Kristina: With people spending more time online, we're hearing a lot more about the importance of personalization. Are brands using personalization as it should be used?
Christian Selchau-Hansen, CEO & Co-Founder, Formation: For most marketers personalization rarely means personal. Including a name in an email, retargeting or doing simple demographic segmentation does not offer sufficient relevance or value for today's consumer.
There's a lot of ambiguity around the word "personalization" and what that actually means. That ambiguity can make it difficult for brands to use personalization effectively. We think about personalization in three stages: segmentation, microsegmentation and individualization. Many brands are between stage one and two, segmentation and microsegmentation. Moving from stage one to stage two by adding a few more segments linearly increases the amount of resources and effort required to execute on campaigns. However, that linear increase doesn't scale to individualization because segmentation is often a manual and laborious process. The only way to scale to stage three is with machine learning and automation. Brands that can implement the technology and strategies that allow them to move beyond segmentation and toward 1:1 personalization will be most effective.
Additionally, there are numerous applications of personalization and different applications have different levels of return. Individualized offers, where we have deep specialization, is one of the most effective and lucrative applications.
Kristina: What is the difference, from a marketing perspective, between personalization and repetition?
Christian: Using data from past purchases, browsing and customer actions to inform future marketing communications and promotions is a step in the right direction for brands marketing to that individual.
However, that's only part of the equation. Identifying a pattern and repeating those same marketing efforts is easy enough, but to create true personalization and loyalty, marketers need to offer relevance to their customers. This starts with understanding why a customer engages in a given pattern and that not every customer purchases in the same pattern. Machine learning helps brands to develop individual insights and optimize offers over time, while automation makes sure that far fewer resources are required to deploy millions of variations - thus maximizing relevance to each customer.
Kristina: How can brands ensure they are properly personalizing campaign materials without repeating the same, non-relevant, information to consumers?
It all hinges on understanding the customer, being able to act on the relevant and recent data and do so at scale. Otherwise, the only choice is to show everyone the same message, which we know cannot maximize relevance or value to the customer.
Christina: Granularity is essential. Just knowing that a customer recently made a purchase is less valuable than understanding a customer purchased a yoga mat six days ago with a 25% off coupon. This is an opportunity to improve the customer's journey. Rather than retarget that customer with an ad for another yoga mat or a blanket 25% coupon, brands could dive deeper into the customer's motivations and interests. They could really drive engagement and improve the customer experience with offers for additional yoga items or even videos around online yoga classes.
Kristina: How does personalization feed into the overall digital experience?
Christian: Digital is becoming the primary experience. Digital natives have developed tremendous personalization and reset customer expectations. Everyone else needs to catch up
The rise of digital channels means that customers have more options than ever for where to shop, and every time a consumer is exposed to an improved digital experience, their expectations for all experiences are reset to a new higher level. And personalization is the same. Consumers are experiencing improved personalization, which means for a brand's digital experience to be successful, it needs to be personalized. Personalization also helps brands build and deepen relationships with customers, so it is key to making a brand's digital experience stickier.
Kristina: How can brands use personalization to give their shoppers, or readers in the case of publishers, a more relevant experience?
Christian: Relevance requires personalization. And higher degrees of relevance require higher levels of personalization. Amazon, for example, was one of the first retailers to personalize recommendations within search results by using data on past purchases, browsing and what other users have been buying. Other brands like Netflix and Stitch Fix also use personalized recommendations to create a more relevant experience. Companies are increasingly using data and automation technology to personalize experiences through everything from surfacing more relevant search results to tailoring marketing communications and promotional offers.
Kristina: When personalization and experience are done well, what is the benefit to merchants and brands?
Christian: A personalized customer experience increases customer engagement, brand loyalty and customer lifetime value while also supporting customer retention. Acquiring customers is costly, so prioritizing value and retention has a significant impact on a brand's bottom line. Additionally, when integrated with a company's promotional strategy, individualization enables even higher relevance resulting in higher engagement, more transactions and larger baskets. The net result is higher lifetime value. Moreover, because the offers are more tailored, they are substantially more efficient.
Kristina: What are your top 3 tips for brands to improve personalization?
Christian: 1. Change your mind-set from product focused to a customer-centric approach. The customer experience is critical in building relationships with consumers. Yet most brands still rely on traditional product-centric strategies and promotional offers to drive purchases. Rather than generating loyalty and increasing the lifetime value of a customer, these types of transactional offers create short-term and temporary results.
2. Focus on individual relevance. 76% of customers expect companies to understand their needs and expectations, and that's not possible without data. When you improve customer experience, customers are more than willing to opt in. A loyalty program can be a great way to build this data. With data in hand, leverage AI and machine learning to develop individual customer insights at scale.
3. Implement 1:1 automation and turn insights into $$. Applying automation and the individual insights, brands can create and deploy millions of individualized offers. These offers maximize relevance, customer engagement and business impact - ultimately driving growth, customer lifetime value and more efficient marketing spend.
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