The Customer of One: How Personalisation is the Key to Long Term Profitability

This article was originally published by David Howell.

To maintain loyalty and brand advocacy, how has personalisation evolved? Highly focused data is, of course, needed to create personalised communications, but in an age where privacy is essential to consumers, how can businesses balance security and the delivery of personalised experiences?

Personalisation is now a vital component of every business’s customer service. As the ability to track purchases and profile consumer behaviour has matured and expanded, retailers have taken advantage of advance data analytics, or is there more work to do?

Speaking to Silicon UK, Paige O’Neill, CMO of Sitecore says: “Many marketers are investing in personalisation. Research from SoDA [https://www.sodareporton.com/trends-in-personalization] shows that less than a quarter (23%) are able to personalise beyond a basic level, and most are uncertain about how to use the available data and technology to become more sophisticated.

What’s more, while two-thirds (67%) of marketers ranked themselves as ‘experts’ or ‘masters’ of personalisation, most are still stuck at the broad segmentation level or are targeting specific groups of consumers, rather than honing-in and tailoring content to customers on an individual basis.”

Personalisation works as clearly outlined by Bryan Kirschner, Vice President, Strategy, DataStax “Eye-catching metrics make a strong case for some retailers. For example, both a 238% increase in customer engagement with Home Depot’s mobile app and 25 million sign-ups in just two weeks to Target’s new loyalty program were attributed in part to personalisation. I think we’re also seeing a blossoming of smaller companies built from the ground up on a combination of customisation and craftsmanship.

Kirschner continued: “I have a pair of shoes handmade by Adelante that I customised from a base design on their website. Inside Weather brings a similar approach to furniture. Over time, either as they get larger or participate in a data ecosystem, the data generated by our ability to customise products should make possible even smarter recommendations back to us.”

Personalisation is rapidly expanding thanks to the arrival of AI and, in particular, Machine Learning encapsulated in Personalisation 2.0

In their report, Episerver concluded that 62% of respondents feel that companies should place the same priority on personalised experiences in 2020 as they did in 2019. At the same time, 25% of consumers feel that brands and retailers should make respecting their anonymity online a higher priority.

Like their U.S. counterparts, online shoppers in the U.K. want a personalised experience, but they’re concerned about anonymity and security. 49% of U.K. members think brands and retailers should make respecting consumer anonymity more of a priority in 2020. And 30% report a lack of security features as a primary factor stopping them from making more purchases via voice-enabled devices in 2020.

The importance of a Personalisation 2.0 strategy is the core finding of the Hitting the Mark report from dotdigital: “As modern-day shoppers increasingly put themselves first, they’re more likely to hand over their personal data if they know they’ll benefit immediately from the relationship. Despite this, we found that 43% of brands were still failing to collect key customer data, such as date of birth, at the earliest stage of acquisition.”

However, the report also revealed that the vast majority of businesses could be doing much more to enhance their use of personalisation: “Personalisation also continues to be underused. We found that 66% of brands weren’t using basic, first name personalisation, and only 26% used advanced, behavioural personalisation such as an abandoned cart or browse. Adding a layer of personalisation to the shopper’s experience is the most direct and fail-proof way to ensure these abandoned products are kept top of their mind. This will, in turn, increase the shopper’s conversion potential.”

Ian Fairclough, VP of EMEA CS, MuleSoft commented: “Much of the reason retailers struggle with delivering personalised customer experiences lies in how they store, access and harness data. To create a truly personalised experience, retailers need a unified view of each customer – from browsing preferences to shopping history and location. However, it’s not enough just to have the data. To deliver personalisation, retailers need to be able to analyse it in real-time and understand the full context of everything they know about the customer.

“The problem is that rolling this capability out at scale for every customer can be a huge challenge. This comes down to the fact that data is often stored in disparate silos across the business, making it hard to piece insights together to truly ‘know’ the customer and deliver a personalised experience. Unifying this data can also be really time-consuming, and by the time the data is all compiled in one place, it’s not uncommon for it to already be out of date and far less valuable for personalisation. As a result, retailers often miss out on opportunities to provide truly personalised experiences for their customers.”

Fairclough concluded: “One way for retailers to overcome this challenge is through API-led connectivity. APIs can be used to build an application network – that is, a network of applications, data and devices connected with APIs to make them pluggable and reusable.”

Focused communications

Many businesses misunderstand what personalisation is. Regularly sending marketing emails SMS messages is not personalisation. Deloitte made this clear when they stated: “According to a recent survey, three in four consumers said they receive too many emails from brands, and one-fifth said they could not handle the current volume.

“As a result over half of consumers are avoiding brands that contact them with poorly targeted communications and 69% have ‘unfollowed’ brands on social media, closed their accounts or cancelled subscriptions. Another 59% have been forced to block numbers to curb nuisance texts and calls. Only one in five of those surveyed said they received very relevant information from supermarket brands, while even fewer said the same about communications from banks (13%), food and drink brands (11%) or technology brands (12%).”

Katie King is a published author and CEO of AI in Business and told Silicon UK: “The great thing about technology such as AI is that businesses don’t necessarily need to be analytical geniuses to deliver high levels of personalisation to their customers. There are so many tools on the market now that can collect data, turn it into insights, and provide detailed recommendations that human staff can then act on. There are businesses in every sector already reaping the benefits of these tools, but there are still plenty of organisations lagging behind. Soon enough, it’ll become a matter of sink or swim and these laggards will either have to adapt or risk being left behind for good.”

With Josh Schoonmaker, Senior Director Strategy, Commerce at Episerver, answering the question: do businesses have the data analytical skills and tools to deliver high levels of personalisation to their customers? “This is a crucial question that isn’t getting nearly enough attention. Implementation of personalisation strategies can vary in complexity, from set-and-forget to multi-tiered, frequently adopting initiatives.

“One of the most important skills in helping retailers move up this maturity curve is understanding data. Although the AI behind Personalisation is managed by SaaS offerings and personalisation engines, retailers need to focus on being able to understand the machine learning aspects of data science. Having the analytical skills needed for ETL data, customer journey mapping, and statistics will become a real differentiator for retailers.

“The conversation around data analytics follows the same theme as personalisation engines. While the technology is already well on its way, we need teams to be able to use it with efficacy. Being able to understand the wealth of customer data being produced today, and now the wide variety of personalisation configurations within an engine is what will allow some retailers to make significant ROI for each dollar spent in personalisation.”

And what impact is COVID-19 having on the development of personalisation strategies? Jil Maassen, Lead Strategy Consultant at Optimizely explained: “The pandemic, and the subsequent shift to online buying, has further demonstrated the importance of personalisation in maintaining customer loyalty. With more than 75% of consumers have tried new brands and methods of shopping over the past six months, building personalised online experiences are essential in both completing sales, and encouraging repeat spending.

“However, many retailers are doing personalisation wrong, specifically, using data in the wrong way. By relying too much on demographic data, or past purchases, retailers can only see what their customers have done, not what they’re going to do. For example, this Christmas a person might buy cologne for a friend, some books for a parent and toys for their children, however once bought, it’s unlikely they’ll want to see recommendations for these items again. Successful, smart personalisation brings this data together and understands the customer is likely Christmas shopping, and rather than showing variations of what they may have already bought, could instead recommend advent calendars, wrapping paper or gift cards as useful suggestions.”

Brand advocacy

Developing a comprehensive Personalisation 2.0 strategy is essential to ensure your business is sustainable in a post-COVID-19 trading environment. The latest findings from the Hitting the Mark report from dotdigital are telling:

“With acquisition costs rising, cultivating customer loyalty is more important than ever. A Yotpo survey found that 68% of shoppers define loyalty as returning to purchase from the same brand. Once they’re loyal, 35% will spend more on your products even when there are cheaper options elsewhere, and 56% will refer your brand to friends.

“But there’s a catch: 39% of shoppers say it takes five or more purchases before they consider themselves loyal. So how do you keep your customers coming back to push past the five-purchase threshold? By creating a loyalty program that is as thoughtful, delightful, and on-brand as the rest of your customer experience.

“Tailor your program to build an emotional bond: offer points for interacting with your social accounts or writing reviews. 38% of shoppers want to earn credit by taking actions other than making a purchase. Similarly, when it comes to redemption options, go beyond discounts and free shipping to offer gifts, unique brand experiences, or early access to new products and sales.”

So, how can businesses develop their personalisation strategies? DataStax’s Bryan Kirschner advises: “The good news is that we have a good line of sight into the tools that make up the modern stack for data-driven experiences, including real-time personalisation–among them, Apache Cassandra and Apache Spark, for example. People are reacting to the market demand – over 30,000 developers worldwide have participated in DataStax hands-on Cassandra training events so far in 2020 alone, for example.

“On the other hand, not asking the right questions can make the best analytics capabilities moot. I’ve found a good test is how comfortable a team is answering, “What data about their interactions with us might our customers find valuable?” The best tools and analytic techniques can’t substitute for being able to form a testable point of view on that.”

Andrew Fowkes, Global Retail Practice, SAS says: “One thing is for certain: the technology necessary to provide a personalised customer experience exists. Businesses cannot use this as an excuse anymore. Technology such as AI is advanced enough now to provide a detailed analysis of individual customers and provide actionable insights for businesses to act upon. Given that 25% of UK customers noted an improvement in the customer experience over lockdown, it seems that the adoption of this technology has accelerated.

“The main issue that businesses will face relates to their infrastructure. If the customer data is not accessible from a connected platform it becomes extremely difficult to access and analyse. With data siloed across different environments, there is also the risk of misplacing and underutilising vital customer data – which may include offline as well as online data. Instead, with a cloud-based storage system, technology such as cloud-based analytics and AI can be implemented to analyse all of the data at a business’ disposal. When it comes to interacting with customers, this will ensure that businesses have up-to-date information to make faster, better decisions.”

With Zoë Senior, General Manager, Loyalty Agency at Collinson – a global customer benefits and loyalty company also concluding: “It will feel a lot simpler and intuitive to consumers, and more directly reflect the permissions that they have set. The word ‘trust’ is banded around a lot. Still, the reality is that marketers have often been careless with customers’ data and finding quick wins to prove they are using data in the manner they have promised, and the customer has signed up to is critical.

“There are a couple of areas we will see growth in: The first is ‘paid for’. The evidence suggests that consumers are willing to pay for a better experience, and with that comes as the expectation that their data and tracked behaviour will lead to a more personalised and better experience. It will need to go well beyond a tailored ad or offer, into understanding the lifestyle of a consumer.

Second is the choice. People still like choice, and their desire for discovery will be undiminished. Greater personalisation must avoid funnelling to limited choices but instead help in the discovery process. This is as true for music or fashion as it is for groceries.”

And businesses must remember that data is the foundation onto which personalisation 2.0 is built, as Sarah Curran, MD EMEA, True Fit explained: “The future of personalisation revolves around data; data to deliver exceptional, seamless shopping experiences, make smarter purchasing decisions, keep pace with evolving trends and present shoppers with the right items at the right time. As a shopper, it feels like my emails contain promotions for products that were designed for me, with content I innately gravitate towards, ads as well.

“Products are sorted based on my personal style and fit preferences, and I am not shown items anywhere across the customer journey that is out of stock in my size. I am able to shop seamlessly across digital platforms and brick and mortar, and the retailer knows who I am the entire time. From the retailer side, data from personalisation drives a lot of BI decisions and decisions across the supply chain. This data also cuts down on waste and other environmental impacts, uniting retailers around the mission of change.”

All businesses need to be expanding their use of personalisation. Making those close connections to individuals is the key to unlocking long-term brand loyalty, which translates into long-term commercial relationships. If your enterprise can focus on the customer of one, this will be rewarded today and long into the future as these connections deepen.