Personalization is not dead - but it does need an overhaul

Profile picture for user barb.mosher By Barb Mosher Zinck February 28, 2020
Summary:
Is personalization dead? Gartner made that claim. The truth is that brands struggle with personalization, but there is also progress on how to get it done. Here's what my latest round of interviews revealed.

reality check

Gartner stirred up a lot of conversations around its announcement of the death of personalization within the next five years.

The research firm isn’t wrong in saying there are challenges to doing personalization well, and brands are struggling. But personalization isn’t going anywhere; how we think about it and implement is what is going to change.

In its report, Predicts 2020: Marketers, They’re Just Not That Into You, Gartner says this:

Eighty-seven percent of marketing organizations are currently pursuing some level of personalization, requiring an in-depth understanding of customers to effectively execute.

And then this:

By 2025, 80% of marketers who have invested in personalization will abandon their efforts due to lack of ROI, the perils of customer data management or both.

Are brands doomed to fail at delivering truly personalized experiences that consumers appreciate?

All the ways we personalize the experience

The term personalization means different things, and there are different types - or levels - of personalized experiences.

Garin Hobbs, Director of Deal Strategy at Iterable, a multichannel customer engagement platform, defined personalization as a meaningful and value-based experience that puts the customer first.

Oz Etzioni, CEO of Clinch, a creative personalization platform, defined personalization as helping brands communicate in the most relevant and specific way.

If you think about the different levels of personalization, you see where the challenges occur.

First, there’s what Hobbs referred to as table stakes. Table stakes can include doing things like:

  • Personalizing emails with the person’s first name
  • Recommending products based on browsing behaviors and past purchases
  • Changing the message or offer according to location or time of day.

The next level of personalization Hobbs said marketers need to get to is the one that tends to have a bigger impact: the context of personalization. It deals with understanding, “Why did I buy this item. What does that mean to me personally?”

We don’t all buy a product for the same reason; each of us has our own context, and the marketer’s job is to provide the virtues, qualities, and benefits of that product according to each consumer’s context.

Hobbs said that one type of personalization isn’t more or less important than another, but that different types provide different levels of value and degrees of difficulty:

Understanding where we are in the moment, what these things mean to us in the moment, and the particular value of your product, service, or bit of content, contextualized to the individual, I think that’s what personalization means today. And it’s becoming increasingly important.

For Etzioni, there are three levels of personalization:

  1. A general level is at the segment, media, or DMP level.
  2. Advanced personalization that uses preferences, engagement, and behavior data.
  3. Environmental, situational data like time of day, weather, or location.

Etzioni said that together, 2 and 3 make a powerful combination. Unfortunately, most marketers are still stuck at number one. He also said that marketers need to stop looking at personalization as a gimmick. “It’s not a tactical move for PR and awareness.”

Instead, Etzioni said that personalization is part of a holistic view of marketing strategy. Often, marketers talk about creating omnichannel personalized experiences, but more often, it’s multichannel, rather than true omnichannel. That said, marketers know they have to move forward, especially those in retail, explained Etzioni.

Can you personalize well on a segment level?

One thing I was curious to know is whether it’s okay to personalize at a segment level, or if a one-to-one contextual experience is necessary. Hobbs said it comes down to what you are marketing. He said some things could take a more generalized or segment-based approach. But there are also ways to personalize within a broader segment. For example, a group of people can all get a breaking news email, but you surface headlines within that list of breaking news that are similar to other news stories each consumer has looked at.

Hobbs said it shows a level of disrespect to send everyone the same message. Brands need to treat consumers as people, or as an audience and take the steps required to personalize. You don’t have to do it all at once, either. Working in iterations allows you to consistently improve the experience and bring a level of excited expectation from the customer.

What makes personalization hard?

Hobbs said data is the new gold (he isn’t the only one saying this). And it’s the trickiest part because you have to collect it, clean and parse it, derive insights from it and execute on it. Marketers struggle because the data has to help them create the right experiences across many channels and touchpoints, all contextualized to each individual.

One of the challenges with data, according to Hobbs, is that brands are dealing with legacy systems that weren’t built for personalization. As a result, they are playing catch up and often missing the mark because the data they need to use isn’t structured in a way that supports personalization. He mentioned new breeds of solutions that leverage structured data and APIs that make the technology part of personalization easier and helps put it in the hands of the marketer directly (less reliance on IT to help).

Etzioni said that many brands are missing the middle component of the tech stack, the technology that can help them activate and execute on their data. He said brands need to be able to look at the data and understand it in milliseconds and know what to do. People can’t do that; technology can.

The type of data is another consideration. First-party data is the holy grail, Etzioni told me, but it’s not always required to create personalized experiences. He said that the type of data you need depends on the campaign objectives. Many global clients know consumers buy from them, but they aren’t sure why. The goal is to understand the audience, and you don’t need the data upfront to do that. If you continually test, you can build more precise and granular audiences that are relevant.

Something else Etzioni said that was interesting is that you don’t need to know who the consumer is to personalize the experience. You need to know their behavior, past and present to figure out what they want or need. Of course, this requires the use of cookies, something Google is putting an end to. And then there are ad blockers. Both are causing personalization tools, and brands to know less about a consumer from the beginning, and Etzioni said that we would start seeing less relevant ads because of these changes.

Brands can resolve the challenges brought on by losing cookies and fighting ad blockers, but it requires building a relationship with the consumer that is open and transparent. Consumers will become open to building profiles that share their preferences, including saying what kind of ads they want to see and how they want their experiences personalized if they trust the brands they want to buy from.

But technology is only one challenge. You can bolt on personalization technologies and still not see change. Hobbs said that’s because brands need to change their approach. Successful personalization strategies require a shift in how you communicate with your customers. It also requires a cultural shift inside the organization as well as a shift in your processes.

That’s the biggest part that providers [of personalization technologies] or marketers themselves don’t do the best job of preparing themselves for. The philosophical and operational shift that has to happen in order for folks to extract the maximum potential and opportunity from platforms such as Iterable.

Get on the right track to prove personalization works

I asked both Hobbs and Etzioni their recommended approach to marketers and brands to move towards personalized experiences.

Etzioni offered five pillars:

  1. Get your data in order (CDP, DMP, data partners).
  2. Define your goals in terms of channels, audiences, consumers, and so on; are you focused on retaining or acquiring customers?
  3. Find an omnichannel partner who is the right fit for your goals and long-term strategy.
  4. Get your partners synced and build clear lines of communication, including technology, creative, data, media, and other partners. This pillar is often the hardest Etzioni told me.
  5. Involve your personalization tech partner from the conception stage to ensure alignment with process, assets, and goals.

Hobbs provided five steps, as well:

  1. Decide it’s necessary. You can’t compete on product alone. The advantage to the consumer is the flexibility of choice, which means brands are compelled to personalize the experience to stand out among the choices. Hobbs also explained that consumers can only absorb so much information, which means marketers need to find ways to reduce the noise to signal ratio and resonate with a consumer.
  2. Make the commitment to see it through. Figure out the operational and procedural shifts required, which includes technology, but isn’t the technology alone.
  3. Get everyone involved. Teams are still siloed, and there are still disparate data channels, Hobbs said. You have to bring down the walls and get people working together.
  4. Innovate and test. Try new things; change the way you work. Personalization platforms can automate a lot of the mechanical aspects of campaign production, which means the marketer can work on the transformative aspects of their personalization strategy.
  5. Stay the course. Too many marketers look at the ROI and don’t find the value in personalization. Hobbs thinks this is the wrong way to look at it. He said personalization can’t be a campaign level performance-boosting element. It’s a way of thinking and operating - a convent with the consumer.

Hobbs:

Look at ROI over the entire year. Did it maintain? That’s a win. The fact that you didn’t lose ground in an era where some of the biggest names in retail are failing on a somewhat daily basis, that’s an enormous win. And if you gain, that’s an even better win.

How you determine ROI may need to change as well. Etzioni suggested doing things like comparing control versus personalization, measuring brand recall, foot traffic in the store, using questionnaires and forms, and other tactics. He said that determining ROI is less about measurement and more about the ability to execute. Brands think personalization takes too much time and effort, but the opposite is true when you combine the right strategy with the right technologies.

My take

The Gartner report notes that many reasons for the failure of personalization, including data and personalization technology, as well as privacy and trust issues.

The truth is we can find all kinds of reasons why personalization won’t work. But if brands want to be relevant and cut through all the information consumers see every day, they are going to have to figure out how to resolve their challenges. It will start with understanding who their customers are and what they want to achieve. There are brands doing a good job delivering personalized experiences, so we know it can be done.

Image credit - Conceptual hand writing showing Reality Check Ahead, by @ArturSzczybylo from Shutterstock.com