Debunking the 5 myths of personalization: Part 1

Profile picture for user Neil Capel By Neil Capel March 1, 2015
Summary:
In the first of a two-part series, Sailthru CEO Neil Capel dispels myths of personalization that hold back marketers from effective customer engagement

Neil Capel CEO Sailthru 250px
Neil Capel, Sailthru

Even for the most tech-savvy of marketers, personalization is a confusing topic. No one seems to agree on what exactly ‘personalization’ means.

To one marketer, personalization is using a customer's first name in the subject line of an email blast. To another, nothing short of a single customer view coupled with algorithmic recommendations specific to every individual user will do. It’s that wide of a spread.

Personalization is prone to misperceptions simply because the technology behind it has changed so dramatically. When I think about some of the biggest myths about personalization, the reality is that as recently as three to five years ago, they weren’t actually myths at all. They were true.

In this two-part series I’m going under the hood of the five most glaring myths about personalization as I see them:

  • Personalization is all or nothing
  • Personalization at scale is far too costly
  • Personalization is a “nice to have”
  • Recommendations and predictions are the same thing
  • Personalization only drives short term conversion

To reiterate - none of these are true - and I’ll go into why. The bottom line is that every business needs to know that today more is possible, more easily, than ever before. More than half of marketers at companies with $500 million+ in revenues are working to personalize key phases of the purchase process; only 14 percent say they're not doing personalization at all.

Let’s dive in:

Myth: Personalization is all-or-nothing

Reality: Personalization is a continuum. Most companies are somewhere along the path

When I talk about the promise of personalization, I hold up examples of brands that are delivering true 1:1 personalization: they're the ones reaping the greatest benefit; the ones that show that it’s possible to drive a 20% increase in customer lifetime value and millions of dollars of incremental revenue.

Yet no company is using a batch-and-blast approach on Monday only to flip a switch to master personalizing every aspect of the customer experience on Tuesday. Going from zero to sixty is not realistic and quite honestly not advisable. As they say, test, test, test.

An effective strategy requires that data from multiple channels goes through one platform, but most brands are using piecemeal solutions and can’t integrate their data or tap into it in real-time. To be successful, they really need  a familiarity and facility with all that data, which also seldom happens overnight. Like many technological advances, personalization has its own maturity and learning curves, and everyone is at a different stage.

More than anything, personalization must be looked at as a growth opportunity, one that falls in line with any comprehensive testing and optimization strategy. A marketer might start their journey with personalized email templates, ideally where the content is determined by a user’s actions across all channels, interests and other factors.

For an ecommerce company, personalized email is proven to deliver more revenue; for a media company, it means more pageviews and increased time on site. Once those templates start to deliver lift and ROI, an organization might be ready for the next part of the strategy, which could be personalized send times for email.

Personalization in on-site might be next, or mobile, in-store or social. The sequence is unique for each brand. What’s more important is that brands get on the path, and commit to forward momentum as they expand based on long-term revenue gains, not short-term improvements in campaign metrics (i.e. opens, clicks).

Myth: 1:1 personalization at scale is far too costly

Reality: Personalization at scale is happening today, and it’s efficient both in terms of time and money

Businessman magnifying glass Individual customer service and CRM concept © Jakub Jirsák - Fotolia.com
If you're using legacy technologies, personalization at scale really isn't possible – it can be incredibly expensive, time consuming, and inefficient. Legacy technology houses data in relational databases and employs rules to govern them. To create 1:1 personalization, you'd need a unique rule for each individual. Few brands can afford that, so they end up with a veiled segmentation approach.

But if you're using more flexible technologies, 1:1 personalization, across all channels, at scale, is neither hugely challenging nor prohibitively expensive. Using a flexible database structure, and powering it with algorithms rather than rules, allows the technology to personalize the experience for every individual. Think of this as permutations, not segmentations. Personalization at scale becomes not only possible, but imperative. That's why so many of your competitors are using it today.

Next week I’ll get into some tricky nuances facing personalization today and those that cry out for clarity for today’s executive teams. I’ll get into the very real differences between a recommendation and a prediction (be careful what you pay for), the long-term impact of personalization versus the short term gains, and the overarching myth that personalization is optional still. (SPOILER ALERT: It’s not.) Meanwhile, you can read more of my views on marketing technology on my blog. See you next week.

Image credit: Magnifying glass concept © Jakub Jirsák - Fotolia.com; headshot by Sailthru.