
Let’s say you’re a chain of fast-casual sandwich shops. Your in-store business is doing great, but you’re not getting the traction you want for your catering business. One idea is to use location data to automate push notifications through your app to your customers who work in offices within a certain radius of your stores to promote catering options during the week. These customers are likely your most loyal in-store customers and will already be more likely to choose your catering options for meetings in the office as well.
Or, perhaps you operate a chain of beauty bar and salon locations across the country. Maintaining peak utilization targets is critical for profitability across your operation, but each store faces different schedule gaps each day and manages different client bases with different preferences and seasonal patterns. You could automate targeted offers to individual clients based on store and service level availability, matched with your clients’ preferences, service history and location. Your clients would be thrilled to get individualized offers that align with their favorite services, and your stores would maintain optimum utilization more reliably and predictably.
These are just two ideas among a universe of creative –– and attainable –– ways to harness the power of technology to capitalize on the power of personalization to strengthen your customer relationships, improve retention and lifetime value, and ultimately curate customers for life.