Personalization is expected to play a very big role in marketing in the future. It will alter the way marketing is carried through content, products, emails – etc. which will be created in consonance with the taste and character of individual customers.
Before you wonder on the “how” part, let me tell you that technology has already started to make this a reality. This will be an in-thing of marketing as 96% of marketers today believe that personalization takes customer relations to a higher level.
Big companies like Amazon and Netflix have started using personalized marketing and are scaling up their business to higher levels. If you have observed closely you will find that they are showing you products based the choices you have made in the past. They are leveraging the power of personalization and paving way for others to follow suit.
Personalized marketing is done with the help of datasets like purchase history, consumer behavior, links clicked etc. These datasets enable a brand to create tailored messages to customers. Custom content has a far better strike rate than broadcasting content.
A study by Marketo revealed that personalized emails which are based on insights derived from these datasets were three times better than regular marketing emails.
Personalization marketing comes into play when a company decides what marketing is suitable for an individual customer based on previously collected customer data. Personalization can be very expensive since it thrives on data. Companies have to stretch their resources on the data collection process. They use numerous software to collect and study data. This can also raise privacy issues.
Another risk is the accuracy and dependability of the data. There are three steps which are critical for personalized marketing. The first step is of collecting accurate and reliable data. The second is to transform this data into insights. The third step is to operationalize the insights into decisive actions. The success of personalized marketing entirely rests on the effective implementation of these steps.
Personalization can be very expensive since it thrives on data.
Challenges lie in collecting and integrating data of customers. The extent of customers used for integration will play a significant role in computing the insights accurately. A 360° view will be an ideal extent for integration.
It’s exceedingly expensive to study all customers with such a wide angle view. A company can obtain a 360° view easily for 40% of its customers if they are members of the company’s customer loyalty program. In such a case the company can leverage the insights from this 40% sample and interpolate it to the remaining 60%.
Another crucial feature of personalization is its reliance on statistical analysis of customer data. How accurate are these predictions? Personalization relies on assigning the right marketing effort to the right customer. Any miscalculation can be highly detrimental.
Distracting and annoying the customer by recommending some products which he or she has no interest may be worse than making no recommendation at all. There is a lot of scope for error if the whole marketing process takes a wrong path.