2018 Trends for Personalized Marketing

Thought Leadership

Personalized marketing has moved beyond being a buzzword and getting the customer’s name right in an email. True personalization is highly sophisticated and when done right, it has proven to increase customer satisfaction, lift sales and optimize operations.

2018 is a pivotal time for personalized marketing. We, as marketers, cannot afford not to personalize:

  1. We have a wealth of data. Data is extremely valuable and when leveraged properly, it will offer you a powerful competitive advantage. Consider the top organizations today based on market capitalization: Apple, Google/Alphabet, Microsoft and Amazon – they all embodied a data-first and customer-centric culture. Data insights and analysis leads to understanding your customers, which then enables you to deliver personalized messaging, offers and experiences that will fulfill your customer needs.
    Customers are more loyal to companies that understand them, that value them as individuals and that are responsive to them. Loyalty is about a mutually beneficial value exchange. As such, leveraging your data for insights is the only sustainable competitive advantage. Leveraging our own data to completely satisfy the needs of our customers is truly the only way to compete against the Amazons of the world.

  2. Customers know we have a wealth of data. If we do not use their data to provide value back to them, they could assume we are using their data for nefarious purposes (has anyone missed the Cambridge Analytica debacle?).
    As more information emerges from the Cambridge Analytica situation, people are becoming increasingly more aware of how much of their personal data is out there. Customers are starting to employ tactics to hide their online behavior. At the same time, government regulations worldwide (such as the introduction of GDRP in the EU) will also make it harder to collect personal data. Data may also become more expensive to collect, as customers would even charge us for collecting and using their data. The key message here is that it is our responsibility to leverage our customer data with a purpose. So why would we go through all the trouble and expense of collecting and storing data, if we are not going to use it?

  3. Customers expect personalization but are not getting it. According to Experian Marketing Services, 84% of customers would no longer buy from an organization that failed to take account their preferences and purchasing history, while 41% of customers said they ditched a company because of "poor personalization and lack of trust" (Accenture 2017)

  4. Personalized marketing drives results! Our clients see sales lifts of 5-10% from personalized marketing over control groups and the same results are substantiated by many other major consulting firms.

If personalization goes beyond using the customer’s first name in email, what is it? What is true personalization?

So far, we have talked a lot about the data aspect of personalization. However, true personalization goes beyond data and recognizes that we’re all human – with needs, preferences and motivations. To deliver true personalization, we need both the science of data AND the art of human thinking.

At Relation1, we employ the following rules to achieve true personalization:

Rule #1 – the richer and more diverse the data set, the more accurate your personalization results will be. Personalization cannot be simply driven by collecting what the user entered on a sign-up form or preference center. Declared data supplied by the customer is sometimes misleading. You need to augment declared data with other data sets, such as behavioral data (e.g. browsing activity), transactional data (purchase history), loyalty and social media data sources. For more sophisticated hyper-personalization, you might also consider contextual data set such as geo-location and weather conditions.

Rule #2 – From the data sets, you need to aggregate, normalize and create a single profile for each customer. The goal here is to use the all your data sources to create a super profile all tied to a unique identifier for each customer, such as a customer number, loyalty membership number, phone number and/or email address.

Rule #3 – Apply enriched segmentation models such as RFM segmentation, brand affinity, price sensitivity, etc. to make your data set immediately actionable.

Rule #4 – Apply artificial intelligence and machine learning over time to detect customer intent and journeys.

Rule #5 – Commit to continuously updating your data set and refining your models.

From then, your imagination is the limit of what can be personalized. Some standard personalized marketing deliverables are individual (one-to-one) for each customer:

  • Personalized product recommendation engine. Think of Amazon product recommendations and product bundles
  • Personalized content. What editorial content should the customer receive based on what we know about them: for example, dry skin care vs. baby care
  • Personalized offers. Should we offer points, discounts, BOGO, free samples and on which products?
  • More targeted acquisition. Find look-alike audiences based on the profile of our most valued customers
  • Customer journeys. These would be triggered communications with different messages in direct response to specific customer actions or inactions and involving “if, then” scenarios. Customer onboarding or re-engagement journeys always come to mind

These are the traditional applications of personalized and one-to-one marketing.

What new trends did 2018 bring that impact the world of personalized marketing?

1. Consumer to Business (C2B)

The concept of being customer-centric is not a new one. Crowd-sourcing, crowd-funding, co-creation, co-selling and peer-to-peer asset sharing have been around since 2014, but now are not only hitting critical mass, but have also changed the conversation. We are no longer in a one-way conversation of business-to-consumer, but consumers also want to get involved in the design, creation, funding, distribution and marketing of their products: the world of C2B!

Mass customization is getting easier and more accessible, especially with increasing distribution of 3D printing, which takes the C2B concept to yet a higher level.

2. AI Democratization and Increased Proliferation

Artificial Intelligence (AI) is 2018’s buzzword du jour. It is becoming cheaper, easier and more accessible and is a great enabler of 1:1 personalization. Without it, all calculations would have to be computed and executed manually, which would be impossible at scale. AI has evolved to the point that it can perform Natural Language Processing (NLP) that interprets whether a customer is happy or about to lose patience during a brand interaction, that would then allow the brand to respond, perhaps even in real time.

AI for personalization, however, to be most effective, needs to be paired with a human with a lot of expertise, to oversee the operation and write appropriate business rules. Without a human, you can get gaming of the system (e.g. every time I abandon my cart, this brand will send me a coupon, so I will abandon every time before purchasing). Additionally, a human with experience would help prevent situations that I love to hate with Amazon, such as receiving emails about Menorahs in March.

3. Perfect Online Privacy

This trend could either be an opportunity or a threat to personalization. According to a de zeen article, MIT predicts that the ability to be online without being detected and leaving a footprint.

Are marketers the cause of this trend? Is the surge in retargeting responsible for customers wishing to be anonymous online? We may never know. The threat would be real: perfect online privacy would reduce the data we would be able to collect about customers’ online behaviour, which then reduces our ability to personalize effectively. In my world, less data is bad news.

We do know that when customers are asked if they would be willing to share data with companies, they typically would only choose to do so when they get value in return, in the form of personalized offers, coupons and products.

So, personalization may end up being the opportunity. By providing value back to the customer in the form of personalization or usable data (think education about data usage from your mobile provider), we can continue to prove to our customers that they should allow us to view their behaviour online.

4. Digital Integration in Store

The movie Minority Report always comes to mind and in 2018, this vision could very much be reality. You walk into a store; your app triggers a beacon and your customer profile information is sent to a personal shopper. They know what your size is, your favourite brands, preferred colours, fabrics, fit and style and your last purchases. The system notifies them of a personalized coupon that is waiting for you. You walk through the store and hold up a shirt to your body in the mirror – now you can see what it would look like on you, what you can pair it with and how it looked on the runway. You can also personalize this shirt, tap a few buttons and it is monogrammed. This is the epitome of clientelling and it completely changes the customer conversation and interaction with the sales person.

The next stage is seamless checkout (Amazon Go) and a post-purchase customer communication journey.

When personalization crosses the imagined boundary of just email, I get very excited, in my own nerdy way!

5. Personalization Across the Organization

This trend is a continuation of the trend above, which also makes me very happy. Personalization should not be segregated to the marketing department of the organization. Data is power. With great power comes great responsibility… to unleash it, to help put the customer at the centre of all decisions.

In Merchandising, customer data can be used to determine products to list and delist, to determine price and price bundles, to optimize flyers and trade promotions. In operations, store hours, store layouts, new store openings and customer care skill queues can all be designed around the needs of best customers and can continue to be adapted based on what the data says.

6. Frictionless Home/Retail Integration

With access to driving, wearables and home data, insurance companies are evolving from being a company you call for a claim to being a life solution provider that updates you on weather conditions, so you can move your bike into the garage, that helps you monitor your health condition and that helps you with driving tips.

An estimated 27 million Amazon Echo and Google Smart Home devices were sold in 2017. In addition to wearables and mobile phone geo-location services, we may soon have access (perhaps through partnerships) to every waking moment and extremely personal details of our customers’ lives. The question will become, how can we responsibly store and leverage this data to benefit our customers, to make their lives better and more meaningful, without being creepy, intrusive or completely self-centred?

7. Personalized Videos

As we all know, good personalization goes beyond inserting the first name of your customer into an email.

The latest innovation involve image and even video personalization. According to Vidyard, personalized video drives lifts in conversion to the magnitude of 500%!

8. Subscription Models and Auto Replenishment

Subscriptions are not just for movies, music and books anymore (yes, I am dating myself a bit). The Birchbox model was very successful and now, subscription models have moved into the fickle world of fashion, with companies like Stitch Fix. This is personalization at its best: they personalize outfits based on predictive algorithms of colour, fabric, cut, style, pattern and size, layered over available inventory, on top of amazing shipping and return policies.

Auto replenishment is another form of a subscription model where the customer can sign up to receive the same product over select intervals or with a press of a button with Amazon Dash-like devices.

9. Open-Time Personalization

The last trend on the list is open-time personalization. This is a very interesting innovation that allows the brand to change the message when the customer opens the email. Examples would include differentiated messages based on:

  • Weather: umbrellas for rain, boots for snow, etc.
  • Location: favourite sports team
  • Inventory: replace this item if inventory runs low or notify “only 3 left”

The world of personalization is certainly fascinating, at times creepy and ever evolving. If you would like to discuss how you can personalize your customers’ experience, please reach out to me.

If you would like to discuss how you can personalize your customers' experience, please contact us at engage@relation1.ca.

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