02/26/2016

Closing the Gap in Experience Personalization, a.k.a. Contextual Marketing

by Sue Spaight

Personalization (also known as contextual marketing, and adaptive marketing or adaptive content) is a practice that brands need to implement to better meet their customers’ growing expectations. There’s a sizable gap between how well marketers think they’re doing at experience personalization and how well customers think marketers are doing. Smart marketers will take the opportunity to close that chasm and create a better, more seamless customer experience in which customers feel recognized and valued.

Fortunately, more brands are taking on this challenge. Forrester Research found that a whopping 91 percent of marketers surveyed are prioritizing improving customer experience through personalization, in The Contextual Marketing Imperative. They also found that 79 percent of marketers surveyed believe personalization is very important to achieving their top marketing and customer experience goals, like increasing customer satisfaction and building customer loyalty, in The Power of Personalization

We agree, in part because companies that are personalizing web experiences and are able to quantify results are seeing on average a 19 percent sales increase. Harvard Business Review cites a more conservative 10 percent potential sales lift from personalization – with five to eight times the ROI on marketing spend – in How Marketers Can Personalize at Scale. Specific to the email channel, one study found that personalized email results in transaction rates six times higher than non-personalized email. 

Personalization seems like a worthwhile endeavor, right?

Contrary to marketer perceptions, customers are frustrated and their expectations are most often not being met.

There’s a fundamental gap between what most brands are providing and what consumers want. Currently, while two-thirds of marketers rate their efforts at personalization as “very good” or “excellent,” less than one-third (31%) of consumers say companies are consistently delivering personalized, cross-channel experiences. In other words, we as an industry are not doing as great as we think we are.  

It’s easy to see why failure to personalize the customer experience causes frustration, as it goes to the fundamental human needs of belonging and feeling recognized. We all want to be seen, heard, and known. Yet chances are good that you can recall a time in your recent past when you felt frustrated that a brand didn’t recognize you. I’ve had a couple of these disappointing experiences recently, most notably the fact that Pottery Barn blasts me with emails about buying a new dining room set when I just bought one from them. I’ve even invested the time to meet with one of their interior design consultants – in our home – about other interests that we have. She has photos of our house and a list of exactly what we want. Yet I still get the generic “buy a dining room set!” email, which actually discourages me from buying anything or engaging further in our relationship because they don’t “know” me and don’t seem to care about what I’ve already invested. Have you had a similar experience? Please share it in the comments. 

The “mobile mind shift,” as Forrester calls it, also contributes to higher customer expectations, of course. Customers now expect to get exactly what they want in their immediate context and immediate moment of need. 

Not sure addressing this for your customers should be a high priority? Consider these statistics:

•74% of consumers are quite comfortable with companies using data about them to provide personalized experiences. 
•70% of customers receiving personalization today see it as superficial.
•63% of customers feel personalization efforts are useless and feel bombarded with emails.
•40% of consumers say most promotions don’t deliver anything of interest.
•37% of consumers delete most email offers and promotions without reading them, while 40% have unsubscribed because they feel overwhelmed.

Sounds to me like a whole lot of marketing effort is being wasted by a whole lot of brands because it’s not customer-relevant anyway. The bottom line? If we as marketers don’t get our acts together and start treating our customers like the important individuals they are, they’ll continue to move toward tuning us out and disconnecting from their relationships with us in favor of others who know them and provide experiences accordingly.

The holy grail of personalization: a seamless and individualized customer experience across all stages and touchpoints. 

Experience personalization has gone way beyond addressing people by name (oh, the life of a marketer was so simple then), and beyond adjusting content and product assortments based on the customer’s past purchases and preferences. What’s sought after now is the ability to create the right overall experience for each individual customer and having that be seamless from touchpoint to touchpoint throughout all stages of the customer journey. It’s no small task, obviously, yet like any challenge it’s better to get started than to pretend it’s not there. 

About two-thirds of marketers are using demographics to target content and offers; some marketers may be thinking this is personalization, but it’s not – it's segmentation. Less than half of brands (41%) are using actual customer interaction and contextual data for personalization. 

While segmentation is a start, there’s now a relatively clear path to redefining personalization as experiences that are relevant to individuals, not broad segments. About half of marketers are already using more sophisticated personalization methods, including leveraging data from loyalty programs (52%) or behavior-based data, such as sales data and purchasing patterns (48%). These can be aggregated and turned into predictive models of future behavior. “Web analytics can flesh these out with content analytics and platform preferences, along with days and times that customers prefer to interact with specific types of content. This can be paired with offline data such as in-store purchasing information to produce a three-dimensional customer view,” in Aimia’s words. 

For example, if Pottery Barn was doing this right, instead of that annoying email trying to sell me a dining room set, I might have received one about living room furnishings based on my in-store behavioral data and in-home consultation. They could also incorporate a more personalized discount as a way of luring me back after an unfortunate customer service experience that I had, which ended in email dialogue with their social media/service support team. Connecting those dots is not happening, though presumably because the corporate email data silo is not talking to the in-store behavioral data silo is not talking to the customer support data silo. More about that issue later, because we need to start with strategy first. 

Start with strategy. Remember that half of strategy is deciding what not to do. 

To start your personalization efforts, first you need to determine where to play and how you’re going to apply personalized, contextual marketing for customer engagement. As with any experience, developing a customer journey map is a great place to start. Then you can plan your personalization (and other) strategies to address the areas where customers are having experiential issues, to bring the most bang for your proverbial buck. Define specific personas and use cases, and develop taxonomies. 

Here’s the thing to keep in mind as you strategically plan: You don’t have to do ALL THE THINGS. In fact, you likely can’t do all the things effectively. It’s easy in this world of rampant channel proliferation to get caught up in using all available channels, churning out piles and piles of content, with quantity trumping quality and value. As Forrester Research states, “Unfortunately, the personalization strategy employed by most marketers isn’t all that strategic. An overwhelming majority of marketers employ the ‘throw it up against the wall and see if it sticks’ method of personalization, spreading their ’personalization’ methods across any and all channels. The average marketer surveyed reported using or planning to use 11 channels for contextual marketing and personalized messages.” No wonder so many marketers are overwhelmed and less than optimally effective. 

Instead, choose a strategic focus. Then choose a few channels that are most important to your customers and fixate on using them extremely well, in a way that actually does personalize the experience for them, creating a sense of recognition and value. Creating value exchange should be at the heart of your strategy because customers expect value for sharing their data and for continuing to engage. “While consumers primarily expect perks like discounts, coupons and virtual rewards, they also want customer experience-related benefits, like the ability to provide feedback to the company, access to premium information, and for the company to remember them if they are a regular customer,” says Forrester Research. This is completely in keeping with the GS “BRAVE” model of customer engagement, activating the levers of Belonging, Recognition, Access, Voice, and Enrichment. Without that customer focus, most of your effort and investment could be wasted. 

Consolidate your data and secure the right technology. 

Approaching “big data” can be extremely intimidating for marketers. The good news is that just as you don’t need all the channels, you don’t necessarily need ALL THE DATA to get started using personalization effectively. In fact, having all the data can be a hindrance or as Aimia says, an “unfocused, unfulfilled promise.” They advocate for a focus on “Intelligent Data” instead, saying it’s “about finding real-time insights to add value and forge customer bonds, leveraging data insights to deliver meaningful, personalized messages to consumers at the right time on the right platform. When customers are able to engage with relevant content at the precise time they need it during their buying journey, the likelihood of a positive action is exponentially increased.”

Whatever your strategy and approach, at some point in your personalization rollout you’ll need a single, unified customer database or CDP (customer data platform). Siloed customer data is likely the single largest barrier to implementation of effective customer-relevant personalization. Just as marketers are often using too many channels to be effective, they’re also using an average of 15 separate systems to house customer data. Yes, FIFTEEN systems. How is it possible to create a sane system of personalized, contextualized marketing in that environment? It’s not. On the flip side, marketers using a single customer database are 16-30 percent more likely to have the capability to implement real-time marketing via email, online, mobile, the call center, and in-store. I’m somewhat surprised it’s not a higher percentage, though the database is only part of the challenge, of course.

The right technology systems are also needed to enable data analysis and action in real time, rather than outbound or push marketing, along with the right people and the right processes. Companies such as Monetate and Demandbase read the IP address of a visitor and deliver content dynamically based on his or her profile and other factors. That can move a marketer a step closer, certainly, but not all the way to the grail. Incorporating a predictive analytics model is key. 

In the abstract for its premium paper You Can’t Personalize Digital Experiences Without Predictive, Forrester Research says, “Digital experience delivery vendors have generally fallen short in their use of predictive analytics to contextualize digital customer experiences. Many of these vendors offer simple, rules-based recommendations, segmentation, and targeting that are usually limited to a single customer touchpoint. Historically, application development and delivery (AD&D) pros responsible for delivering their firms’ digital customer experience have thought that this is as good as it gets. But today, a host of new predictive analytics tools are poised to enable AD&D professionals to become clairvoyant architects of their customer’s success.”

If you want to learn more about solution options, many of them have been evaluated in the Forrester Wave™: Digital Experience Platforms study. Or we can help, as we’re evaluating several of them, as well. 

Finally, a brief note about managing customer privacy, which is a challenge to personalization success that must be addressed. We’re all too familiar at this point with examples like How Target Figured Out a Teen Girl Was Pregnant Before Her Father Did. Guarding against privacy issues – and avoiding crossing the line from relevant to seriously creepy – must be a primary consideration in planning strategy and technology. It’s also a good reason to dip your toe in with a limited pilot program before getting more ambitious. 

Start small. Get started. 

While the ultimate goal is to have seamless personalization across the entire customer journey – and all touchpoints – trying to optimize for everything right out of the gate is obviously unrealistic. Initially you can pilot an experience that addresses one or more of the highest priority user needs. Then analyze, iterate/expand, repeat. This is how we work at GS and Harvard Business Review espouses the same approach: “… expecting a machine to generate the perfect personalized experience is a fool’s errand. Rather, we’ve found the best way to achieve meaningful personalization is by systematically testing ideas with real customers, then rapidly iterating.” Forrester, too, condones starting small to prove ROI and customer value. 

Don’t let the perceived enormity of the challenge of experience personalization stop you. It’s time to get started because your customers expect it. Successful personalization will provide a more differentiated and valuable customer experience, enabling you to better meet your customer engagement goals.

Forrester sums it up beautifully: “Customers today expect to not only interact with companies on the devices and channels they want, but to be delighted by those experiences. Personalized experiences make customers feel catered to and valued, which in return makes them more likely to be an advocate for a company.”

Sources/Additional Reading: 

Adobe, Experience Design Optimization: Where Personalization Goes to Grow Up
Forrester Research and SAP Hybris, The Contextual Marketing Imperative: The Evolution of Personalization From Push Messaging To One-To-One Personalized Customer Experiences
Forrester Research and PwC, The Power of Personalization
Harvard Business Review, How Marketers Can Personalize at Scale 
Loyalty 360/Aimia, Big Data Loses Relevancy as Intelligent Data Drives Results 

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