You need at least one of the following:
- A uniquely superior product
- A superior customer experience with individually personalized care and engagement
Why Is Personalization Important?
If traditional marketing focuses on the breadth and quantity, then personalized marketing focuses on the depth and quality. You personalized by going the extra mile to make your consumers feel they have been heard and understood. If you genuinely help your customers solving their problems, they are much more likely to trust, buy, and advocate for your product.
Personalization is difficult, but if execute right, it can be a sustainable competitive advantage and differentiator. In fact, study from McKinsey shows that personalization marketing can reduce acquisition cost, increase revenue, and improve marketing spending efficiency at once.
“Personalization can reduce acquisition costs by as much as 50 percent, lift revenues by 5 to 15 percent, and increase the efficiency of marketing spending by 10 to 30 percent.” — McKinsey & Company Research
The study reveals the significant benefits of personalization marketing, and it is likely one of the most important strategy for business to stay relevant and competitive in the long run.
Challenges of Personalization
While marketers see the benefits of personalization, they generally don’t put it as their top priority. They often obsess over customer acquisition and overlook the potential in nurturing and strengthening relationships with their existing customers.
This is not surprising because we can easily measure the number of new prospects and customers, and implement tactics to see results in the short-term. On the contrary, personalization marketing is the long game that generally requires much effort from many stakeholders without any immediate benefits.
So where do we begin in our endeavor of personalization marketing? Let’s first take a look at the key implementation challenges below:
1. Lack of Ownership & Accountability
Personalization marketing takes a collective effort from stakeholders across multiple departments. It likely takes a senior executive’s buy-ins to make it a priority and find resources to support the implementation.
More importantly, we need a person or team to take the ownership of the personalization strategy, keeping all stakeholders accountable in sharing the responsibilities of the initiative. Likely, we have all experienced situations where we prioritized our immediate department goals over the larger and collective company targets. How do we overcome the challenge of making the long-term goal a priority over the immediate benefits? It takes a collaborative effort to see any significant impact on your business.
2. Data Fragment & Silos
The only way to enrich and personalize customer experience is to have consumer data that can be used for personalization. To accurately reflect consumer sentiment, you need to combine consumer data in one location. However, this is a significant challenge for large organizations when data from different departments are not necessarily stored in the same location and likely not be in a compatible format for data integration.
The increasing number of customer interaction channels (phone calls, social media, e-mail, in-person, etc.) across multiple computing devices further complicates the process to interpret and integrate data from the different sources. This challenge is confirmed by a consumer survey done by Forrester Consulting.
“Over 83% of respondents indicated at least some challenge with data collection, storage, analysis, and distribution.” — Forrester
The execution of personalization marketing is simply not easy. It requires the alignment from multiple departments, integration of technology solutions, and a large scope of well-defined processes to work seamlessly together.
Depending on your business environment and company culture, you may not see a path to achieve personalization marketing due to your budget, company culture, or talents.
Where Do I Start?
The barrier of personalization marketing has significantly lowered with the democratization of artificial intelligence technologies in marketing automation and sales force software. In a series of the following posts, we will go into details on how to achieve personalization marketing even if you are a small team with limited resources.
1. Customer Segmentation
To achieve personalized engagement, you need to narrow your targeted customers and focus on your most important customer segments. In this post, we’ll go over the process of segmenting your customer.
2. Data Management
To address the issue of data fragmentation and silos, you need a process to integrate consumer data from different sources. In this post, we’ll go over the concept of data management and how to do it with free resources.
3. Personalized Engagement
To achieve efficient and effective personalized engagement, you need to develop pre-established processes and contents to respond to customer interactions. In this post, we’ll go over the process to achieve personalized engagement.