Three years ago, Gartner shook the marketing world with a startling prediction. Now we’re on the verge of discovering the accuracy of its forecast.
By 2018, Gartner theorized, “Organizations that have fully invested in all types of personalization will outsell companies that have not by 20 percent.”
But while many organizations seem to understand the value of personalized customer experience, far fewer actually engage in it in a consistent, measurable and scalable way.
Will your company be among the winners next year?
Getting Up to Speed With Personalization
Personalization isn’t new. Companies have long been working to create accurate and targeted marketing. The more targeted, the less likely the marketing collateral will feel like spam to customers.
Back in 2012, Forrester began beating the personalized drum, too. As its analysts noted, success in the new digital environment requires firms “to deliver smarter, more customer-centric interactions that feel like they were tailored for each user and his or her specific set of circumstances.”
Since then, companies have been capitalizing on massive amounts of data — from demographics and purchase history to the time of day people shopped and the products they considered but did not buy — to drive personalization, relevance, and speed of delivery.
At least in theory, anyway.
Oops: Personalized Marketing Fails
In practice, personalized marketing has proven far more hit or miss — a reality Bloomberg Gadfly columnist Sarah Halzack lamented in a column called Personalization Helps Retailers; Too Bad They’re Terrible at It. As she noted,
“Chains have long touted personalization as a cornerstone of their digital futures, making lofty pronouncements about how it will let them reach out to customers with previously unseen precision. But so far, they’re doing a lousy job at it. And they’re leaving money on the table by not pushing harder and faster to get this right.”
Consider this data from the 13th annual Accenture Strategy Global Consumer Pulse Research, which surveyed more than 25,000 consumers globally, including 2,000 in the US.
More than four out of 10 US consumers have abandoned companies because of “poor personalization and lack of trust,” the report explains. The impact: $756 billion this past year in lost retail and brand sales. That’s just in the US. Globally, poor personalization and lack of trust is costing brands $2.5 trillion, according to Accenture.
Personalization vs. Segmentation
Here’s the thing. A lot of companies still confuse personalized marketing with segmentation. But segmentation, while useful, only breaks your target audience into broad swaths based on perceived interests, needs, or priorities. Think demographics or lifestyle.
Personalization is a leap ahead of segmentation. Technically speaking, “Personalization requires implicitly or explicitly collecting visitor information and leveraging that knowledge in your content delivery framework to manipulate what information you present to your users and how you present it.”
In simple terms, it means celebrating the uniqueness of each individual. It delivers marketing collateral so targeted it looks and feels as if it had been handcrafted by a personal friend.
Marketing to Segments of One
By moving from broad segments to segments of one, brands gain a great opportunity. They can interact with customers based on their personal interests and buying habits and offer more relevant information.
When personalized communications are delivered in real-time the benefits can be even greater. This is especially true for customers in restaurants or physical retail stores, who need information now.
Alan D. Smith, a professor of marketing at Robert Morris University in Pittsburgh, said personalization technology should optimize the customer’s journey and enrich each brand’s value proposition.
“These interactions can vary from simple transactional e-mails to conversations with product experts and recommended selections based on previous purchases from a variety of websites,” he wrote.
While personalization takes extra effort, Smith and other experts agree there are big benefits for brands. It can pay off not only in deeper company-customer relationships and greater brand loyalty, but increased buying and greater return-on-investment.