How to Make Personalization Work in a Privacy-Conscious World

In my last post, I wrote that it's time for marketers to rethink their approach to personalization. The value of personalized marketing has been widely recognized for nearly two decades, and most marketing pundits are recommending that marketers expand their use of personalization. They contend that marketers should make personalization more specific and use it more frequently, in more channels, and for more types of communications and experiences.

The problem with this "more personalization" approach is that it fails to account for widespread and growing privacy concerns among both consumers and business buyers. Personalized marketing will not reach its full potential unless marketers use an approach that addresses these privacy concerns. Simply increasing the use of personalization will be ineffective at best, and may do more harm than good.

Personalization has been the subject of numerous research studies over the past few years, and these studies provide a good picture of what is required for personalized marketing to produce maximum results. There are three major components of an effective personalization strategy.

Make Personalization Useful

The first requirement for effective personalized marketing is that it must deliver meaningful and pragmatic value to the recipient. A 2018 study by Gartner/CEB documents the business value of personalization that is perceived by customers and prospects to be helpful. I've previously discussed this research, so I won't repeat that material here. For a more detailed description of the Gartner/CEB study see this post.

Make Personalization "Relationship-Appropriate"

The second component of an effective personalization strategy is to use a level of personalization that is appropriate for each customer or prospect. By appropriate, I mean that the level of personalization should match the real-world status of the relationship. A message or offer sent to a long-time customer can and should be more personalized than a first outreach to a new prospect.

To be effective, personalized marketing must be based on genuine insights about your customers and prospects. When you take personalization beyond such insights, it becomes inauthentic and will tend to be perceived as presumptuous. Corporate Visions recently conducted a field trial involving this principle, and you can read more about that research in this post.

Get Meaningful Permission for Personalization

Much of the concern about data privacy and personalization revolves around the issues of transparency and control. Many consumers and business buyers aren't confident they know what personal data companies are collecting about them or how that data is used. And many feel they don't have any meaningful control over those data practices.

Several recent research studies have shown how important transparency and control are for customers and prospects. For example, in a 2019 survey of 3,000 people in the U.S., Canada, and the U.K., The Harris Poll asked participants about the importance of several data privacy practices. The following table shows the percentage of survey respondents who rated four transparency and control practices as very important or absolutely essential:

These research findings point the way to the third important component of an effective personalization strategy. In a world where privacy concerns are heightened, permission is critical to successful personalized marketing. If all the research about personalization tells us anything, it tells us that most consumers and business buyers will welcome and value personalized content when it is helpful, authentic, and based on permission that is willingly and consciously given.

So, how can marketers gain this kind of permission? There are three key steps.

Use Personalization "Programs" - In most cases, personalization efforts should be organized into discrete programs, each of which is designed to provide a specific type of value to a specific type of customer or prospect. This approach leads marketers to focus on the purpose of personalized marketing from the recipient's perspective.

Invite Participation - Invite your customers and/or prospects to "subscribe" to personalized content on a program-by-program basis, and reassure them that subscribing to one program won't open the floodgates to other marketing communications.

Be Transparent - It's important to be "radically" transparent in your invitation about the details of the personalization program. The main objective of the invitation is to persuade customers or prospects to participate in the program. So it should include:

• Why the program will be useful and valuable for the recipient
• What personal information will be used, and how the information will be used
• How the personalized content will be delivered (format)
• How frequently the personalized content will be delivered
• The duration of the program
• A clear statement that the recipient has the option to "unsubscribe" at any time

It's About How - Not Whether - to Personalize 

The issue for marketers is not whether to personalize marketing content and customer experiences. The evidence is clear that customers and prospects want and appreciate the increased relevance that personalization can provide. The real issue is how to deliver personalization in a way that respects privacy. By making personalization helpful, authentic, and permission-based, marketers will reap the maximum benefits of personalized marketing.

Top image courtesy of Josh Hallett via Flickr CC.

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Why It's Time to Rethink Personalization

The value of personalization in marketing has been largely unquestioned for nearly two decades. Today, most marketers view personalization as essential for success, and many companies have made personalization a top priority. But the marketing environment is changing, and that means it's time for marketers to rethink their personalization strategy.

In a report published last November, the research firm Gartner predicted that by 2021, one-third of marketers will reduce spending on personalization, and by 2025, 80% of marketers who have invested in personalization will abandon their efforts due to lack of ROI, the perils of data management, or both. These predictions were both surprising and controversial because they run counter to most of the current conventional wisdom about personalization.

While I doubt that eight out of ten marketers will completely abandon personalization over the next five years, it is clear that marketers are already facing a personalization conundrum. On one hand, numerous studies conducted over the past several years have reported that consumers and business buyers want - and are willing to provide personal information in order to receive - personalized offers, messages, and experiences.

But a growing number of studies also show that consumers and business buyers don't always welcome personalized marketing and will react strongly when they perceive that personalization goes too far. In one recent study, for example, 38% of survey respondents said they would stop doing business with a company that sent them "creepy" personalized messages.

Most marketing pundits and many marketing leaders argue that the key to increasing the effectiveness of personalized marketing is more personalization. They contend that marketers should collect and use more data about customers and prospects, make personalization more specific, and use it more frequently, in more channels, and for more types of interactions. The popularity of this view explains why hyper-personalization and personalization at scale have recently attained buzzword status.

The "more personalization" argument is based on the idea that increased personalization will produce more relevant messages and experiences, and that the increased relevance will make those messages and experiences more compelling. The fundamental flaw of this approach is that it fails to account for a significant shift in public attitudes toward personalization that's occurred over the past few years.

The Shadow of Cambridge Analytica

Since the Facebook-Cambridge Analytica scandal became public knowledge a few years ago, we have been bombarded with media coverage about how companies collect and use our personal information. Facebook's data privacy policies and practices have been widely, strongly, and repeatedly criticized, but other large tech firms such as Alphabet/Google have also been the subject of multiple media stories and Congressional hearings.

All of this has made the public more acutely aware of how much personal data companies are collecting and how they are using that data to target and personalize advertisements and other marketing communications.

Note:  The data practices of large technology companies have also been addressed by several highly-respected scholars. If you'd like to see an example of these discussions, get a copy of The Age of Surveillance Capitalism by Shoshana Zuboff. Dr. Zuboff is the Charles Edward Wilson Professor emerita at the Harvard Business School. Her book is thorough and sobering - if somewhat strident - but at over 700 pages, it is not a quick or easy read.

The heightened public awareness is impacting personalization in two ways. First, as members of the public have become more knowledgeable about how companies are using personalization in marketing, they have become desensitized to its effects. They no longer see personalized messages or content as extraordinary. So, many of the more widely-used personalization tactics and methods make less of an impact today than they did in the past. As the old saying goes, "Familiarity breeds contempt."

More importantly, as the public has learned more about how companies are collecting and using personal information, they have also become more disturbed about those practices. Today, when someone receives a personalized message, he or she is likely to think first about what enabled the personalization. What does this company know about me? How did the company obtain that information?

The conundrum facing marketers is clear. Most consumers and business buyers say they want and value personalized offers, messages, and experiences. At the same time, however, both consumers and business buyers are becoming more concerned about privacy, and they are increasingly distrustful about how companies are obtaining and using their personal information.

Under these circumstances, the "more personalization" strategy may do more harm that good. So, what's the alternative? I'll discuss that in my next post.

Image courtesy of Phil Wolff via Flickr CC.

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Four Keys to Strong Customer Relationships

A recent report by Accenture Interactive provides several interesting insights on both the fragility of B2B seller-buyer relationships and what B2B companies need to do to strengthen long-term customer relationships. Service is the new sales was based on interviews with 748 business buyers and 1,499 B2B sellers across 10 countries and 16 industries.

All of the study respondents were directly involved in (or had oversight of) their company's buying or selling strategy or processes. About 75% of the respondents were manager-level or above, and about 25% were C-level. All the companies represented in the research had annual revenues of at least $25 million.

Accenture's report opens with some rather disconcerting statistics. The research found that 44% of B2B buyers had switched sellers in the 12 months preceding the study. The percentage was even higher among buyers who made weekly B2B purchases. Sixty-two percent of those study respondents said they had switched sellers in the previous 12 months. Another 36% of these frequent buyers said they plan to switch sellers in the coming 12 months.

When Accenture asked buyers why they had switched (or plan to switch), the three top reasons - each identified by 25% of the study respondents - were:

• Uncompetitive pricing
• Long lead times for delivery/fulfillment
• Missed delivery dates

This finding indicates that business buyers are a pragmatic group, and it suggests that, before anything else, B2B sellers need to be sure they are getting the basics right.

On a more positive note, half of the buyers interviewed by Accenture said they had increased their average number of items per purchase and grown average purchase values with those sellers who met their needs and helped them succeed.

The Accenture research also sought to identify important attributes and behaviors of B2B "leaders," as compared with "laggards." The report does not provide a precise definition of "leaders" and "laggards," but it does describe how Accenture made the distinction:

"To discern the leaders from the laggards, we weighted responses to 12 questions from the sellers' survey across three key pillars of B2B transformation:  organizational strategy, activities, and infrastructure. To give a robust and accurate picture of the global state of buyer-seller relationships, greatest weighting was given to questions reflecting the objective and measurable elements of B2B sales and service."

With this "definition" in mind, here are some of the major differences between leaders and laggards that the Accenture report highlights.

Personalization - Leaders were twice as likely as laggards to track buyer behavior and more likely to make personalized offers based on "the sum of all behaviors." The Accenture study found that leaders consistently offered greater personalization at all stages of the customer journey.

Digital and Human Interactions - Laggards tended to prioritize digital sales channels over channels with a human touch. Leaders, on the other hand, emphasized interaction channels that provide a dialogue with buyers. This includes digital channels such as chatbots and traditional sales reps and call centers.

Organizational Commitment - Leaders were more likely than laggards to view customer experience as an ongoing work-in-progress rather than as a one-time effort. Seventy percent of leaders said that providing good service and experiences had been a top or high priority in their company for at least three years.

Functional Integration - Forty-eight percent of leaders said they had fully integrated marketing functions across channels, compared to only 19% of laggards. Leaders were also more likely than laggards to have partially or fully integrated their sales and marketing teams.

The Accenture report also highlighted the benefits of being in the leader category. Ninety-seven percent of the leader respondents said they had gained market share, 96% reported higher profitability, and 90% said they had won a greater share of their customers' wallets.

This research also confirmed the importance of blending digital and human-to-human interactions to build and sustain strong customer relationships.

Image Source:  Accenture Interactive

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Where Marketers are Missing the Mark with Customers

The New York chapter of the American Marketing Association has just published a research report that should be required reading for marketers. The Techlash is Here report addresses several aspects of marketing in the world's two largest economies - the United States and China. While the findings about China are interesting, this post will focus on the U.S. results.

The U.S. part of the research consisted of two quantitative surveys and several interviews with marketing leaders. One survey included 502 marketing executives - about 200 from agencies and approximately 300 from brand owners. The second survey polled 508 U.S. consumers. The consumer sample was matched to population data through weighting.

This research revealed two significant disconnects between U.S. consumers and U.S. marketers, one pertaining to social media, and one relating to the appetite for, and concerns about, new marketing technologies and practices.

The Social Media Marketing Bubble

According to Investopedia, a bubble is "created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior." The AMA New York surveys suggest that a different kind of bubble may exist in the social media marketing space.

In the consumer survey, respondents said they expect their use of social media to decline over the next three years. The net change (the proportion of respondents expecting to spend more time on social media minus the proportion who expect to spend less time) was -6%. The survey also found that Facebook use is likely to show no net growth over the next three years, while the use of Twitter, Snapchat, and LinkedIn will decline over that period.

U.S. marketers, on the other hand, plan to substantially increase spending on social media advertising over the next three years. In the marketer survey, social media generated the strongest indication of increased spending (net 68%), followed by web display ads (net 51%) and email (net 47%).

Other research has found a similar exuberance for social media among marketers. In the August 2019 edition of The CMO Survey, respondents said they expect spending on social media to increase from 11.9% of their current marketing budget to 22.5% of the budget in five years.

The Techlash is Here report describes the emerging social media marketing bubble (my term, not theirs) as follows:

"American marketers are overindexing on many social media now and plan to increase spending even as consumer use flatlines or falls off. Currently, the share of ad spend devoted to social media in America . . . is 150% of the proportion of consumer media time they receive."

The Technology Disconnect

The AMA New York surveys also investigated the attitudes of U.S. marketers and consumers about nine specific marketing/advertising technologies and techniques. In this research, between two-fifths and three-fifths of U.S. marketers said they plan to increase their use of every one of those nine innovations, as the following table shows:

A striking disconnect between marketers and consumers becomes apparent when we look at the results of the consumer survey. As the table below shows, none of the nine technologies or techniques is viewed favorably by a majority of U.S. consumers. Four of the nine did receive a favorable plurality by survey respondents, but five of the nine technologies and techniques are viewed unfavorably by a plurality of U.S. consumers.

Once again, the survey report describes the current situation in compelling terms:

"American marketers overrate the perceived positives of marketing innovations:  most expect that U.S. consumers will consistently welcome them . . . On average, nearly four out of five (78%) expect American consumers will agree with each benefit claim we tested. The proportion of marketers who say consumers will agree substantially exceeds that of consumers who do on every one of them - by an average of 27 points."

The Takeaway

The AMA New York research should serve as a wake-up call for marketers. It highlights the risks inherent in getting caught up in the hype that inevitably surrounds new marketing channels, techniques, and technologies. While this research dealt with important disconnects between marketers and consumers, many of the study findings will apply to B2B marketers and business buyers.

Marketers' exuberance for new technologies and techniques is often attributed to the fear-of-missing-out or the shiny object syndrome. This view is overly harsh, but it does contain some truth. FOMO can actually be a positive thing when it motivates us to experiment and test new tactics and tools. But if it isn't tightly controlled, FOMO can also result in bad - or at least ineffective - marketing investments.

The findings of the AMA New York research regarding personalization are particularly noteworthy. As I have previously written, marketers are facing a true conundrum regarding when and how much personalization should be used. In fact, I would argue that the personalization-privacy paradox will be an "elephant-in-the-room" issue for marketers in 2020. I'll have more to say about that in a future post.

Top image courtesy of Artura Pardavila III via Flickr CC.

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When "Prove You Know Me" Personalization is Essential

A few months ago, I published a post arguing that marketers who want to improve the effectiveness of personalized marketing should focus primarily on making personalization pragmatically useful to recipients. This argument was based on the results of several research studies, including a 2018 survey by Gartner/CEB that polled more than 2,500 consumers in North America, Europe, and Asia-Pacific.

One objective of this study was to identify what types of personalized messages are most effective. Survey participants were asked several questions about the content of personalized messages they had recently received. From the participants' responses, Gartner/CEB identified two types of personalization based on what consumers perceived was the primary intent of the message:

• "Prove You Know Me" Personalization - Consumers perceived that these types of messages were primarily intended to demonstrate that the company "knows" the recipient. So, for example, they may have explicitly mentioned a previous purchase made by the recipient, or they might have mentioned that the recipient had recently viewed a particular product.
• "Help Me" Personalization - Consumers perceived that these types of messages were primarily intended to help the recipient in some way. For example, they may have made it easier for the recipient to complete a purchase, or helped the recipient understand how to better use a product.

To measure the comparative effectiveness of these types of persosnalization, Gartner/CEB created a "Commercial Benefit Index" that considered four consumer intent and behavior factors - brand intent, purchase, repurchase, and increase in shopping cart size. When Gartner/CEB analyzed the impact produced by each type of personalization, they found that "Help Me" personalization produced a 16% increase in the CBI, while "Prove You Know Me" personalization resulted in a 4% decline in the CBI.

Where "Prove You Know Me" Personalization Really Helps

As any good lawyer will tell you, "There's an exception to every rule." The evidence is clear that "helpfulness" is the most powerful driver of effective personalization. But there are some points in your relationship with a customer or prospect where demonstrating that you "know" him or her can be critical to advancing the relationship.

One of these points is when you are seeking to have the first person-to-person conversation with a prospect. Many prospects prefer to conduct early-stage research and information gathering on their own, and to avoid conversations with vendor reps until later in their decision-making process. Overcoming this reluctance is difficult, and that's where an injection of "Prove You Know Me" personalization can be highly effective.

To illustrate this point, below is the text of an email message that I recently received from a client development representative at a sales technology company. I received this message after attending one of the company's webinars. I've altered the text to conceal the real names of the company and the rep.

"David,

Thanks for attending our webinar with Jones & Company, "The Secret Sauce for a High-Performing Sales Organization."

Hopefully, you enjoyed the webinar - John and Joe had some great insights on . . .

• The current state and challenges of sales enablement in the age of the modern business buyer
• Why a buyer-centric sales enablement approach is vital to an organization's revenue growth
• How the right software can accelerate sales enablement efforts and help win more deals

Would love to get your feedback from the webinar.

Are you available this Friday for a quick 15 minute chat?

Best,

Roger Smith"

On the surface, this appears to be a well-constructed email. It's concise and not overly promotional. But it didn't convince me to reply and schedule a telephone conversation. What "Roger" failed to do in this message is show me that he knew some basic things about me and my business, and explain why a telephone conversation could be worthwhile.

If "Roger" had spent two or three minutes scanning through my LinkedIn profile, he would have gained a basic understanding of what I do. My profile also contains links to the 127 articles that I've published at LinkedIn. If "Roger" had spent another two of three minutes scanning through the titles of these articles, he could have obtained a pretty good understanding of my professional interests and focus.

With this information, "Roger" could have easily added a short paragraph to the email that would have made me more inclined to schedule a telephone conversation. That paragraph could have looked something like this:

"I see from your LinkedIn profile that you work with B2B companies to develop marketing strategies and marketing content. I also noticed that you've written several articles about improving marketing and sales productivity. I'd like to get your thoughts about the role that sales enablement technology plays in improving sales productivity.

Are you available this Friday for a brief telephone conversation?"

This approach would have demonstrated that "Roger" had made an effort to "get to know" me and my business, and the proposed topic of the telephone conversation is one that could be useful for both "Roger" and me.

Some readers may be thinking:  "There's no way we can have our business development reps spend this much time on every prospect." That's not what I'm recommending. This approach is reserved for prospects whose engagement with your company suggests that they may be ready to take the relationship to a higher level by beginning to have person-to-person conversations with your reps.

Image courtesy of Marco Verch (trendingtopics) via Flickr CC.

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With Personalization, Less Can Be More

There is no longer any doubt that marketers overwhelmingly believe in the value of personalization. Most marketing leaders now view personalization as essential to marketing success, and providing personalized messages and customer experiences has become a top priority in many companies.

Numerous research studies have confirmed that large majorities of marketers believe personalization improves marketing and business performance. For example, in the 2019 Trends in Personalization survey by Researchscape International, 70% of surveyed marketers said personalization has a strong or extremely strong impact on advancing customer relationships.

And in a 2018 survey of more than 600 business executives by Harvard Business Review Analytic Services, more than half of the survey respondents said personalization is an important driver of their revenue and profits.

Recent research also shows, however, that marketers have more work to do to realize the full potential of personalization. In the Researchscape International survey, only 16% of survey respondents said they are very or extremely satisfied with the level of personalization in their marketing efforts. Fully half of the respondents said they are not satisfied or only slightly satisfied.

To maximize the impact and effectiveness of personalization, marketers need to use the right level of personalization for each customer interaction. Most marketing pundits and many marketing leaders seem to believe that the key to maximizing the benefits of personalized marketing is more personalization. According to this view, the right strategy is to leverage every bit of available data about customers and prospects to make personalization more specific, and to use personalization more frequently, in more channels, and for more types of communications and experiences.

But as I recently argued, the problem with the "more personalization" approach is that it largely ignores the real and growing privacy concerns of both consumers and business buyers. The real key to maximizing the effectiveness of personalization is to use an appropriate level of personalization for each interaction with a customer or prospect. And in some situations, the best strategy will be less, not more, personalization.

The Corporate Visions Research

Recent research by Corporate Visions provides compelling evidence that less can in fact be more when it comes to personalization. This study consisted of a live field trial that involved nearly 7,000 potential buyers in the Corporate Visions prospect database. All of the prospects in the trial met two criteria:

• Each was a cold prospect - someone who had had no prior interaction with Corporate Visions
• Each fit the Corporate Visions ideal client profile (industry vertical, company size, and job title).

The objective of this study was to test the effectiveness of four methods or levels of personalization:

• Industry only
• Company only
• Industry + personal
• Company + personal

For the trial, Corporate Visions used emails that had identical offers and calls-to-action, but different subject lines and openings based on the method of personalization used. (Note:  The research report includes examples of the emails.)

The trial used three metrics to evaluate the effectiveness of each level of personalization - open rates, click-through rates, and number of meetings scheduled. The following table summarizes the results of the field trial.

As the table shows, the emails that used company + personal personalization (the highest level of personalization) produced the highest open rates, while those using industry only personalization (the lowest level of personalization) produced the lowest open rates. But the positions were exactly reversed with click-through rates. The emails that used industry only personalization produced the highest click-through rates, while those using company + personal personalization produced the lowest. 

In terms of meetings, the emails that embodied either industry + personal or industry only personalization produced significantly more scheduled meetings than those using either company + personal or company only personalization.

So the results of this trial indicate that when reaching out to cold prospects, messages that embody less personalization actually produce better conversion rates than messages using higher levels of personalization.

Explaining the Differences

The Corporate Visions research did not attempt to explain why the different methods or levels of personalization produced different results. However, in the research report, Leslie Talbot, Corporate Visions' Vice President of Customer and Commercial Excellence, offered a possible explanation:

"Human beings are self-centered enough to respond readily to something that looks like it's personal to us. But when we discover the underlying gimmick - that is, someone plucked a random fact from our LinkedIn profile and used it to suck us in - the letdown factor is enough to preclude further action.

Similarly, when you try to ingratiate yourself to someone by referencing an issue specific to their company, they already know you don't work there - you've just read publicly available content . . .

On the other hand, if you offer an insight about a prospect's industry, you activate their voyeurism . . . So when you share a story about how a similar company struggled and solved a common industry concern, they're better able to project themselves into the story and eager to find out what happened next."

I believe that Ms. Talbot's speculation is fairly accurate. To be effective, personalization must be based on genuine insights. When you take personalization beyond such insights, it become inauthentic, and customers or prospects will tend to view it as presumptuous.

Top image courtesy of BobChao via Flickr CC.

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Two Ways to Make Personalization Welcomed

In my last post, I discussed the inconsistent and often contradictory attitudes of consumers and business buyers regarding personalized marketing. On one hand, numerous research studies have confirmed that most consumers and business buyers want personalized offers, messages, and experiences, and are willing to provide personal information in order to receive such offers, messages, and experiences.

On the other hand, several studies have found that customers and potential buyers are growing more concerned about privacy, and aren't comfortable with how some companies are collecting, accumulating, and using their personal or business information. In one fairly large study, less than half of the respondents (48%) agreed that, "There are ethical ways in which a company can use my personal information.

These conflicting attitudes are creating a Catch-22 for marketers because it's now clear that personalization is a high-stakes game. Effective personalization drives broad and significant business benefits, but when marketers get personalization wrong, the consequences can be serious. In one survey, 38% of the respondents said they would stop doing business with a company that sends them "creepy" personalized messages.

So far, most marketing pundits and many marketing leaders seem to believe that the key to maximizing the benefits of personalized marketing is more personalization. In other words, collect and use more data about customers and prospects, make personalization more specific, and use personalization more frequently, in more channels, and for more types of communications and experiences. This explains why hyper-personalization and personalization at scale have recently become such popular buzzwords.

The "more personalization" approach is based on the idea that increased personalization will increase the relevance of messages and experiences, and that the improved relevance will make those messages and experiences more compelling, interesting, and/or satisfying for customers or potential buyers. The problem with the approach is that it doesn't address the privacy half of the personalization-privacy conundrum, nor does it provide specific guidance about what attributes (other than relevance) cause personalized marketing to be welcomed by potential buyers.

We need to use a different approach to deal with privacy concerns and maximize the benefits we obtain from personalization. Here are two related steps marketers can take to get the most from personalized marketing.

Base Personalization on "Informed Consent"

The key to alleviating privacy concerns is to base personalization on data that each customer or prospect has willingly and consciously provided for a clearly-stated purpose. This approach addresses three practices that frequently cause a customer or prospect to view personalized communications as presumptuous, invasive, or "creepy:"

• When a company bases personalization on data that the customer has not directly shared with the company (e.g. third-party data)
• When a company bases personalization on data that the customer or prospect has not consciously shared with the company (e.g location data from a smartphone, browsing history, etc.)
• When a company ostensibly collects information for one purpose and then uses the data for other purposes.

Customers and prospects won't see personalized marketing as intrusive or "creepy" when they willingly provide personal data in exchange for personalized content or experiences that are designed to serve a clearly understood purpose.

Make Personalization Pragmatically Useful

The most effective personalized marketing programs are those that deliver meaningful, pragmatic value to recipients. A recent study by Gartner/CEB provides strong confirmation of the importance of making personalization useful. The centerpiece of this study was a 2018 survey of more than 2,500 consumers in North America, Europe, and Asia-Pacific.

One objective of this study was to identify what type of personalization is most effective. So survey participants were asked several questions about the content of the personalized messages they received. Based on the survey responses, Gartner/CEB identified two basic types of personalization:

• "Prove You Know Me" Personalization - These types of messages mention the recipient's personal information, base personalization on information about the recipient's past purchases from the company, or generally reflect the recipient's interests in some way.
• "Help Me" Personalization - According to Gartner/CEB, these types of messages can make it easier for the recipient to complete a purchase, help the recipient understand how to better use a product, or otherwise help the recipient solve a problem or address a need.

To measure the relative effectiveness of these types of personalization, Gartner/CEB created a "Commercial Benefit Index" that considered four consumer intent or behavior factors - brand intent, purchase, repurchase, and increase in shopping cart size. When Gartner/CEB analyzed the change in the Commercial Benefit Index produced by each type of personalization, they found that "Help Me" personalization produced a 16% increase in the CBI, while "Prove You Know Me" personalization resulted in a 4% decline in the CBI.

The Takeaway

The important point here is that marketers should organize their personalization efforts around specific "programs" that are designed to serve a clearly-defined purpose and provide pragmatic value. When customers or prospects proactively choose to participate in a program by providing relevant personal information, the personalization-privacy conundrum disappears, the personalization will be welcomed, and it will be more compelling and impactful.

Top image courtesy of Richard Patterson via Flickr CC.

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The Growing Personalization Conundrum for Marketers

For more than two decades, the value of personalization has been largely unquestioned in marketing circles. Most marketing leaders now view personalization as essential to marketing success, and providing personalized marketing messages and customer experiences has become a top priority in many companies.

Several recent research studies have confirmed that marketers strongly believe personalization drives improved marketing performance, and that most are committed to making personalization a core component of their marketing efforts. For example:

• In the 2019 Trends in Personalization survey by Researchscape International and Evergage, 70% of surveyed marketers said personalization has a strong or extremely strong impact on advancing customer relationships, and more than half of the respondents said personalization produces increased conversion rates, increased visitor engagement, improved customer experience, and increased lead generation/customer acquisition.
• In the 2018 State of Marketing research by Salesforce, more than eight out of ten surveyed marketers said personalization delivers major or moderate improvements in brand building, lead generation, customer retention, customer acquisition, and customer advocacy.
• In the 2019 Digital Trends research by Econsultancy and Adobe, targeting and personalization was the second most frequently identified priority for 2019 among survey respondents from larger enterprises.

There are also several studies showing that consumers want (and increasingly expect) personalized experiences.

• In a 2018 survey of 8,000 consumers by Accenture Interactive, 91% of respondents said they are more likely to shop with brands that provide them relevant offers and recommendations.
• In a 2018 survey of more than 6,700 consumers and business buyers by Salesforce, 76% of all respondents said they expect companies to understand their needs, and 72% of the business buyers said they expect vendors to personalize engagement based on their needs.

Given these research findings, it shouldn't be surprising that many marketing pundits are now advocating the use of "hyper-personalization," which generally refers to the use of real-time data and artificial intelligence to deliver more relevant content to each recipient.

So the correct strategy for marketers is to personalize everything they can, whenever they can, as much as they can, right? Well, not so fast!

Why More Personalization Isn't Always Better

There is a growing body of evidence indicating that consumers and business buyers are increasingly concerned about privacy and do not always welcome personalized marketing. For example, in a 2018 survey of nearly 6,400 individuals in France, Germany, the U.K., and the U.S. by data security firm RSA, less than half of the respondents (48%) agreed that, "There are ethical ways in which a company can use my personal information."

When survey participants were asked about specific types of personalization, the results were even more stark, as the following table shows:

Note that more than half of the respondents in this survey believe all four of these personalization practices are unethical, not just annoying or ineffective.

Other research has confirmed that people will react strongly when they perceive personalization goes too far. In the 2018 Consumer Personalization Panel research by Gartner/CEB, survey participants were asked how they would react if a company sent them irrelevant or annoying emails. Forty-eight percent of the respondents said they would unsubscribe, and 12% said they would stop doing business with the company.

But when they were asked how they would respond if a company sent them personalized messages that were "creepy," 57% of the respondents said they would unsubscribe, and 38% said they would stop doing business with the company.

When all of the recent research is considered, it's clear that marketers are facing a Catch-22 when it comes to personalization. On one hand, most customers and potential buyers say they want personalized offers, messages, and experiences, and large majorities also say they are willing to provide personal data in order to receive such offers, messages, and experiences.

At the same time, however, most customers and potential buyers are growing more concerned about privacy, and they aren't comfortable with how companies are collecting, accumulating, and using their personal or business information.

So, how can marketers deal with buyers' inconsistent and contradictory attitudes toward personalization? How can marketers balance the benefits produced by effective personalization against the risks of creating personalized messages or experiences that buyers will perceive as intrusive, presumptuous, or otherwise "creepy?" In my next post, I'll provide a few suggestions for dealing with this growing conundrum.

Top image courtesy of Anders Sandberg via Flickr CC.

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Salesforce Study Identifies Major Marketing Trends

Salesforce recently published the fifth edition of its State of Marketing report. The new report is based on a survey that was fielded between August 13th and September 23rd of last year, and produced 4,101 responses from marketing leaders (manager or higher). Survey respondents were from North America, Latin America, Asia-Pacific, and Europe.

The authors of the report observed that today's marketers are facing far different challenges from their predecessors. These new challenges are driven by high customer expectations for overall experiences that match their expectations for product quality. This observation isn't particularly surprising, given that the importance of customer experience has been widely discussed for several years.

The Salesforce survey identified four major trends in marketing.

Marketing Becomes the Orchestrator of Customer Experiences
Providing exceptional end-to-end customer experiences is inherently cross-functional, but marketing is well positioned to function as the hub of customer experience efforts. Nearly half (45%) of the survey respondents said that marketing is leading customer experience initiatives across the business at their company.

This finding is nearly identical with the August 2018 edition of The CMO Survey, in which 45.7% of respondents reported that marketing leads customer experience efforts.The Salesforce survey also found that marketers are forging connections with sales, commerce, and service teams in order to deliver better end-to-end customer experiences.

New Realities Elevate the Importance of Data Unification
It's not news that the effective use of data is critical for marketing success. The Salesforce research found that marketers are using more sources of data to gain a deeper understanding of customer needs, preferences, and behaviors.

According to the survey, the median number of data sources used by marketing organizations will increase from 12 in 2018 to 15 this year. However, more work is needed to unify those data sources. Only 47% of survey respondents said they have a completely unified view of customer data sources.

Marketers Remain Committed to Personalization
The Salesforce survey revealed that marketers' belief in the power of personalization remains strong. More than eight out of ten of the survey respondents said that personalization produces major or moderate improvements in brand building, lead generation, customer retention, customer acquisition, and customer advocacy.

The survey also found that the use of artificial intelligence to power personalization is growing. Twenty-nine percent of respondents in the latest survey reported using AI, up from 20% in 2017. Marketers also appear to be focused on trust and privacy issues. Fifty-one percent of respondents said they are more mindful about balancing personalization and privacy than they were two years ago.

Marketers Strive for Real Time Engagement
Lastly, the Salesforce research found that engaging customers in real time has become marketers' top priority and their biggest challenge. Fifty-two percent of survey respondents said they now engage customers in real time across one or more marketing channels. It also appears that marketers are making their engagements more responsive and dynamic. Fifty-two percent of the survey respondents said they adapt marketing strategy and tactics based on customer interactions.

The annual State of Marketing survey by Salesforce provides an important snapshot of the attitudes and practices of global marketers. I suspect that the new Digital Trends Survey by Econsultancy will address some of the same issues, and it will be interesting to compare the findings of these two studies.

Image source:  Salesforce

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How Customers Really Feel About Personalization

Over the past several weeks, I've published posts that reviewed the major findings of two recent research studies - one by Dynamic Yield, and one by Researchscape International - that focused on the current state of personalization in marketing. These studies were based on surveys of marketing professionals, so they captured the perspectives of individuals who are on the "selling side" of the personalization equation.

For obvious reasons, it's important for marketers to understand how customers and prospects view the use of personalization, and two other recent studies address this critical issue.

The Periscope By McKinsey Study

Periscope By McKinsey is a unit of McKinsey & Company that provides a suite of marketing and sales analytics software. Consumers Value Personalization - Up Your Game to not Miss the Opportunity was based on a survey of 2,500 consumers located in the United States, France, Germany, and the UK.

In all four of the markets included in the study, more than 50% of the survey respondents said they frequently receive personalized messages. However, the markets differed in terms of how much consumers like receiving personalized communications. Fifty percent of the U.S. respondents said they really or somewhat like receiving personalized messages. French, UK, and German respondents were less enthusiastic, with only 38%, 37%, and 29%, respectively, feeling somewhat or very favorable toward personalized messages.

Attitudes toward personalization also varied by gender and age. For example:

• In the U.S. and Germany, men feel more positively than women about receiving personalized messages, but the opposite is true in France and the UK.
• Overall, younger consumers feel more positively than older consumers about receiving personalized communications.

The Periscope By McKinsey study also revealed that companies have a long way to go to get personalization consistently right. Overall, about 40% of survey respondents said they only sometimes receive personalized messages that truly feel personal, relevant, and intriguing. In addition, the number of respondents who said that personalized messages rarely or never feel truly personal exceeded the number of respondents who said they usually or often do.

The Accenture Interactive Study

Accenture Interactive has also published the results of a recent study about how consumers view personalization. The 2018 Personalization Pulse Check study consisted of a survey of 8,000 consumers from North America and Europe.

The Accenture research confirmed the potential impact of personalized marketing. Nearly all of the surveyed consumers (91%) said they are more likely to shop with brands that recognize, remember, and provide them with relevant offers and recommendations. Moreover, about eight out of ten of the survey respondents (83%) said they are willing to share their data to enable personalized experiences, so long as companies are transparent about how they use the data and give consumers control over it.

One important concern about personalized marketing is that it can feel invasive or "creepy." The Accenture study found that this problem doesn't occur frequently. Seventy-three percent of the surveyed consumers said that a business had never communicated with them online in a way that felt invasive.

Survey participants were also clear about what triggers the "creepy" factor. Of the 27% of respondents who reported having a brand experience that felt invasive, about two-thirds (64%) said it was because the brand had information about them that they had not knowingly shared with the brand directly.

The study report explains why this triggers such a strong response from consumers:  "Brand and consumer relationships are no different than their real-life counterparts. When one party goes outside of the relationship for information, the level of trust is completely broken."

Finally, the Accenture study demonstrates that companies should be especially careful when using location data to personalize messages. When Accenture asked survey participants how creepy they found certain types of personalized marketing, 41% said it felt creepy when they received a text from a brand as they walked by a physical store, and 40% said it felt creepy when they got a mobile notification after walking by a store.

The Bottom Line

Taken together, these two studies make three important points about personalization. First, most consumers like and want personalized messages, and when it's done correctly, personalization is a power marketing tool. Second, creating messages and offers that feel truly personal and relevant to potential buyers is hard, and most companies have more work to do to get this right. And third, companies must be particularly careful not to violate buyer trust when using personalized marketing.

Illustration courtesy of Phil Wolff via Flickr CC.

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New Insights on Personalization - Usage, Value, and Challenges

A few weeks ago, I published a post discussing the major findings of a survey by Dynamic Yield regarding the current state of personalization in marketing. A new study by Researchscape International (in association with Evergage) provides more valuable insights about marketers' attitudes regarding personalizaion and current personalization challenges and practices.

The 2018 Trends in Personalization study consisted of a survey of 300 marketers and other business professionals representing nineteen industries. Ninety-three percent of the respondents held marketing related positions. Most of the respondents (93%) were located in the United States, and they represented a wide range of company sizes. Seventy-nine percent of the respondents were affiliated with pure B2B or hybrid B2B/B2C organizations.

Like several other research studies, the Researchscape survey found a widespread belief in the importance of personalization. For example, 88% of the respondents believe their prospects and customers expect a personalized experience, and 74% believe that personalization has a strong or extreme impact on advancing customer relationships.

Researchscape also found that the use of personalization is widespread. Ninety-two percent of respondents said they are using personalization in some form. About three out of four respondents (77%) are personalizing emails, and about half (52%) are personalizing websites.

Most of the marketers in this survey said their company has received value from personalization. Eighty-seven percent of the respondents reported a measurable lift from personalization, and more than half (53%) said they had experienced a lift of more than 10%.

Despite the relatively widespread use of personalization and recognition of its value, many of the marketers in this study see significant room for improvement in their personalization efforts. For example:

• While 70% of they study respondents were slightly or moderately satisfied with their level of personalization, only 12% were very or extremely satisfied, and 18% were not satisfied at all.
• Nearly half of the respondents (46%) gave themselves a grade of "C" on their personalization efforts.
• Over half of the respondents (52%) rated their personalization maturity level as limited, and another 33% rated their maturity level as moderate.

Having the right data is essential for effective personalization, and many of the marketers in this study see data-related issues as a major challenge. For example, more than half of the respondents (55%) do not believe they have sufficient data and insights to personalize content and messaging. 

Marketers at B2B and hybrid B2B/B2C companies appear to face greater data challenges. Fifty-eight percent of surveyed marketers in B2B companies, and 60% in hybrid B2B/B2C companies don't believe they have sufficient data and insights, compared to only 39% of respondents in pure B2C companies.

The problem is not the complete absence of data, but the lack of centralized data. Nearly half of the respondents (48%) said they store their customer and prospect data in four or more systems. This fragmentation of data may help explain why many marketers find true omnichannel personalization to be challenging. In this survey, only 27% of respondents reported having half or more of their marketing channels connected. Forty-six percent of the respondents said they have "a few" of their channels connected.

Finally, Researchscape found that B2B and hybrid B2B/B2C companies are less aggressive than pure B2C companies at adopting new personalization technologies. For example, among those respondents not currently using machine learning to support personalization, 26% of B2B respondents, and 49% of hybrid B2B/B2C respondents said they would begin using machine learning in the coming year, compared to 55% of B2C respondents.

Illustration courtesy of John Bonham via Flickr CC.

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The State of Personalization in 2018

The personalization of content and messaging has been widely discussed in marketing circles for more than two decades. Numerous research studies have shown that both consumers and business buyers want companies to understand their individual needs and interests, and then tailor experiences accordingly. Virtually all marketing thought leaders agree that personalization is vital for delivering outstanding customer experiences.

So, just how far have we come in our personalization efforts? New research by Dynamic Yield provides important insights regarding the current state of personalization. The Personalization Maturity Assessment report is based on a survey of 700 marketers and executives in various business roles drawn from several industry verticals. Forty-two percent of the survey respondents were located in Asia-Pacific, 34.1% in EMEA, and 23.9% in the Americas.

This research revealed a strong belief in the value of personalization. Globally, about 26% of respondents said that personalization is at the core of their marketing/customer experience efforts, and another 46% said they understand the benefits of personalization.

Dynamic Yield's survey found that many companies have made significant progress on the personalization front. For example, 23.57% of respondents said they have a single view of the customer that enables them to personalize experiences across marketing channels, and another 23.14% said they personalize most experiences.

The survey also revealed, however, that many companies have more work to do to maximize the potential of personalization. Only about half of the respondents (49%) said their organization has prioritized personalization as a company-wide strategic initiative. And only about 52% reported having sufficient resources (money, time, personnel, etc.) to deliver personalized experiences across all marketing channels. In addition, only about 22% of the respondents said they have a centralized, cross-functional team that executes personalized campaigns across all channels.

Dynamic Yield also found that many companies need a more integrated technology stack to reap the full benefits of personalization. Only about 24% of respondents reported having an integrated tech stack that allowed them to personalize customer experiences across all touch points. Another 33% said their personalization technology is integrated with some, but not all, of their other marketing/customer experience technology systems. These findings are generally consistent with Econsultancy's 2018 Digital Trends study, in which 40% of survey respondents reported having a highly or somewhat integrated technology stack.

So overall, the Dynamic Yield study paints a fairly positive picture of the state of personalization in 2018, although it also clearly shows that there's room for improvement.

It's possible that the Dynamic Yield research slightly understates the level of personalization maturity in larger organizations. About 42% of the respondents in this study were with companies having $50 million or less in annual revenue, and 23% were with companies having under $10 million in annual revenue. It seems fair to say that larger enterprises are likely to have more experience with personalization and more resources to devote to their personalization efforts.

Image courtesy of Brian Solis via Flickr CC.

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Two Ways to Boost the Impact of Personalization in 2018

Delivering outstanding customer experiences has become a primary strategic objective for both B2B and B2C marketers. In the 2017 Digital Trends report by Econsultancy (in association with Adobe), surveyed marketing, digital, and ecommerce professionals selected optimizing the customer experience as their single most important opportunity for 2017, and they identified customer experience as the primary way they will differentiate their company from competitors over the next five years.

Most marketers now recognize that personalization is a critical ingredient in the recipe for great customer experiences. In a 2017 survey of marketing and business leaders by Researchscape International (in association with Evergage), nearly all (96%) of the respondents agreed that personalization helps advance customer relationships, and 88% agreed that their prospects and customers expect a personalized experience.

In the Econsultancy study, survey respondents identified targeting and personalization as a top digital priority for 2017 (behind only content marketing and social media engagement), and half (51%) of the respondents said they would increase their spending on personalization this year.

But despite all the recent focus on personalization, it's clear that most companies have more work to do to maximize the benefits of personalized marketing. In the Researchscape survey, only 30% of respondents were very or extremely satisfied with the level of personalization in their marketing programs, and 46% gave themselves a grade of "C" or lower on their current personalization efforts.

Other research has shown that many buyers aren't particularly impressed with the personalization efforts they encounter:

• In a survey by Adobe, 71% of consumers said they like receiving personalized offers, but 20% reported that offers are not done well.
• In a study by the Economist Intelligence Unit, 70% of survey respondents said that many of the personalized messages they receive are annoying because the attempts at personalization are superficial.

So what can be done to improve the effectiveness of personalization? There are two important steps that companies can take to boost the impact of their personalization efforts in 2018.

Make It Valuable

To be effective in today's competitive environment, personalization must provide meaningful value to customers and prospects. Personalization that is superficial or superfluous - i.e. personalization that is merely "window-dressing" - simply won't cut it.

Recent research has confirmed that buyers want to get practical value from their interactions with companies and brands. For example, in a survey of consumers conducted earlier this year by the CMO Council and SAP Hybris, nearly half of the respondents defined value as something that saves them time (49%) or makes their lives easier (47%).

Value is equally important to B2B buyers. In a 2017 survey of B2B buyers, Aberdeen Group asked participants what factors they consider when choosing a vendor. Over two-thirds (68.2%) of the respondents said the vendor can help sharpen our competitive differentiation, and over half (55.7%) said the vendor can help me identify new possibilities and avenues for revenue.

Personalization can be a powerful way to enhance the value of interactions with customers and prospects, but it must be designed with that objective in mind. Therefore, marketers should evaluate any proposed personalization initiative by asking a basic question:  How will this application of personalization provide practical value to our customers and/or prospects?

Make It (Mostly) Invisible

Since the early days of personalized marketing, the most common way to personalize a marketing message has been to include specific facts about the recipient in the message, a practice that can be called explicit or overt personalization. 

It's as if marketers believe that the effectiveness of personalization is based on communicating to the customer or prospect what they know about him or her. There may have been some truth to this belief when any form of personalization was rare. Now, however, most types of overt personalization are largely ineffective (because they are so common), and they can be seen as "creepy" by customers or prospects.

Today, personalization is usually more effective when it's invisible. The best personalization doesn't feel like personalization - it just feels like a message or experience that's really relevant, appropriate, and valuable.

There are, of course, some situations where overt personalization is still effective. For example, online stores (such as Amazon) often provide personalized product recommendations that are introduced by a phrase like, "People who ordered [Product X] also purchased . . ." When the personalization algorithm works well, these recommendations can be useful to customers, and most buyers don't view such recommendations as intrusive or creepy.

Illustration courtesy of Michael Coghlan via Flickr CC.

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