How to Personalize your customers’ experience and where to get started?

Why Personalization brings so much value to businesses.

• The rise of personalization?
• Is your business ready for personalization?
• How to get started on the personalization journey?
• How to set up the foundations for a personalized customer experience?
• How to optimize your personalization engine?

Personalization is becoming more and more the foundation of modern Marketing as our technological capabilities catch up with customers’ expectations and our need for better customer targeting.

What I mean by Personalization is not just using the customer’s first name in an email but completely contextualizing a customer’s experience to cater to their individual needs. For the difference between Personalization and Segmentation see this article:

Personalization or Segmentation? When to do either?

Here are just a few anecdotes on how important Personalization has been to customers’ experience and businesses that invested in it.

* Personalization can reduce acquisition costs by as much as 50 percent, lift revenues by 5 to 15 percent, and increase the efficiency of marketing spend by 10 to 30 percent- Reference

* 80% of consumers are more inclined to do business with a company if it offers a personalized experience. Reference

* 93% of companies experience an increase in conversion rates from personalization. Reference

* 65% of customers say that personalization influences their brand loyalty. Reference

The rise of personalization?

Although the concept of Personalization has been around as a goal for Marketers for many years, there has been widespread adoption of Personalization by many industries in the last decade. The rise of personalization has been brought up by a few factors:

1- As companies evolved from focusing on their product to focusing on the full customer experience enabled by new tools and models, the need to focus on customers as an individual has become more prevalent. If brands want to inspire loyalty in their customers they need to go from focusing on transactional interactions to having an ongoing relationship with their customers based on understanding their needs and wants.

2- The increase in the amount of data collected through various devices and advanced methodologies of modelling customers’ behaviours has enabled brands to go beyond a simple socio-demographic understanding of their customers. As more data becomes available statistical correlations are found faster leading to better predictions of customer needs.

3- Customers these days don’t follow social norms as much as they did in the past and are proud of their individual tastes. As customers value their individuality, they also expect brands to provide them with highly relevant information and have a 2-way relationship with them. Hence, it is becoming more difficult to create experiences that are relevant to large groups of customers.

4- Customers have more information regarding brands and their criteria for choosing a brand to be loyal to has become more complex than ever. They can now trial and compare many offerings, read tonnes of reviews and share their experiences in open forums with others. It is easier than ever for customers to know when brands are using generic offers and ingenuine canned 2-way communications.

5- Wider use and advancements of Customer Data Platforms (CDPs) will remove the investment and technological barrier for many smaller organizations to get in the game.

6- More and more brands are pioneering offline personalization to create an omnichannel personalized experience. These can include in-store digital or personnel-driven experiences, POS messaging or location-based offers in a mall.

Is your business ready for personalization?

Personalization often requires considerable investments in tooling and understanding of customers which are inherently complex and take a long time to create. In Many cases, the best on-ramp to personalization is continuous refining of smaller segments. There are several cases where starting from segmentation is necessary:

• When a new business that does not have a considerable amount of customer data collected to be able to use for further personalization.
• For New customers or leads that the business may not know much about yet or when the business trials new adjacent customer markets from whom only a few attributes may be known.
• When the business needs to identify which attributes lead to changes in customer behaviour to be included in the personalization data collection.
• When the business wants to identify pockets of the potential market that should be excluded from targeting for acquisitions or reactivation.
• When there is not sufficient data or targeting tooling built in the business yet to enable personalization
• When the use of personal attributes is limited by ethical and legal limitations (for instance in healthcare)
• When collecting customer data is limited due to customer sentiment or regulations

How to get started on the personalization journey?

As we said previously Personalization requires focus and investment. It is a complicated journey and it often takes a few tries before it starts working.

Most businesses start with a much simpler view of the customer and work towards more ad more advanced methods of personalization. Most businesses often go through the following stages

Personalization journey steps

Here is a list of steps you will need to set up the foundations for a personalized customer experience.

1. Set personalization as the center of company strategy- ensure that there is internal alignment that personalization is a strategy the company has agreed to invest in and set expectations of how long it might take before a considerable value is recognized
2. Clarify what is the objective of personalization- Whether it is to improve loyalty, increase Share of wallet or create a barrier to customer churn. It is often recommended to identify which customer pain points you are trying to alleviate rather than taking a solely business goals view to personalization.
3. Agree on how the success of personalization will be recognized- What specific KPIs are going to be used to evaluate and optimize personalization efforts? How is this data going to be reviewed and who is responsible for its reporting?
4. Assess capabilities required and plan a team- You may require niche skills that may need to be hired for or externally resourced.
5. Identify the tools and resources required- You will need a complete set of tools that are scalable and potentially use an open architecture so they can be integrated across multiple touchpoints and extended over time. A good starting point would be the following:

• A Customer Data Platform (CDP) to collect all the customer data from various 1st, 2nd and 3rd party sources and organize the data to create a uniform view of each customer. As you advance on your personalization journey the CDP can also house the advanced models that predict customer behaviour.
• A Data Management Platform (DMP) to collect behavioural and implicit data (especially from anonymous customers) and integrate data with the 3rd party DSPs (marketing channels) to target specific segments of customers
• A Customer Relationship Management (CRM) system to engage the opted-in customers through owned communications channels (eg, Email, SMS,…)
• A Data analysis tool to enable tracking and understanding the customers
• An experimentation tool to enable A/B testing various targeting logic to speed up optimization

6. Identify the currently available data and consolidate your customer view- In order to create a single view of the customer, the data from different platforms will need to be collected, cleaned and mapped to each customer.

7. If needed design interactions to gather additional customer data- If you require additional demographic or behavioural information from your customers, you can ask them but be very clear about why you need this information, how it will be used and how they will benefit from providing additional data.

Once the foundation is set, you will need to repeat the below steps to optimize your personalization engine:

1. Create hypotheses of which attributes you believe will impact customer behaviour
2. Define rules of which sets of offers and messages based on hypotheses, will be targeted to customers with which attributes. In addition, you may have to discuss what is the hierarchy of offers per customer and how you will prioritize and time the offers per customer.
3. Create dynamically extendable libraries of content & creative assets that can be matched based on your rules and offered to customers
4. Run experiments based on your new set of rules and content on your customers
5. Collect quantitative results of the experiments and qualitative customer feedback from each of the hypotheses
6. Analyze each hypothesis based on the effectiveness in influencing customer behaviour and customer satisfaction and decide what the next set of hypotheses look like

The cycle of Personalization Optimization

In summary, even though the investment and journey of Personalizing the customer experience may seem arduous, companies that have made this investment have found it well worth their effort. Even if you are not ready to take on the more complicated steps, you should consider starting from a simple set of rules and optimizing over time as you understand your customers better and build a stronger infrastructure for Personalization.

If you are interested in the difference between Segmentation and Personalization and best practices for both checkout “Personalization or Segmentation? When and how to do either?”

I am working also on a few other articles regarding Personalization and Segmentation, so follow me if you would like to be notified when they are published.