This blog was created in tandem with a recent webinar with our partners at Bloomreach, a leading CDP + omnichannel marketing automation and experience platform that was purpose-built for the marketer. To dig in on this topic further, be sure to check out the webinar recording on demand.
Make sure you are thinking about data and personalization from the proper lens.
When embarking on this journey, most brands look at the data or technology they have and create customer experiences based on what data is available, or what limits to their technology exist. Instead, brands should decide on the personalized customer experiences they want to activate and collect the data needed to activate those experiences. This particularly applies to personalization. We call this approach “flipping the data pyramid.” If you can imagine in a pyramid, data is the base with decisions/experiences being the tip of the pyramid. Flip that, decisions and customer experience are now the foundation of the pyramid and data powering personalized experiences are at the tip of the pyramid.
Flip the Data Pyramid: let your customer experience journey drive the data collection strategy.
So, once a brand has shifted their mindset and defined the personalized experiences they want to create for the customers, how do they collect the data?
This is where a Zero-Party Data (ZPD) strategy can help fill in the gaps in your data profiles, and the best thing about this type of data is that it is obtained directly from your customers. Forrester defines ZPD as “Data that a customer intentionally and proactively shares with a brand. It can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize them.”
ZPD solves the privacy vs. personalization paradox by providing transparency around the value that a customer gets in exchange for their data. When customers are enabled with the choice, and then choose to share their data preferences, it ultimately creates a more convenient and faster experience for them, as well as the potential for more accurate data for the brand.
Four Keys to Up Level Your Customer Experience Strategy
1. Understanding your customers and their needs
Consumers expect brands to know them on an individual basis. Questions a brand should ask when developing their personalization strategy may include:
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- What is the urgency of their need state?
- What are their emotional and functional needs?
- What activities must they engage in to fulfill their needs?
- How will their needs change and evolve in the future?
Understanding the answers to these questions will help brands gauge consumers’ personal receptivity and inform their customer experience and personalization roadmap.
2. Respecting privacy
Can privacy and personalization exist in the same space? Or are they mutually exclusive? KPMG released a study on the topic of corporate data responsibility. What they found from business leaders is:
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- 70% of business leaders say their company increased collection of consumer personal data over the last year
- 33% of business leaders surveyed stated consumers should be concerned about how their personal data is used by the company
From the other perspective, here’s how the general population responded:
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- 86% say data privacy is a growing concern for them
- 68% are concerned about the level of data being collected by businesses
- 40% don’t trust companies to ethically use their data
What this says is there is a strong correlation between the increase of data collection and consumer distrust. So how do brands combat this?
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- Ensure a strong data governance process is in place, and use the data collected responsibly
- Strategic content and messaging that provides relevant value to the consumer – without the flags
There are ways brands can tailor messages to create an in-the-moment experience, without explicitly stating what data they know about you. For example, new cars are becoming smart phones on wheels and generating enormous amounts of data. They can collect data on driving patterns, maintenance needs, destinations, what music you listen to, etc. If I fail to schedule an oil change when I hit the mileage limit, I may be leery to see a message from my dealer telling me that I hit my threshold without having a future service scheduled. Instead, they can put a nonobjective, positive spin on the message by promoting the benefits of not skipping required maintenance and how regularly scheduled oil changes can extend the life of my vehicle.
3. Technology Matters
Tie all the channels together. The strongest digital brands understand that technology plays a critical role in creating a seamless experience across channels. It’s important to make sure your systems are fully integrated and pertinent customer data is available across systems where a customer may engage to create that connected experience.
4. Test and Learn
Ultimately, the goal of implementing personalization is to have valuable impact on customer behavior and drive additional revenue. Personalization is a proven strategy for increasing spend and maintaining loyalty. Brands that are succeeding in delivering personalized customer experiences rely on data and analytics to identify opportunities.
Personalization strategies are not one size fits all. Brands need to build out a robust test and learn strategy so that they can measure what does and doesn’t move the needle for their customers. Test out different levels of personalization to see what resonates for your customers, or what may not be working to impact your customers’ behavior.
There are many different segments and personas that consumers fit into, what’s your take on 1:1 personalization vs creating experiences that impact more of a business consumer basis?
Personalization vs Personal Experiences: What’s the difference?
- When specific data points are used to show you know someone, it’s personalized. When the full experience context is taken into consideration and used to show you know someone, it’s personal.
Typically, we see segments and personas built based on first-party data, like historical transactions, and third-party data demographic appends. While these are powerful data points, they are not necessarily the only indicators of future behavior.
Here is a real-life example: As a mom of young kids, I have been purchasing multiple boxes of diapers every month for the last 5 years. When the retailer I buy from looks at my profile from a persona standpoint, they will see that I have a presence of young children in my home and that my transactional profile consistently shows I buy baby category products.
A personalized message to me will use these data points to show they know I buy baby products and therefore display a promotion on wipes and diapers, or they may even attempt a cross sale into other products or higher margin products. This may seem like a decent strategy, but the downfall with this approach is that the personalization will need to evolve with me, as I will not always need to buy diapers. In fact, we are very close to no longer needing diapers. How would a brand know this without having important details like my age and number of children?
A sophisticated brand will consider the full experience and use segmentation, transactional data, and combine with ZPD to create a personal moment. This can be done through a preference center or household profile, where I can enter information on my shopping preferences, or even the ages of my children and their clothing sizes. Details about my children are very personal, so there needs to be a clear and transparent value exchange in order to provide this data.
Back to how to up level customer experience. Once a retailer has my information, they can then create a personal experience for me. That may look like a communication acknowledging that my family is about to reach a huge milestone and graduate from diapers into potty training. It may offer tips and tricks on how to potty train or recommend products for this new phase. Messages such as these show that the retailer knows where I am at any given moment. At that point, it is not just adding personalization but enabling personal experiences.
Debunking the myths around personalization:
- When is it too much or too personal?
Data should be used responsibly. In the scenario discussed earlier about using a household preference center, brands should use sensitive data around children, family, or health details with care. You do not need to display every data point I have provided on a child in an email to incentivize me to make a purchase, but instead use the data points contextually.
- Should 1:1 personalization be the ultimate goal?
The goal should be to impact customer behavior and drive revenue. Brands need to test what works to move the needle for their own individual KPIs.
- We don’t have enough data to understand our consumer
Again, it isn’t always the quantity of data, but the quality. Identify what data is critical to the brand’s customer experience journeys and focus on going deep vs wide. Then, implement ways to gather deeper profiles on the most critical data.
- It’s too difficult to do it well
There are multiple studies published reiterating that personalization is a proven and effective strategy to drive performance.
McKinsey Study “Next in Personalization 2021 Report” found that
“Personalization drives performance and better customer outcomes. Companies that grow faster drive 40 percent more of their revenue from personalization than their slower-growing counterparts.”
- We don’t have enough content to do personalization
Oftentimes, the tactic ‘start small’ applies to a lot of the challenges marketers face. Starting small and scaling when appropriate gives marketers the opportunity to be nimble and reactive.
Your journey to personalization may start as a 1-to-many approach and evolve to 1-to-few before you can get to 1:1 personalized experiences, and that is OK. Personalization can be an iterative process.
You may find the more complex the strategy is when you launch, the harder it is to react and enable change, or the longer it takes to implement and realize ROI.
- It’s hard to measure so we can’t make it a business priority
Focus on collectible metrics. Data privacy landscape is changing rapidly, whether it’s death of the 3rd party cookie, or changes to Apple Mail iOS tracking. What this means is that brands are having to rethink measurement and instead of focusing on what isn’t available, focus on what is available. This may be a shift from micro to macro and your measurement may not be in opens or clicks, but overall increases in revenue.
From your experience, how do personalization strategies differ across industries? OR, is the methodology essentially the same?
The considerations we discussed earlier apply to all industries. The differentiator is how the content and messaging are applied. That can absolutely differ across industries.By nature, some industries like healthcare, insurance, and finance are highly regulated and hold a deeper level of personal information. The content strategy in these industries must uphold privacy and ensure trust is not broken.
Recently the North Texas area experienced a wave of Tornadoes that did a lot of damage and destroyed many homes. I received a personal mobile push message from my home insurance provider. The message stated “Our thoughts are with you after the devastating tornadoes that impacted the state. If you need to file a claim, please click here. This is a great example of a personalized moment created by a highly regulated industry. They created the right mix of empathy in the message content combined with anticipating a customer’s needs in the now.
A few key questions to ask yourself in determining where your industry or category falls on the data acknowledgement spectrum are:
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- What are the potential pitfalls to avoid? (Are there any PR concerns? Any cultural sensitivities? Any laws or regulations)
- What are the safest data territories to explore in the creation of personal experiences or personalized touch points?
