Tactical Personalization is dead. Long live strategic personalization
According to analysis from Gartner 80% of marketers will abandon efforts at delivering personalization by 2025. This stark statistic contrasts with the current market growth and interest in personalization - it was even selected as the word of the year by the Association of National Advertisers in the US.
At Kameleoon we disagree that personalization is likely to become less important to brand strategy - in fact, we believe it is the foundation of future engagement with customers. However, we would agree with Gartner that it is easy to get something as complex as personalization wrong - in terms of technology, approach, culture and the data you use. To achieve ROI brands must harness real-time behavioral data, AI, business focused technology and a culture of experimentation. This post explains how brands can ensure that personalization is delivering on its promise of customer and bottom-line benefits, particularly by using the right data to balance anonymity with an optimized experience.
1 Why personalization fails
Gartner sees two main reasons for marketers giving up on personalization over the next five years:
- The perils and difficulty of managing customer data. Over a quarter (27%) of marketers say this is their biggest obstacle to success.
- A lack of Return on Investment from their projects, causing them to be dropped.
The analyst also lists concerns from marketers in four further areas:
- A continuing decline in consumer trust, making it less likely visitors will share their data
- Increased scrutiny by regulators, as demonstrated by the GDPR and CCPA.
- Tracking barriers erected by technology companies, such as browser providers.
- Poor technology solutions. While personalization comprises 14% of the marketing budget, more than one in four marketing leaders say that the technology they have is a major hurdle to personalization.
2 Delivering personalization that works
Let’s be clear - it is true that done badly personalization actually undermines relationships - we’ve all had emails that misspell our name or been followed around the web by adverts for products that we quickly glanced at on a website.
However, well-targeted personalization delivers real benefits for both customers and brands:
- Research from the Boston Consulting Group found that 40% of consumers spent more than they originally planned when visiting websites that were highly personalized.
- In a survey of 3,000 consumers in the US, UK and Canada 63% of consumers said they now expect personalization as standard.
Clearly Gartner’s conclusions are meant to be provocative and eye-catching. As with any technology or strategy, if personalization is implemented poorly or without an overall objective it will fail. To help avoid this, the analyst outlines three recommendations to increase the chances of projects delivering success:
- Run a pilot or proof of concept (POC) with a vendor before investing in their personalization solutions. Start at a basic level and test tailored recommendations through segmentation first to avoid investing in a personalization engine before you are ready.
- Take a strategic, not just tactical approach. Focus on planning, use case development and consent management within a wider personalization roadmap.
- Work together across the business, aligning and sharing control of personalization efforts. This increases insight, impact and ROI.
3 Overcoming the main hurdles to personalization success
Based on our experience, and that of our clients, here is how marketers, helped by effective technology, can overcome the key challenges that Gartner highlights:
1. Lack of ROI
No project will continue if it doesn’t show a distinct return on investment. Digital marketers therefore need to focus on their aims from personalization and use this to create a well-argued, measurable business case. Be clear on your objectives - do you want to increase sales? Grow your margins by cutting promotional spend? Free up time within your team by removing manual activities? Measure what you are aiming to achieve and show how personalization will support this goal.
It is also important to understand that personalization tools alone don’t deliver ROI - you need to have access to the right skills and culture to harness them effectively.This means embracing experimentation and a ‘test and learn’ methodology within the team, aided by your vendor and by the right external agency partner as required.
2. The difficulty of managing customer data
Brands face a privacy paradox - consumers want greater personalization, but also want greater privacy. At the same time brands have access to ever-greater volumes of transactional data on consumers, potentially making it difficult to focus on what is important.
At Kameleoon, we believe that brands simply don’t need most of this ‘cold’ transactional data to deliver effective personalization. Instead, by using anonymized ‘hot’ behavioral data, collected in real-time, you can provide a personalized experience without privacy concerns.
Tests show that our technology can predict the conversion intent of completely new visitors within 15 seconds of them arriving on your website. It doesn’t rely on them being existing or identifiable customers, but uses a trained AI algorithm to compare their actions with those that have previously converted to deliver a conversion score (the KCS) that is accurate solely using behavioral data. There’s no impact on privacy, yet consumers get the personalized experience that they want quickly and simply.
3. The decline of trust and increased scrutiny by regulators
As well as consumers themselves, regulators around the world are now focusing more on how personal information is used by businesses. The GDPR in Europe has been joined by the California Consumer Protection Act, along with other legislation across the world - all of which has a major impact on how you use identifiable consumer data. Legislation threatens large fines (up to 4% of global turnover in the case of GDPR) for companies that either fail to protect customer data or to gain consent for its specific use.
Managing customer data has therefore become more onerous for marketers, however GDPR only applies to information that identifies consumers. Using anonymized, behavioral data is not covered, meaning that relying on hot data has much less of a compliance overhead. For marketers that do want to combine existing cold data (such as from CRM systems), within their personalization platforms, it is vital to work with a solution vendor that understands GDPR and can ensure you are compliant.
4. Tracking barriers erected by tech companies
For brands looking to deliver a personalized experience they need to work with technology vendors that can help them overcome these barriers. For example, Kameleoon’s tool uses cross-domain local storage to retain information that can power ongoing personalization for site visitors.
5. Poor technology
The personalization market is growing rapidly, and is not yet mature, meaning there are a large number of vendors all competing for attention and business. For those selecting a platform it is vital to understand the strength of a vendor’s underlying technology, and in particular how it has been proven with similar brands and use cases. Questions to ask include:
- What are the technology foundations?
- How easy is it to use?
- How much support does the vendor offer in order to get the most from the tool?
The need for strong technology is particularly true when it comes to real-time personalization. Delivering this successfully, at scale, is complicated and requires a robust technical architecture that is designed for real-time and AI that can learn to predict conversion intent, based on analysis of real-time behavioral data.
Companies that don’t adopt a strategic approach that brings together real-time data, an experimentation culture and easy-to-use, focused AI-based technology will see their personalization projects fail. This will damage their brand, both in terms of customer trust and revenues. However, to succeed you need to differentiate by offering a personalized approach, meaning that pulling back from personalization is not an option. Looking beyond the headlines of Gartner’s warning it should act as a wake up call for brands - use the right data, measure your efforts and continually look to improve the experience if you want to thrive in the personalized future.