How to Personalize your Personalization Strategy

October 28, 2019

Person using smartphone

Whether your company is embarking on its personalization journey or refining its current approach, you’re likely to have had many discussions on how to move away from personalization as a buzzword towards defining the practical reality of what you can, and should, implement.

Personalization can mean many things and can be executed in many different ways. The 5 questions below outline some of the fundamental questions you and your organization should ask while developing your own personalization strategy.

Personalization versus segmentation: how targeted do we really need to be to improve conversion and overall loyalty?

The first element to consider is how personal you could and should be. The reality is that for some companies the 80% of topline gains can come from a successfully executed customer segmentation. For others, hyper-personalization utilizing complex algorithms to match each customer to specific products is both feasible and necessary.

It’s also critical to understand the development path, don’t walk before you can run and ensure the whole company is brought along on the journey. Plugging in a black box one day and expecting success is a risky and, even if technically successful, unlikely to be accepted and adopted by the wider organisation.

Personalization versus customisation: how can we provide the end consumer with the products, services and experiences they truly want?

While the terms are often used interchangeably it’s valuable to consider the differences in these two approaches. Generally personalization case studies involve a company selling hundreds, or even thousands, of products with a large source of customer specific data and the ability to identify the customer every time they interact with the brand. Here the source of improvement is to offer the right products to the right people and refine how that occurs over time.

However if you only sell a few products or you cannot identify the customer each time they interact with your brand then this isn’t feasible. Here’s where customisation comes into play, you have to ensure the consumer can create the product or service they want or can select from a selection of pre-bundled options. You may choose to allow customer to build a la carte products rather than bundles. While this allows consumers to get the product they want, or think they want, it comes with a high risk of downgrading and revenue loss. While this could lead to great loyalty it needs to be carefully considered.

Which elements of the offering should be personalized?

Price, product, promotions, services, customer experience or wider communications, there are a lot of ways you can more effectively target your customers. For some companies it will be more obvious that others but you should also not necessarily simply embark on the same approach as your competitors, maybe they haven’t thought through all the options.

The core of the strategy is to identify core customers groups, I won’t use segments as a term as that could be easily confused, and then identify what they need to improve conversion. Is the issue that there is varying willingness to pay or differences in products required? Are both of these actually the same but the reason behind the need, i.e. the emotional trigger to create the purchase, different?

Obviously the path you take may vary at this stage but the key question to ask at the start is to identify whether the approach should be to vary price in some way, the product, customer experience or something else.

What common pitfalls should I look out for?

There are two questions here, how can it go wrong and how can it not go right. Moving towards your end goal of personalization will be a process of testing and learning, and this goes hand in hand with not running before you learn to walk. If initial efforts are not revenue positive then you need to go back and understand why. Maybe the element you thought was limiting conversion was not the case, or maybe some element of the personalization had unexpected consequences.

Simon-Kucher’s research indicates that consumers accept and expect some elements of a company’s offer to vary across customers (e.g. promotions) and others they don’t (e.g. list prices). If your personalized offering is presented in a seamless way to the consumer it is more likely to improve conversion than if the offer becomes complex and inconsistent. The numbers of touch points customers, and their friends and family who are travelling with them, have with your brand is increasing. In the case of personalized price points, this will simply increases the chances of varying prices being observed and trust in the brand being lost.

The data, people and processes needed to successfully implement personalization should also not be ignored. You cannot have a data science team sitting in a silo creating personalization, the approach needs to be deep rooted across the company. It may be surprising that an article on personalization has not really touched upon the technology driving it. While the technology is obviously fundamental for a strategy to be executed in most cases, the technology needs to be chosen to meet the strategy rather than the strategy being implemented because the technology is there.

Is personalization the only strategy to embark on?

While personalization is a great opportunity to become more customer-centric, it is not the only revenue driver available and should be viewed as one of many opportunities to pursue, remember it is simply a way to increase conversion at its heart. It will also not cover up more fundamental issues with the product or service offering if those, as their fundamental core, are not what your customers need. In the same way each customer is unique, so it each company so it’s imperative you personalize your personalization.