Analyze, Personalize, and Profit

June 21, 2010

Is your company targeting customers with personalized marketing emails and web content? It should be. The reason is simple: Customers like it.

A new study by Forrester Research for email service provider e-Dialog, based on a web survey of 2,000 users in the U.S. and U.K., revealed strong consumer preferences for personalized emails. Customers want emails that reflect:

  • Products and services I like (64% of respondents)
  • Offers I like (61%)
  • Whether I’m a new or returning customer (54%)
  • My communications preferences (47%)
  • My name (39%)
  • My shopping habits (e.g., online, in-store, via print catalog) (36%)

The Forrester survey was in line with similar studies on the power of personalization conducted over more than a decade. Invariably, these studies have found that marketers who meet consumer expectations for email and web content relevant to their interests enjoy substantial boosts in sales, online conversions, and customer loyalty.

If personalization is so effective, why isn’t every company doing it as effectively as Amazon.com? A lack of infrastructure and tools for customer data quality and analytics is the chief culprit. Growth in customer data volume and complexity is another.

A whopping 68% of respondents to a December 2009 Aberdeen Group survey on customer data analytics cited the need to improve customer data capture and quality as one of the top three priorities for their organizations in 2010.[1]

“Unfortunately, when it comes to personalization and one-to-one initiatives, many marketers are constrained by the quality of customer data and an inability to centralize disparate data for analysis,” Ian Michiels, Aberdeen research director, said in a blog post.

The personalization stakes are only getting higher. More than ever, consumers are bombarded by information, from BlackBerries to billboards, from TV to texting. As information overload grows, consumer attention spans diminish. If your marketing email isn’t relevant, the only click-through you may see is on the Unsubscribe line at the bottom.

Degrees of Personalization

It’s important to recognize the many degrees of personalization and the customer data analytics that make personalization possible. There’s no one-size-fits-all personalization solution. The approach and technology selected will depend on company size, industry, line of business and so forth.

Perhaps the simplest, if crudest, form of personalization is simply addressing a customer by name. (Of course, if you’re sending a “Dear Matt” email to a 20-something male that pitches Hannah Montana backpacks, you’ve probably missed the mark).

But many companies are missing out on opportunities for even such basic personalization. For instance, the Aberdeen study noted that even though nearly all email marketing tools have dynamic messaging capabilities to personalize content, only 19% of survey respondents used them.

At the high end, the most sophisticated and effective personalization is based on the systematic capture and analysis of customer data across multiple channels. The use of cookies, or ideally log-in registration, enables you to track the movement of customers across your web site. Tracking such identifiers as email addresses, or in some cases credit cards, can help you size up customer activity on the web, via email, through call centers or direct mail, and in brick and mortar stores.

That data can in turn power Amazon-like personalized web site content and product recommendations based on customer purchasing and browsing activity, both over many months and in real time. And companies engage in segmentation—creating segments of customers for targeting, often based on personal and demographic data.

Building Your Personalization Prowess

Of course, your company can’t become Amazon.com overnight. Amazon’s renowned personalization capabilities are the result of multi-million dollar investments and years of development. But you can get started now on your own path to personalization prowess. Here are some key strategies and capabilities to keep in mind.

  • Make the business case. Assess your company’s personalization strengths, weaknesses and areas for improvement and rapid payback. Back up your cost-benefit analysis with case studies on personalization ROI. Engaging C-level sponsorship that can drive collaboration between marketing and IT is your best bet to getting your initiative on the fast track to success.
  • Size up the solutions market. There’s no shortage of solutions in the marketplace, from basic email marketing tools to software-as-a-service (SaaS) systems that cover email, web site analytics, multi-channel data capture and more. Open source software can be affordable and effective for companies that prefer on-premise IT systems, while top-line vendors offer proven, sophisticated solutions and deep resources, albeit at a price.
  • Start small, think big. Don’t try to boil the ocean. An iterative approach that zeroes in on core personalization touchpoints is likely to pay the greatest dividends. If you’re already doing email personalization, look to expand to personalized web content with recommendations, and targeted search engine marketing or digital display ads. Ultimately, look to integrate multi-channel marketing into a personalized whole that gives customers relevance and consistency at each point of interaction.
  • Test, monitor and improve. It’s difficult to overstate the importance of testing for personalization. The best e-marketers use A/B testing to assess effectiveness of such elements as email subject lines, web site content placement, landing page text, color schemes and more. More broadly, an analytics system is essential to tracking campaign performance, identifying weaknesses, and adapting accordingly.

And the results? They can be off the charts. The web site www.marketingprofs.com recently carried a piece about how Publishers Clearing House (PCH) boosted click-through on its email promotions to an incredible 40% by integrating data generated by customer online and offline activity, and more deeply segmenting its customers.

“We thought we were doing OK segmentation before, but we knew that we were not synergizing channels as much as we could, nor really listening to customer data,” a PCH representative said. After implementing more sophisticated solutions for customer data analytics and personalization, “We saw a pretty immediate 15%—20% lift in click-through rates.” For the full PCH story, see http://tinyurl.com/3xpmp2n (registration required).


[1] Aberdeen Group, “Using Customer Data to Fulfill the One-to-One Marketing Imperative,” February 2010, http://tinyurl.com/2cfnlp2.

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