COVER STORY: Why Personalisation failed, and how it is now evolving

The marketing technology sector has been pushing personalisation hard for a decade, but it hasn't delivered, at least not as the vendors originally imagined it. Indeed, the best measure of whether CMOs are really enamoured with a solution is their willingness to defend it in the face of budget cuts, and on that front, the answer is a resounding "No way!"

Jason McNellis, senior research director at Gartner tells Digital Nation Australia his company's research reveals that only one out of 18 marketers would be willing to do so.

That is consistent with research findings the firm released in 2019 which predicted that 80 percent of marketers would abandon their personalisation efforts by 2025.

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A big part of the problem is that a marketer’s idea of personalisation - largely based around customising messages about things they want to flog, is different to that of the consumer who principally wants an experience that is fast simple and easy.

McNellis calls personalisation a “big tent where almost everybody can put their use case into”.

“If you can fit your use case into it, then you run the risk of personalisation of tomorrow being the exact same digital marketing you're doing yesterday. How is that going to add business value? The brands that are benefiting from personalisation, have a distinct definition,” he said.

McNellis explains that not everything was personalised recently, for instance, every CEO was sending out a political message or something relevant to COVID.

“Those aren't personalised, not every communication is going to be personalised. But if personalisation is going to make a difference, we need to have that minimum definition,” he said.

Personalisation will need to have a minimum definition for marketers to properly utilise it.

McNellis said personalisation might have to have an insight, hypothesis, or something from market research that said if added this component that will increase my conversion rate.

“Does personalisation need to involve experimentation such as classic AB testing? What we see in some of our data, we talk about personalisation strategies we think are valuable like tailored help,” he said.

“But even though we think that's a robust strategy, it can take some experimentation to figure out the details for how to get tailored help to work in your brand. That is one thing people can plan for as they're thinking about personalisation.”

Another use case is implementing KPIs according to McNellis.

“Often when we're optimising personalisation day to day, it's on a very near term KPI. It's on a click, and add to cart, very short term. We want to balance that if we can with a longer-term KPI. We're seeing some interesting trends in personalisation for digital self-service. After purchase I've questioned about my product, setting up the new TV that I bought, those are great experiences to personalise.

“I might have a short-term metric did Jason find his need? Did we contain that from becoming a call into the call centre? But ideally, I also want to pair that to a longer-term metric, like repurchase rates, like customer satisfaction, scores, and balance those two,” he said.

Evolution of personalisation

Personalisation used to be called hyper-personalisation, customers were offered items based of their previous purchases, according to Sri Annaswamy, founder and director at Swamy and Associates.

He said the concept has not worked in the way marketers originally thought.

“The vision was you would be able to log in, type the specific thing that you wanted, and Woolworths would already know what kind of toothpaste you bought last time, it'll give you two or three options, you'll be able to click and then all be delivered at your door. A lot of that hasn't happened,” he said.

“That customised toothpaste hasn't happened, what has happened is what Commonwealth Bank is doing brilliantly with their customer engagement engine, they're actually able to proactively warn customers.”

This means Commonwealth Bank can notify customers when their account is overdrawn, their credit limit might be reached or they might miss a loan mortgage payment.

“In terms of financial welfare, personalisation has worked very well, " But that is a very different idea to what marketers typically meant by personalisation over the years. That vision has failed. 

Empathy

Simon Edwards, Research and Insight Lead at ANZ Group said it helps an organisation when their personalisation efforts are implemented with an empathetic view.

“It’s difficult if you're trying to develop new experiences within the mortgage process or home loan process. You can't go out to people and ask them how about this? How about that unless you're really in it, or you've recently been in it,” he said,

“The research can suffer because it has a lack of relevance to the customer and they haven't experienced the things you go through.”

Brands also need to keep in mind how they use their customer’s data when implementing personalisation tools, especially in the banking sector.

“You have a lot of operational risks, things to think through because you've got this person coming to this research direction, you need to get their permission not only times to do the research that happens anyway but for them to be comfortable that their banking data is used for what you're testing. Then you've got to make sure that you're executed in a way that preserves confidentiality,” he explained.

Marketers are not lacking in customer data as COVID has accelerated the volume of data that marketers have and the volume and accessibility of data they have on customers because it went digital, according to Jo Gaines, VP of retail and consumer goods APAC at Salesforce.

“Companies who took that time to develop strong customer profiles that single customer record, to understand their customers on understand how they want to shop. Looking at things like when the mask mandate was released or when people could go back and store which customers did go back in store which ones want to be face to face,” she said.

“Training their staff on 'what does customer-facing interaction look like' and 'what does that digital interaction look like?' But also giving your customers that choice if they want to continue to shop digitally, then you know them, you understand them you understand what they're interested in, you can deliver a self-service type experience if that's what they want or you can deliver a personalised customised experience.”

Gaines explained that marketers need to think of different ways to offer truly personalised customer service and customer support.

She used an example of buying a couch she recently purchased from a furniture store. The store is targeting her with ads to buy a couch but she needs it to be repaired.

“They should know that if they could help me over here, there's more likelihood of me purchasing my second couch from them. That is a basic level of personalisation,” she said.

 “You also need to be able to offer support where I wanted, if I want to talk to you through social media, then let me do it that way, if I want to talk to you on the phone, let me do it that way. That is part of where this, this furniture company is struggling.”

Gaines said the world changed rapidly and it's great for consumers, as it gives them more power over where they shop and how they shop.

“But there are a lot of brands still not truly getting a handle on that data on that single source of truth. We're starting to see digital sales, either flatten out or decline, some people are wanting to return to in-store,” she said,

“Behaviours have changed, expectations have changed and the number of sources of data that most companies have, you know, they have up to 50, after up to 44 different sources of data for that, do you know to really understand and manage that customer experience across every channel?”

A new customer costs two to four times as much as a returning customer according to Keng Ng, CTO at Munro Footwear Group.

“A loyal customer who receives personalised service often becomes your advocate online and word of mouth,” he said.

“We also use personalisation for efficiency. We've recognised that if we understand the customer to a point of when they would like to shop, we can put enough the right staff member, at the right store at the right time. If we know that families tend to come in between 2pm and 4pm on a Sunday, we deploy the most family-friendly, patient staff to all stores at that time.”

Personalisation works both ways for the brand and the customer, Ng explained.

“It works well for the customer because they feel special and they feel like the only customer then, but also helps us streamline our process because we know how to serve our customers instead of a shotgun approach,” he added.

The impact of personalisation

When personalisation is implemented by marketers and used correctly, the results speak for themselves.

Robert Lopez, general manager – CX, brand and innovation at hospitality group Norths Collective explained through a strong personalisation strategy, brands can see an improvement in customer experience.

“We're seeing that by personalising our communications with our members, we're giving them a much better customer experience, both onsite and online. When they are building this relationship to the point where you were communicating with members in such a way that they feel connected more so now than ever with us,” he said.

When consumers are allowed to customise their products, it adds to the personalisation experience. Brosa is an e-commerce furniture store that allows its customers to personalise their furniture.

Ivan Lim, CEO at Brosa said the customers who undergo these experiences at Brosa through speaking to stylists and getting smart recommendations to spend 30 to 40 percent more per order.
“Customer lifetime value is higher and customer satisfaction is higher. That gave us a lot of confidence, we played around with elements of high service and personalisation, from very early days,” he explained.

“We're about two years into the business and just learning more about the customer and being able to see these are the data points that make a difference around the customer's experience. How we personalise experiences has resulted in great things around how much more customers spend and how satisfied they are.”

Vicky Katsabaris, director of XM solutions and strategy at Qualtrics said the key to driving business outcomes through personalisation is being able to respond in a meaningful way at scale.

"Consumers expect organisations to know their needs better than ever before, meaning personalisation is a significant opportunity to build deeper customer relationships and increase loyalty and satisfaction. In response, CX programs need to be able to listen in-depth at scale, instantly add context to situations, and automatically take the next right action to deliver value.

"These capabilities will help organisations understand their customers and their journey like never before, and ultimately unlock new opportunities by enabling more personalised relationships at scale,” she said.