Losing Customers Due to Lack of Relevance? Part 2 of 2

By: Lia Grimberg

We are facing a significant gap in customer expectations versus reality in personalization, as 85% of brands believe they’re offering personalized experiences, while only 60% of customers seem to agree. Perhaps the issue lies in the definition of what brands and customers consider “personalization.”

How do you know whether you are delivering on customer expectations of personalization? To gauge your personalization performance, let’s assess where your organization stands on the following continuum:

[Related: Losing Customers Due to Lack of Relevance?]

You may be wondering if the investment is worth the outcome. According to BCG, redirecting 25% of mass promotion spending to personalized offers would increase return on investment by 200%.

Let’s take Canadian Tire, an iconic Canadian retailer, as an example. In 2019, the company started personalizing offers to its five million customers. Before the program, its return on a $1 offer was $4 in sales, which then increased to $9 in sales after the implementation. Susan O’Brien, Canadian Tire’s Chief Brand & Customer Officer, the company attributes the success to “developing really strong algorithms to predict what a customer might want.”

If 33% of consumers are abandoning a brand that lacks personalization, your personalization efforts will certainly help you retain customers who are at risk of leaving for a more relevant competitor. After you have assessed where your organization sits on the path to personalization, you may be asking what the next step is.

The case for personalization is highly compelling, with personalization campaigns driving a 10 to 15% annual revenue lift (with company-specific lifts spanning 5 to 25%, driven by sector and ability to execute).

[Related: Leader Survival Kit: When the Path Forward is Not Clear]

Many of us marketers were tasked with implementing personalization for our respective organizations and the big question looms of how to get started.

Here is a five-step guide on where to start:

1. Research the definition of personalization among your customers. How do your top and next best customers define what “personalization” means to them? What is considered too intrusive or creepy? What touch points are most lacking in a personal touch?
2. Determine the personalization strategy. Many of us fall into the trap of implementing technology (the how) before we determine the strategy (the what and the why). What channels will you prioritize? What metrics do you want to affect? What does success look like?
3. Perform a gap analysis between current data and Marketing Technology (MarTech) infrastructure and what is needed to deliver on your personalization strategy. What are your data sources and how are they integrated? Do you have a single view of the customer? Don’t forget to leverage your loyalty data — that is a wealth of information and allows you to follow the member interactions across channels. Do you have the MarTech to deliver on the vision?
4. Determine milestones and break roll-out into phases. Despite potentially lengthy data and tech upgrade timelines, you don’t have to wait to start your personalization efforts. If your data centralization and MarTech stack fall short of expectations, what quick fixes can you implement (or outsource) and be able to deliver quick wins? Start small (perhaps with a few use cases in one channel) and phase out the execution of personalization to coincide with tech deliverables.
5. Adopt a test-and-learn mindset. Use what you learn to continuously adapt and evolve. What works with one customer segment in one channel may not work with another segment in another channel. Continue using new insights to innovate your business; continuous innovation will have your competitors always trying to catch up and never quite succeeding. Use your data to create a dialogue with your customers, to customize communications with each customer and communicate with them in a relevant way, to truly care about them and their opinions. Connect with them in a meaningful way: that provides your customers with the value they can’t get anywhere else.

You may be asking yourself who is doing it right. Sailthru publishes an annual Retail Personalization Index and Thrive Market, Sephora, and DSW earned the top three spots in 2022.

Keep the end goal in mind: your customers are human and deserve relevant and personalized messaging and content. This is the only way to build meaningful long-term relationships and emotional loyalty.

[Related: The Secret to Success (It Isn’t Just About the Right Idea)]

—

Lia Grimberg is Principal and Consultant for Radicle Loyalty.

Originally published at https://www.ellevatenetwork.com on August 9, 2023.