Marketing Personalization 2.0

I was doing some research over the past week related to best practices for shaping customer-brand experience, and it made me think more about the state of marketing personalization.  The whole point of marketing is to build a relationship between a customer and a brand through which both the customer and the company behind that brand derive benefit.  It is a direct, one-on-one and mutual commercial exchange; for the customer, the brand is experienced at a very personal level.  In fact, we may aggregate data about brand perceptions for larger populations, but the basic unit of measuring brand experience remains something that occurs at the individual level.

That’s why “[e]xperiences need to be designed for individuals,” advocates Bruce Temkin, Forrester Research’s principal analyst for customer experience in his blog-published book, The 6 Laws of Customer Experience.  “While it may not be possible to individualize every interaction, focusing on narrow segments (like Personas) is critical.”

Yet so much of marketing practice and technology infrastructure seems to focus on de-personalizing and scaling marketing communication to as large of an un-segmented population as possible – a trend decried by marketing pundit Seth Godin.  We extract the individual and disregard his/her personal experience.  We engage in shotgun marketing.  Why is that?

I’m not saying that as a marketer we shouldn’t attempt to reach a scale audience.  Quite the opposite, we should absolutely shoot for scale, but I’d argue it’s how we build that scale that is critical.  We need to do it one customer at time … which is the point of personalization.

How can we make both scale and personalization co-exist as hallmarks of every marketing program?

Let’s pursue this question in three parts:  (1) examining normative approaches to personalization, (2) considering insights from mass customization research and (3) exploring the technology platforms that promise to help us connect more personally with our customers.

    

How can we approach the topic of personalization in marketing?

One way to look at personalization in marketing is through the context of the degree of customer engagement.  On one end of the spectrum, the customer tells us when, where and how (s)he wants to interact with our marketing programs; on the other end of the spectrum, we anticipate when, where and how to market to market to customers without any input; a third option would be something in-between.

     

> Customer-defined personalization; Chinese menu:  One option in any marketing strategy is allowing the customer to tell us what (s)he does/does not want.  How simple, right?  Seems straightforward, but this approach can have unintended consequences.  First, this approach assumes a high degree of customer engagement, which can be difficult.  Second, it assumes that you are able to offer the customer a ‘Chinese menu’ of channel, communication and configuration options for your marketing.  In fact, customer-defined personalization can wind up limiting your opportunity to market to, and thus to grow your business with, that customer.

  

> Anticipatory personalization; customer scenarios:  The opposite approach is one we might define as ‘anticipatory personalization’ of marketing activities.  Patricia Seybold, a technology-industry analyst and recognized thought leader in CRM technologies, frames this approach in a May 2001 Harvard Business Review article.  She noted, “We live in a time when customers are under unceasing pressure to do things more quickly, to cram more into each day.  By thinking broadly about the challenges your customers face, rather than narrowly about what you can sell them, you can almost always find ways to make their lives easier.  That, more than anything else, will earn you their loyalty.” 

  

  

As an approach to doing so, she advocates analyzing customer needs in terms of what she calls ‘customer scenarios.’  “By building a detailed understanding of common customer scenarios, a company can often find creative ways to expand its reach into the lives of buyers, helping them save time, use products and services more effectively, and fulfill supplementary needs that may not involve the company’s offerings at all.  In delivering such benefits, the company becomes a vastly more important – and much more indispensable – supplier to its customers.”

  

> Hybrid personalization; collaboration:  There is something in the middle.  Can’t we find a happy medium where we both engage customer input on marketing preferences and also use customer scenarios to achieve some level of scale and aggregation?  Yes, and we see this happening in more and more venues — increasingly facilitated by technology platforms that enable collaboration between customer and brand for marketing personalization. 

A prevalent B2C example can be seen on the Amazon Web platform.  The vast majority of content on this site is customer-generated; moreover, product suggestions, ‘up-sells,’ targeted offers and other marketing activity are all customer-mediated.  The information provided by the customer, together with his/her purchase history and privacy settings form the context for a customer scenario, which Amazon’s platform uses (via complex algorithms) to match customer to marketing activity.

This type of hybrid personalization of marketing is increasingly occurring not only in B2C but also in a B2B context.  A recent profile in US Banker magazine of Barbara Goodstein, chief marketing officer and chief innovation officer for AXA Equitable, details her company’s investments in marketing technology infrastructure that have enabled it to be more targeted and personalized in its marketing to customers.  “She has built an automated platform that allows salespeople to send customized marketing messages to their clients by email and postal mail with a few clicks on the keyboard.  The return has been huge: for every marketing dollar spent, Axa calculates that customers have come back with $5.36 in business,” noted the article.  The article also talked about a new project, code named the ’Personas Project,’ that her team is developing.  It “… will create new and improved Web sites for financial advisors, complete with product recommendation tools similar to those used by Amazon.com,” noted the article.  These tools will help Axa better personalize its marketing to end customers by better arming the channel that serves those customers.

    

What insights can we apply from ‘mass customization’ research in approaching marketing personalization?

Mass customization as a topic is often discussed in the context of manufacturing and delivering customized products and services, but shouldn’t marketing be just as sophisticated — if not more so — in tailoring offerings to the needs of the customer.  The goal in a marketing scenario is analogous to that of a manufacturing scenario — wanting to accomplish customer-centric customization of engagement but on a scale level.

Operations research on the topic of mass customization is, in fact, quite instructive in thinking about this topic and helps us frame our thinking.

Paul Zipkin, a professor at the Fuqua School of Business at Duke University, published a thoughtful piece in 2001 in the MIT Sloan Management Review.  He identifies the three main elements of mass customization:  “Mass-customization systems have three key capabilities:  elicitation (a mechanism for interacting with the customer and obtaining specific information); process flexibility (production technology that fabricates the product according to the information); and logistics (subsequent processing stages and distribution that are able to maintain the identity of each item and to deliver the right one to the right customer).  Those elements are connected by powerful communications links and thereby integrated into a seamless whole.

“Examining elicitation, process flexibility and logistics more closely reveals the difficulties companies can encounter when they attempt to master the capabilities critical to mass-customization systems.”

Translating this to marketing activity, the steps are clear:  (1) knowing who we’re talking to, (2) modulating when, where and how we talk based on that knowledge of who we’re talking to and (3) ensuring that our custom message/offer makes it via the right channels to its intended recipient.

    

What technologies can help us better personalize marketing?

The good news is that personalization is an increasing area of marketing-technology development — especially when it comes to demographic and ethnographic profiling of target customers and brand communities.  The bad news is that the track record of personalization is not as strong as it should be.

  

> Customer relationship management (CRM) / sales-force automation (SFA) platforms:  The most basic, mature and widespread tools for marketing personalization — cited in the Axaexample, above — come in two flavors:  either making sure the sales person gets the customer’s name right (a.k.a., SFA) or making sure the e-mail/direct-mail piece gets the customer’s name right (a.k.a., CRM).  I am over-simplifying – I know – and this is not intended to be dismissive of the roust capabilities of CRM and SFA platforms.  But knowing who you are sending an offer to, and signaling to the recipient that you know who you are sending the offer to, is a huge step in improving the effectiveness of marketing. 

CRM and SFA platforms are the keys to getting this right, and the community of technology providers in this space includes:

• Robust CRM/SFA suites:  Pivotal CRM, SalesForce.com, SugarCRM
• Integrated business suites that include robust CRM/SFA:  Lawson Software, Microsoft (Dynamics CRM), NetSuite, Oracle, SAP

  

> Intelligent, integrated marketing management platforms:  First, what I just described – i.e., such ‘intelligent, integrated … platforms’ – do not really exist … yet.  Second, the point is that it’s important to go beyond a basic level of personalization and to be more ’semantic’ in the customer dialogue.  I’m not saying that traditional CRM/SFAplatforms are not capable of doing more, but there’s more to be done.  Is the name customized, or is the entire e-mail message customized?  Is the sales person guessing that the products/services recommended are a good fit, or does (s)he actually know they are.  And can personalized marketing, and a personalized customer-brand experience, be maintained cross-channel?  To achieve ‘marketing personalization 2.0’ in the current age, a basic CRM/SFA platform is not enough. 

Robust, intelligent, integrated marketing management does not yet exist in any single platform – i.e., it still requires cobbling together technologies for a company to build such an enterprise platform.  There are two interesting areas of development, though, that I believe will power future intelligence:

 

• Predictive analytics platforms:  These platforms enable marketers to predict future customer choices based on past behavioral patterns.  They are driven by complex algorithms and underlying statistical models.  The plus is that they deliver tremendous, customer-insight-driven marketing capabilities, especially around marketing personalization.  The drawback is that, today, they are complex to implement; however, the two leaders in this $1.4 billion market (according to IDC in a June 2008 TechWeb article) – SAS and SPSS – are working to change that.  I also recently ran across an interesting, emerging effort to better marry predictive analytics to personalized marketing via a new alliance between much-smaller competitors ATi and Integrato.  A press release on this relationshipnotes, “ATi’sunique predictive analytics engine powers the Integrato direct marketing delivery solution for precise, personalized marketing communications. The new solution uses ATi’s proprietary technology to accurately predict in real-time who to target for what product or service and when, with automated customized fulfillment of the communication. The revolutionary product will define the optimal media to use for the best possible return on marketing investment using one-to-one communications, whether by email, dynamic direct mail or call center interaction.”  I don’t know how revolutionary their product is, but I like where they’re going with it.

 

• Cross-channel marketing execution management platforms:  These platforms – still very much evolving as a technology space – enable continuity of program objectives, execution, experience, personalization and metrics across numerous channels.  An emerging leader in this space is Neolane.  “More than 100 of the world’s most innovative marketers including Accor Hotels, EMI Music, Sephora and Virgin Megastores use Neolane to improveeffectiveness and drive revenue via cross-channel, personalized marketing,” according to a company press release.  Another emerging player in this space, ADRevolution, has multi-channel technology that “… dynamically targets individuals with customized marketing messages, allowing people to select which ads they prefer and to reject the ones they don’t enjoy,” also according to a company press release.

  

> Mobile marketing platforms:  “… [T]he mobile device has become an extension of the body. Consumers keep it with them all the time: at the office, at the movies, watching TV – even while they sleep,” asserts mobile marketing firm HipCricket in a piece on its Web site.  In fact, this was the topic of another piece I published about two weeks ago that examined the ‘mobile’ nature of brand communities and how mobile marketing technologies can improve management of relationships between brands and their brand communities.  I won’t duplicate what we covered in that piece, but as an extension of that dialogue, it’s worth noting the role that mobile marketing can play in marketing personalization.

Rob Dalgety, communications director at Mformation, commissioned a recent survey of mobile users in the US and the UK.  “The survey … found that, while consumers want to use more mobile applications and services, these need to be tailored more closely to the needs of each user. Respondents indicated that they want a more personalised (sic) mobile experience …,” Dalgety notes in a recent blog post. 

Customers want personalization, and they look to their mobile devices to deliver it.  The potential for marketers to take advantage of this context is significant.

  

> Social-media/social-networking marketing platforms:  I’ve also written on multiple occasions on this blog about the role social-media/social-networking can play in improving one-on-one communication between customers and their brands.  The challenge is managing that interaction – keeping it one-on-one, but also enabling it to be conducted on a scale basis as a strategic component of your marketing programs.  This is an emerging area with technology capabilities developing both within communities, such as Facebook and LinkedIn, as well as via external technology providers.  One such example of an external technology provider is Satmetrix, which seeks to power dialogue in a social-media/social-networking setting.  The company notes in a press release, “Satmetrix for Communities enables companies to movebeyond treating small segments of customers as isolated marketing focus groups to having a full ongoing interactive engagement with thousands of customers, influencers and prospects. Companies can tailor the user experience based on customer interest and/or segmentation.”

   

What’s next?

This dialogue is just beginning.  What are your thoughts on personalizing marketing?  What is your company doing to improve personalization?  Please share your thoughts.

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