Personalization Important for Marketing »
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Personalization has become the Holy Grail of marketing and CRM -- as much sought after and, to many crusaders, just as elusive.
For years, personalization has remained outside the reach of most enterprises primarily because it is broadly defined, and there is not a single magic bullet that will make a personalization strategy fly.
"In the heyday of e-commerce, personalization meant collaborative filtering," Forrester Research senior analyst Eric Schmitt told CRMDaily. "But the meaning [keeps getting] stretched further and further."
Personalization now includes anything from a simple mail merge to extending specific sales and promotional offers based on extensive customer profiling.
That broad definition, at the very least, can confuse corporate decision-makers. Still, the lure of personalization is undeniable.
Custom Work
By customizing relationships with customers, a company can resolve complaints more efficiently, boost customer loyalty and make relationships more profitable.
According to a report sponsored last year by the Personalization Consortium, personalization also can result in greater online spending by consumers.
The report found that 28 percent of consumers who personalize spent more than US$2000, while only 17 percent of those who did not personalize spent similar amounts.
Join the Crowd
In recognition of the value personalization can bring, businesses are jumping at the chance to customize their marketing strategy down to the individual.
Barclays Bank, for instance, recently committed to personalizing the banking experience in an effort to retain current customers and attract new ones. The Barclays project is being driven by Vignette applications.
Likewise, music retailer FYE, part of Trans World Entertainment, plans to augment its retail store offerings with a Microsoft-based personalization tool that can be used in the store or online.
So Many Choices
Still, most enterprises only have a vague idea about which products to buy and how to use them to get personal with the customer.
Despite a few rather comprehensive offerings from vendors, such as BroadVision's One-to-One Enterprise application set and Command Centre rules-based personalization system, "there is not a lot of technology out there yet," Aberdeen Group research director Denis Pombriant told CRMDaily.
There are plenty of vendors, though, who profess to have at least a piece of the personalization puzzle.
Creative Tools
Many personalization offerings have been spun out from other enterprise applications.
For example, Firefly Networks took what was essentially a knowledge management-based tool -- its collaborative filtering software -- and aimed it at personalizing consumer Web sites.
In a similar vein, PeopleSoft added personalization features to its popular software suites. In addition, PeopleSoft recently bought Annuncio Software to get its hands on the company’s dialogue marketing tool. The application will let companies build personalized marketing campaigns via the Web and through e-mail.
Obstacles, of Course
But Schmitt said that many enterprises overlook the major obstacles to personalization.
"The problem is data integration," he said. "The information is all over the place."
In fact, according to Schmitt, any strategy "based on a single source of information is doomed to fail."
There are some companies that have a handle on data management in the personalization field. Schmitt said that Web and catalogue retailer Lands' End, for example, and a number of the Web travel companies have mastered the personal data integration problem.
"They’ve collected and aggregated data for years, and they do segmentation and some personalization," he said.
Split Second
A greater challenge is to integrate customer information in one place and then translate it in a matter of seconds into "the right decision or recommendation at the customer touch point," said Schmitt.
The analyst pointed to E.piphan as one company that has made some strides in doing just that.
Playing Clue
Yet another stumbling block to effective personalization is the misconception that it leads to predictions about a customer's future behaviour. Personalization technologies simply cannot tell an enterprise anything about why a customer did something -- or what he is going to do next.
"It can only make correlations," Yankee Group analyst Neal Goldman told CRMDaily. "If I go to Amazon and buy a Britney Spears CD, and then go to Orbitz and buy a plane ticket to San Francisco, a personalization engine might see a correlation" and extend an offer for tickets to a Britney Spears concert in San Francisco.
"I might hate Britney Spears and only bought the CD for my niece. The engine can only make correlating guesses," Goldman explained.
Despite its drawbacks, personalization technology is maturing and observers say it will gain more value -- as well as accuracy -- as the focus shifts to new applications based on the principles of customer voice management (CVM).
A Rocky Road
On the data-collection front, businesses need to realize that much of a personalization strategy depends on user input, rather than the automated collection of data.
If customers do not fill in the blanks in their profiles, then the data -- however well-integrated -- is certain to be incomplete. In addition, the industry still must navigate the murky waters of privacy issues.
According to a Gartner report, of the companies that already have adopted CRM solutions, about 40 percent are turning their attention to privacy.
Final Segment
Schmitt believes that many businesses would benefit greatly from focusing on segmentation, rather than the complexities of personalization.
Personalization can include long sets of rules that "are not comprehensible to mere mortals," Schmitt said. "For a lot of companies, segmentation would be a win. Eighty percent of value comes from breaking the base down to 10 segments, instead of an infinite number of segments."
Personalization has become the Holy Grail of marketing and CRM -- as much sought after and, to many crusaders, just as elusive.
For years, personalization has remained outside the reach of most enterprises primarily because it is broadly defined, and there is not a single magic bullet that will make a personalization strategy fly.
"In the heyday of e-commerce, personalization meant collaborative filtering," Forrester Research senior analyst Eric Schmitt told CRMDaily. "But the meaning [keeps getting] stretched further and further."
Personalization now includes anything from a simple mail merge to extending specific sales and promotional offers based on extensive customer profiling.
That broad definition, at the very least, can confuse corporate decision-makers. Still, the lure of personalization is undeniable.
Custom Work
By customizing relationships with customers, a company can resolve complaints more efficiently, boost customer loyalty and make relationships more profitable.
According to a report sponsored last year by the Personalization Consortium, personalization also can result in greater online spending by consumers.
The report found that 28 percent of consumers who personalize spent more than US$2000, while only 17 percent of those who did not personalize spent similar amounts.
Join the Crowd
In recognition of the value personalization can bring, businesses are jumping at the chance to customize their marketing strategy down to the individual.
Barclays Bank, for instance, recently committed to personalizing the banking experience in an effort to retain current customers and attract new ones. The Barclays project is being driven by Vignette applications.
Likewise, music retailer FYE, part of Trans World Entertainment, plans to augment its retail store offerings with a Microsoft-based personalization tool that can be used in the store or online.
So Many Choices
Still, most enterprises only have a vague idea about which products to buy and how to use them to get personal with the customer.
Despite a few rather comprehensive offerings from vendors, such as BroadVision's One-to-One Enterprise application set and Command Centre rules-based personalization system, "there is not a lot of technology out there yet," Aberdeen Group research director Denis Pombriant told CRMDaily.
There are plenty of vendors, though, who profess to have at least a piece of the personalization puzzle.
Creative Tools
Many personalization offerings have been spun out from other enterprise applications.
For example, Firefly Networks took what was essentially a knowledge management-based tool -- its collaborative filtering software -- and aimed it at personalizing consumer Web sites.
In a similar vein, PeopleSoft added personalization features to its popular software suites. In addition, PeopleSoft recently bought Annuncio Software to get its hands on the company’s dialogue marketing tool. The application will let companies build personalized marketing campaigns via the Web and through e-mail.
Obstacles, of Course
But Schmitt said that many enterprises overlook the major obstacles to personalization.
"The problem is data integration," he said. "The information is all over the place."
In fact, according to Schmitt, any strategy "based on a single source of information is doomed to fail."
There are some companies that have a handle on data management in the personalization field. Schmitt said that Web and catalogue retailer Lands' End, for example, and a number of the Web travel companies have mastered the personal data integration problem.
"They’ve collected and aggregated data for years, and they do segmentation and some personalization," he said.
Split Second
A greater challenge is to integrate customer information in one place and then translate it in a matter of seconds into "the right decision or recommendation at the customer touch point," said Schmitt.
The analyst pointed to E.piphan as one company that has made some strides in doing just that.
Playing Clue
Yet another stumbling block to effective personalization is the misconception that it leads to predictions about a customer's future behaviour. Personalization technologies simply cannot tell an enterprise anything about why a customer did something -- or what he is going to do next.
"It can only make correlations," Yankee Group analyst Neal Goldman told CRMDaily. "If I go to Amazon and buy a Britney Spears CD, and then go to Orbitz and buy a plane ticket to San Francisco, a personalization engine might see a correlation" and extend an offer for tickets to a Britney Spears concert in San Francisco.
"I might hate Britney Spears and only bought the CD for my niece. The engine can only make correlating guesses," Goldman explained.
Despite its drawbacks, personalization technology is maturing and observers say it will gain more value -- as well as accuracy -- as the focus shifts to new applications based on the principles of customer voice management (CVM).
A Rocky Road
On the data-collection front, businesses need to realize that much of a personalization strategy depends on user input, rather than the automated collection of data.
If customers do not fill in the blanks in their profiles, then the data -- however well-integrated -- is certain to be incomplete. In addition, the industry still must navigate the murky waters of privacy issues.
According to a Gartner report, of the companies that already have adopted CRM solutions, about 40 percent are turning their attention to privacy.
Final Segment
Schmitt believes that many businesses would benefit greatly from focusing on segmentation, rather than the complexities of personalization.
Personalization can include long sets of rules that "are not comprehensible to mere mortals," Schmitt said. "For a lot of companies, segmentation would be a win. Eighty percent of value comes from breaking the base down to 10 segments, instead of an infinite number of segments."