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Getting customer personalization right

Companies are resorting to blunt force marketing tactics. An online retailer says that customer personalization requires more nuance -- and reality-testing.

For many companies, marketing efforts continue to be one-dimensional or unsuccessful.

Marketing departments are still following a principle of more is more in their email campaigns. This focus on quantity over quality is driving away consumers who are clamoring for customer personalization, not a barrage of messages. Despite that fact, between 2015 and 2019 the number of email messages sent is due to increase from 205 billion to 246 billion, according to the Radicati Group's "Email Statistics Report 2015-2019."

To add to that, consumers want quality interactions or they will opt out of the messaging they receive. According to "The Contextual Marketing Imperative" by Forrester Research, of 1,200 consumers and 200 advertising and marketing employees surveyed, 66% of marketing departments reported that they are doing a good job of personalized marketing, whereas only 31% of consumers believe they are. And 40% have unsubscribed because they find the messaging irrelevant, particularly when they are already in a "state of information overload," the report noted.

Customer personalization needs reality-testing

But some companies are trying to tailor their marketing efforts, by using customer personalization and then reality-resting these methods with qualitative and quantitative research.

That's why the Gilt Groupe, an online flash-sale retailer in New York City, blended A/B testing of website recommendations, online feedback and interview research to understand what was desired from customer personalization efforts.

You can cross the line to sound like a stalker if you get too extreme with [customer personalization].
Bill KinnemanThe Gilt Groupe

"We literally had 2,500 flavors of email, depending on your previous interaction with us," Bill Kinneman, senior director of marketing analytics and customer insights at Gilt, said. "But we didn't know how it was being received. ... Knowing the feel and the experience from the customer's perspective was something that we were largely blind to before we did this research."

Kinneman also noted that Gilt Groupe wants to travel a careful line: Showing customers that the company knows them through their data, without being intrusive or creepy in its marketing approach.

"You can cross the line to sound like a stalker if you get too extreme with it," Kinneman emphasized. Customers, for example, may have purchased a baby stroller as a gift, then received recommendations for baby items thereafter; these customers want to opt out from these kinds of irrelevant recommendations. As a result, Gilt Groupe ran pilot programs to reality-test its methods. It built its website algorithm to incorporate customer feedback on its recommendation engine and built more dialog boxes on the website.

Kinneman said companies also need to regularly refresh their customer personalization efforts and use quantitative and qualitative methods to understand whether methods continue to resonate with customers. "These could be the wrong answer by next year," he said, adding that while personalization is "sweeping the entire industry," it is overshadowing individual company business models and the need to understand one's own customer base.

Ernan Roman, founder and principal at ERDM Corp., also shed light on some of these findings by discussing his Voice of Customer research and the Gilt pilot projects. "People are willing to provide information to brands they trust. The stronger the trust, the stronger it serves as an offset to data privacy concerns," he explained. Roman also discussed a privacy pyramid, in which companies have to satisfy basic levels of trust first; then as they deliver on basic levels, customers are willing to cede personal information in return for valuable offers and information.

For more, check out the podcast above and also check out ERDM Voice of the Customer research.

Next Steps

Customer engagement builds customer loyalty

Personalization is key to closing sales

Personalized marketing is about customer trust

This was last published in March 2016

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