Personalized marketing is a strategy by which marketers leverage data and analytics to deliver personal experiences to customers and prospects. The goal of personalized marketing is to communicate with users on an individual level and to speak directly to their interests. As part of a brand’s personalization strategy, it can lead to more revenue and better customer relationships.
The Importance of Personalized Marketing
Personalized marketing is a buzzword in today’s marketing world because it is effective. This application of personalization technology can increase customer engagement, drive revenue, and increase average order value (AOV).
As Jeff Bezos said in his 2017 Amazon letter to shareholders, “Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys.” Simply put, understanding customers on a personal level is the key to driving further success for your business. But poring over individual anecdotes isn’t the only way to achieve a greater level of individualization. A good personalization engine will collect and act on data points at scale in order to deliver customer intent-driven experiences for each person that strengthen relationships over time.
The Need for Better Personalization
Personalization is more than just addressing your customer by name. Although many companies still employ these basic tactics and call it a day, only 7% of clients are more likely to engage if you address them by name and 8% of clients are more likely to engage if you know their birthdays. However 31% of surveyed customers are looking for a more personalized experience—and many brands are failing to deliver. Continue reading to learn more about how you can personalize your marketing beyond the basics.
Where You Can Use Personalized Marketing
There are several ways marketers can personalize their brand, messaging, and offerings to reach users. Consider the following:
Personalized content means serving relevant information, messaging and content assets to users based on their interests and context. An it works: 80% of marketers agree that personalized content delivers better results than content that isn’t personalized.
Email marketing is one of the most popular and effective ways to stay in touch with your database. It’s an easy way to keep your audience apprised of new offers, share industry insights, and increase engagement. However, many marketers could be making better use of their database by sending personalizing emails. Even personalizing just the subject line can increase open rates by 26%.
In order to do email personalization right, marketers must think beyond the first name address. Personalization doesn’t mean sending a completely unique message to every person; it means using data to inform what you send to whom.
One way marketers have personalized emails is segmenting clients into lists based on customers’ demographics, location, previous purchases, or browsing history. For example, the B2B firm NetProspex wanted to understand their users better. By collecting data (including browsing history and pages viewed), they were able to segment users into focused groups including demand generation, operations and data management. They then targeted these personas with emails based on their needs and concerns. This led to a 171% increase in marketing revenue.
But segmentation is only a part of personalization. True email personalization can include product recommendations, birthdays, weather, interests and search history. Instead of focusing purely on the segment, 1-to-1 personalization focuses on the individual. Companies such as JetBlue send their users anniversary emails to celebrate when users first joined their email lists. Amazon sends shoppers product recommendations, featuring items related to past searches. If a section of the country will be hit with a blizzard, you can send emails featuring jackets and boots in your store. When machine learning is applied, your personalized email program can move beyond the segments to cater to the individual.
Personalized Product Recommendations
Product recommendations are a great way for companies to further engage users and encourage future sales, while upselling current clients. When they have the right data behind them, recommendations can higher in-session revenue and higher return rates. In fact, when customers show even minimal engagement with a recommendation, their eventual purchase rates spike by 70%.
Additionally, customers who either add recommended items to their cart or purchase a recommended item within the initial session have average order values a full 33% higher than those who do not engage. That means that brands should use every tool at their disposal to make sure their recommendations are hitting the mark-making personalized recommendations a must.
In addition to personalizing single elements of an experience, the contents and layout of an entire page can be personalized to reflect a visitor’s needs and intent. For sites like Amazon, for example, personalization is a huge revenue driver. Amazon features a vast selection of products, ranging from books to the Echo. Its users are also looking to accomplish widely varying tasks.
Whether it be ordering groceries or shopping for back to school, Amazon customers span different lifestyles and needs. By personalizing almost every element of its homepage based on user data, past browsing history, and previous purchases, Amazon is able to cater to the individual with information relevant to them—reducing the sense of overwhelm that can easily send customers to a competitor.
Benefits of Personalized Marketing
Personalized marketing can deliver a wide range of benefits, including the following:
A Better Customer Experience
Part of the reason personalized marketing is so effective is that it makes the message more relevant to users. A customized offering not only helps you acquire new customers, but helps you create stronger bonds with your existing ones.
In Forrester’s 2018 Digital Customer Experience Report, the research firm cites several customer experience mistakes commonly made by retailers. The list includes broken or slow-loading images and requiring unnecessary information such as type of credit card being used—in other words, wasting the customer’s time. Fixing these design errors and introducing more personalized elements creates a better user experience for the customer and leads to higher revenue.
Target Specific Audiences
Personalized marketing allows you to zero in on the demographics that are most important to your brand. Whether you are trying to reach an audience in a specific location, or one of a certain age, your brand can leverage personalized marketing to connect them in a way you haven’t before, without sacrificing your existing relationships with customers in other groups.
Setting aside a budget for personalized marketing can have a serious impact on revenue. Nearly 80% of consumers say they will only engage with a brand if their experience is informed by past interactions with the brand. Failing to personalize your marketing can result directly in lost opportunities. Meanwhile, the inverse of that negative effect is also true: Personalizing your marketing allows you to connect with more clients and results in a greater return on marketing investment.
Challenges of Personalized Marketing
With personalized marketing comes a few hurdles. Let’s break down a few of the challenges you could encounter when deploying a personalized marketing strategy.
Challenge 1: The Blank Slate Problem
For many marketers, the problem with personalized marketing is that they aren’t sure how to get started (a struggle that we at Monetate refer to as the blank slate problem). Once the tools are in place, marketers need to decide where to begin with their personalization program. We recommend identifying a few key areas to focus on. Instead of rolling out a full personalization program, focus initially on a single strategic component of your marketing. If email marketing is a big source of revenue for you, experiment there first. Then use what you learn and apply it to other aspects of your marketing program. Consider focusing on one of the following:
Consider the visitors of your website. New visitors to your website are likely to be unfamiliar with your brand and products. On the flipside, returning visitors have already shown a level of interest or intent. Apply the information gathered from returning visitors to provide a more personalized experience for deeper engagement.
Creating a cohesive experience for the user is essential. Your organization needs to marry the site experience to the channel experience that brought the visitor in. Each platform and channel has different expectations from the user. For example, if a user comes from social, they may not be in a buying mood, but could be willing to give an email address.
Which devices are users coming from and how can you use this information to personalize their experience? For example, users on desktops have higher attention spans, making it more likely that they will convert. Mobile users are more likely to browse and less likely to convert.
Users from different regions may have different preferences in terms of messaging and products. Additionally, weather can have a big impact on what these people buy. Users in Boston may require boots and jackets for winter blizzards, while users in Texas are looking to purchase sunglasses and sunscreen. Proximity to a city or the country can also impact users’ tastes.
Challenge 2: Lack of Technology
59% of marketers surveyed by Forrester cited lack of technology as an obstacle to getting started with personalization. However, 26% of surveyed marketers say that identifying the right technologies for their needs is one of the biggest obstacles facing them. Reviews of marketing technology platforms are often scattered across sites. Additionally, the use cases you find may not be relevant for what your company is looking to do with the platform.
Many marketing departments also experienced stalled budgets. Getting budgets approved for the right technology partner can be a hurdle for many companies, looking to expand their personalization program.
Challenge 3: Lack of Resources
Many companies struggle with a lack of resources, which may mean fewer staff or less purchasing power. However, even those working under limitations stand to benefit from personalization—perhaps even more than organizations who are flush, as AI-powered solutions can greatly increase ROI and allow marketers to achieve greater scale with less manual work. If leadership is reluctant to invest, it can be worthwhile to start small: Start with a single, but well-thought-out campaign, and measure the results. As you begin to launch more personalized marketing programs, you can share the results with your executive team alongside ideas for how to iterate in order to generate confidence and buy-in.
Getting Started with Personalized Marketing
There are several steps that organizations need to take when getting started with personalized marketing.
1. Figure out where you want to apply personalized marketing
As stated above, many businesses don’t know where to get started when it comes to personalized marketing. As a first step, figure out which of your existing campaigns are driving the most revenue or would benefit the most from a personalization strategy. It may feel safer to experiment in low-stakes elements, but it’s more effective to take the opposite approach: Applying personalization to the areas where it is likely to be seen and have measurable impact is more likely to generate useful insights for your team, not to mention boost your business metrics.
2. Figure out who your best customers are
How well do you understand your customers? By understanding the habits of the customers who are really sustaining the brand, you can apply personalization strategically to keep those customers and offer other newer customers an experience that will increase their loyalty.
A great first step to understanding your customers is through market research and client interviews. You should ideally understand what they like to read (which will help you when buying additional media), their interests, and other things they may value. This will help your creative team apply more tailored messaging. Additionally, partnering with the right personalization vendor will help you take your vast amounts of data on these customers to create tailored emails, web pages, and product recommendations.
3. It’s all about data: Make sure you have the right solution
A good personalization plan relies on data. However, with the vast amounts of data created, it can be hard to distinguish what is important and what isn’t. Partnering with the right personalization vendor can help you leverage this data (for example: demographic data, session data, CRM data, and third party data) and apply it to future campaigns. Check out our 13 questions to ask a personalization vendor to make sure you get started with the right one.
4. Test and repeat.
As with all marketing, a vital step is to test personalized marketing across different campaigns, measure results, and apply the learning to the next campaign. For example: You may launch an email campaign and realize messaging needs to be adjusted for one of your target audiences. Don’t be afraid to perform some A/B testing with personalized marketing to make sure you get the messaging just right.
Brands Taking Advantage of Personalized Marketing
Several brands are taking notice of the benefits of personalized marketing. Consider the following companies and how they have utilized personalization to drive results forward:
Personalization Drives $6.9 in Revenue for Office Depot
Office Depot offers a wealth of detailed information on its product description pages (PDPs), but not all of it is relevant to every customer. The brand found that their top-of-funnel users were spending less and less time on site when they viewed the information-dense PDPs, which were cluttered and overwhelming for some customers who were too early in the research stage.
Office Depot recognized an opportunity to increase conversions and revenue by using personalized marketing to present the right information to each customer, based on where they were in the buying cycle. They utilized Monetate’s machine learning platform to dynamically reorder the PDPs, customizing the page layout and content displayed to make sure that users saw the information that was most likely to be relevant to them in the moment. In just four months, the Office Depot team saw a revenue increase of nearly $6.9 million.
N Brown Group Improves its Bounce Rate in One Week
The website for British retail brand group N Brown featured a homepage hero carousel to grab the viewer’s attention and increase conversions. The carousel featured the same images, in the same order, for every visitor. An analysis of user behavior revealed that, although the carousel rotated, many visitors were only viewing that area of the site long enough to see the first banner in the series—missing the subsequent images that might have been more relevant to them, and possibly losing interest in the site after viewing the initial offering.
N Brown realized this was a lost opportunity to personalize their messaging to users of the site. By applying the Monetate Intelligent Recommendations Engine, they changed their tactics and began to deliver one, truly relevant image for each visitor rather than a uniform rotation intended to include something for everyone. By making this change, N Brown was able to achieve a 3.3% decrease in bounces from the homepage in just one week.
Common Personalized Marketing Questions
Many companies don’t know where to start when it comes to personalized marketing. Below, find several of our most commonly asked questions:
Why should I do personalized marketing?
Personalized marketing is no longer a luxury for modern brands. Nearly 60% of online shoppers who have experienced personalization say that it played an influencing role in their purchase decisions. Many customers now consider it as the baseline for an acceptable customer experience.
What should I consider when launching a personalized marketing campaign?
Anyone launching a personalized marketing campaign should scrutinize what types of data they collect and how accurate it is. In today’s environment, data is everywhere—but not all data is relevant. Basing personalization campaigns on inaccurate data will make them less effective and could potentially alienate customers. Choosing the right vendor is a vital part of launching a successful personalized marketing campaign.
How do I get started with personalization?
Figure out what aspect of your marketing plan would benefit the most from personalization and start there. Test and repeat. Then you can apply your learnings to other channels. See our steps above for more information.
What is a personalized customer experience?
A personalized customer experience goes beyond the marketing channels themselves. It is about understanding the individual customer and their needs. This understanding of the customer should span across platforms and across devices. It should take into account a client’s interests and where they are in the buyer journey.