There are some pretty strange ideas about what personalization means out there in internet-land. Just scroll through your “spam” email folder to see what I mean.
Yet personalization – the delivery of individualized targeted offers – is “the next big thing” in retail according to many experts. CEB’s B2C Marcomm Personalization report indicated that marketers are expected to increase their personalized communications from 12% to 56% in the near future.
In this article, we’ll focus on some of the misguided ideas about what personalization means in marketing, and specifically in retail. By exposing these six myths, we hope you’ll be in a better position to do personalization right.
Myth #1: Personalization is all about marketing automation
Yes, addressing customers by name is part of a personalization strategy. But it’s the low-hanging fruit of personalization. Implemented solely by itself, it’s completely ineffective.
Take a look in that spam folder. You’ll find tons of personalized emails. Do any of them make you feel like a personal connection was made? Of course not.
A common misconception is to equate personalization with simple marketing automations such as adding a first name to a subject line or greeting. Personalization is about much more than that. In retail, personalization is all about using what you know about a customer to make that individual a customized, highly targeted offer.
For that, you need a depth of customer data that goes far beyond first names and contact info. You need to know what your customers want, what “makes them tick.” And you won’t get that level of insight from your basic marketing automation software. You’ll need to start filling your CRM with details about a customer’s actual (and expected) likes and behaviors if you want to make them those offers they can’t resist.
Myth #2: All customers love personalization
Some businesses assume that every customer wants more personalization because it lets them cater more closely to their individual wants and needs. Nothing could be farther from the truth.
Customers don’t like it when you know too much about them. Most of them want to remain anonymous online, except when they’re posting vacation pictures on Facebook. So if you’re telling them, “We’re recommending this product because you purchased this product last year and you subscribe to this magazine and we know you make this much and have this much disposable income so this is a great opportunity for you…” Well. Consider that customer creeped out.
You should use all that data to make targeted recommendations, of course. But use it wisely… the quality of your recommendations will have a huge impact on the customer’s perception of you. Failed personalization attempts will look like you’re trying to take advantage of them. A successful personalization program, on the other hand, makes the customer’s life easier by putting the offer they want in front of them at the right time. Accomplish that, and they’ll feel grateful and appreciative instead.
Myth #3: Demographic data gives you all you need for good personalization
Most businesses have fairly easy access to demographic data. Between site registrations, credit card data, and online profiles, you can fill in the blanks for most of your customer demographics.
But these provide only a shallow interpretation of your customer. They don’t give you the right insights for creating meaningful, targeted offers. Psychographic data – characterizing their likes, interests and habits – will prove far more useful.
Despite the obvious correlation, 47% of marketers in the CEB study said they used demographic data in their personalization efforts, but only 16% used psychographic data. Why? Because demographic data is easy to obtain, while psychographic data is a bit more challenging to piece together. Purchase histories add another important dimension, but aren’t as predictive as actually knowing a customer’s likes, interests, and habits.
So what products should you highlight the next time a customer logs onto your website? A combination of psychographic, demographic, and purchase history data is the best formula to determine which products a customer is most likely to purchase next.
Myth #4: Once you have all the personalized data you need, you’re done collecting
In some marketing programs, each customer is viewed as a database waiting to be filled. A series of communications and interactions is planned to acquire the full data set. Once you’ve filled all those fields, there’s no more personal data to collect.
Retailers with strong personalization programs, however, know that data collection is never done. A customer’s demographics might not change often. But their likes, interests, and habits – their psychographics – can and do change over time, sometimes dramatically. Consider fad diets and self-improvement programs, Pokemon during the Pokemon GO craze, or the merchandise lift from the latest blockbuster movie. Likewise, sending steak sauce offers to a recently declared vegan will not earn you any sales… but sending them vegan cookbooks and relevant kitchen accessories might.
A personalization program identifying a customer’s most important likes, interests, and habits right now helps you create timely offers that capture those short-term interests.
Myth #5: The more technology you throw at your personalization efforts, the better
Personalization can – and should – feel personal. When customers see personalized offers or communications, they should be reminded of a relationship they have with your company built on trust.
Technology, on the other hand, is cold and impersonal on its own. What some companies fail to realize is that technology should be the enabler of personalization, not the goal. Technology can provide the means to collect the data, analyze the data, even compile the data. But what it does poorly is make the data personal.
Often, this is done by personifying a company with employee names and faces. A retailer might recognize that your interests and purchasing behaviors are similar to an employee’s (or even a fictional avatar’s) named Bob. “Bob recommends products X, Y, and Z” carries much more weight than “products we think you’ll like.” Someone else, visiting that same site, might find “Carol recommends A, B, and C” instead because their profiles are more similar to Carol’s.
Personalization is most effective when delivered with a human touch. You need to understand how to build relationships, how to earn respect, how to inspire trust. People can do that. Technology and companies can’t.
Myth #6: If the customer supplied the data, it must be true
Since your data comes from the customer, it must be true, right? Not exactly.
There are many ways errors get into your customer data, according to InformationWeek. Some of these are:
- Life changes
- Not understanding the question
- Data massaging errors
- Input validation errors
- System integration errors
- Multiple records
- Deliberate falsification
Correcting these errors can be time-consuming or difficult, but a personalization program that addresses customers with the wrong information is not going to be effective. A misspelled name will “turn off” a customer every time they see it, no matter how well targeted your offer is. A customer with four kids might have selected none just to complete a survey quicker. A customer might say they don’t care about “green” products without realizing you meant “environmental” rather than the color.
All of these are cases where incorrect data can enter your system and cause you to miss out on the right targeted offers for those customers. You need a strategy that continually updates and verifies your info whenever possible. Seeking out non-demographic data such as psychographics, purchase histories, and offline behaviors will not only create a much more lifelike profile, but also provide more sources to validate each piece of data.
For more information on personalization, and how to implement mobile retail applications that can transform your customer experience, contact us at DecisionPoint today.