The Importance of Customer Data for Personalization and Personification
Many tool producers offer smart AI solutions as personalized use cases that help organizations to win more customers by tailoring digital recommendations and campaigns. But there are often reasons why you should not use personalization and personification, especially in your digital channels. Why?
Let us take a closer look first at the difference between personalization and personification.
Defining personalization and personification
“Personalization is a process that creates a relevant, individualized interaction between two parties designed to enhance the experience of the recipient” (Source: Gartner).
Personalization has been around for a while and has been heavily relying on personal data and third-party cookies. Thus, it might be perceived as a bit too intrusive in terms of privacy. Especially now that Google is phasing out third-party cookies.
On the other hand, Gartner defines “personification” as “the delivery of relevant digital experiences to individuals based on their inferred membership in a defined customer segment, rather than their personal identity”. We can say personification is targeted marketing without the use of personal data. However, both terms are often used as synonymous and are often not being distinguished apart enough.
What is the use of personalization?
Personalization is very important for the conversion of known customers on your website via means of email campaigns, customer experience, website recommendations, site search, and for improving customer retention, enhancing brand loyalty, and leading generally to an increase in revenues.
57% of e-commerce professionals in the US and the UK were already implementing user-specific content personalization based on the outcomes of a study from July 2021 featured in our recent report – The State of E-commerce 2021: Secure Growth Using Data.
Why personification may replace personalization
Over time, marketers have discovered that personalization does not work for several reasons which are described in a very interesting article where Gartner predicts 80% of marketers will abandon personalization efforts by 2025. The main reasons for that are summarized as:
Insufficient data collection, integration, and protection.
Perils of customer data management.
Lack of return on investment (ROI).
In Simplity, we believe organizations need to be data ready first before any kind of personification or personalization efforts are made. When we start the project, the client is usually convinced that they have all the necessary data for their use cases. Unfortunately, this is often not the case and the Gartner article just highlights this issue.
Reasons why to prepare data before personalization project
Very often clients use different low-cost or free tools and technologies over the years that ultimately lack proper integration. Then they try to fix this via integrations with Zapier or custom integrations by freelancers or their own employees. Undoubtedly, this provides marketing departments with a short-term result but, in the long run, it can be very costly, and it causes many discrepancies in the data. We often see in our clients’ projects that the lack of proper data integration has an impact on the creation of a single customer view, which is a prerequisite for efficient personalization.
The main reason for these discrepancies is that each tool from the MarTech stack uses its own database with only limited or missing syncs with the other systems. Moreover, IT and marketing departments usually use two or three databases at a minimum (CRM, email, and ERP). As an example, if a marketer wants to send a personalized email campaign to the clients they initiate an agency or their internal email marketing specialist to create the email, the client data analyst and CRM team may need to export the client emails for the campaign, it takes time when all personalization rules are uploaded to the database, and in the end, the email needs to be proofread and tested. Outside of the problems that will inevitably arise from poor data integration in such situations email results are limited by not active or recipient errors and also potentially by campaign creative, copywriters, graphic designers, emailing setup, and last but not least, by the incentive provided. As you can see, there is an opportunity for a lot of confusion, misunderstanding, and error.
If you use proven data methods and start with customer data assessment and data curation, you can benefit enormously from aligning your business goals with the integrated data.
In order to align your goals with data, you need to collect data from various sources (and tools) such as customer behavior data (or customer events), transactional data, content, customer attributes, campaign analytics, call center, e-shop transactions, ERP, PIM, chatbots, social media, reporting, and many more. It is good practice to use one database, so that it helps you to decrease the number of errors caused by latency (usually caused when using data from multiple resources), unclear data source definition, and overall integration complexity.
It’s worth emphasizing that all personalization or personification efforts need to be A/B tested for improved performance.
Personalization benefits examples:
If your customer database is always up to date, you are not wasting money in order to send emails to non-existing or non-active customers. This will significantly increase your open rates and make the metrics in your reporting cleaner and more reliable.
Using personalization, your campaigns can be more granular and can better target your customer segments. Based on our experience, that better granularity can lead to higher conversions up to a 2-digit percentage.
Your campaigns can be tracked end to end from the frontend to your ERP, and hence better optimized.
Improved reporting and personalized experiences will give you the opportunity to decrease customer churn.
If you are using data from various sources you can start to deliver content through one or two channels, but you can deliver content with channels your customer likes e.g. when your client is not responding to your important emails you can use SMS notification or push content into Messenger.
Personification benefits examples:
Connecting your data from your anonymous real-time bidding (RTB) platform, social media, and CPC with your customer funnel will increase your media spend efficiency and help you to target potential clients based on known data.
De-anonymization use cases can provide you with much faster growth of the known visitors’ segment so you can process them with personalization campaigns later on.
Personification data can help you to prevent customer churn.
Advanced personification will provide you with an opportunity to increase efficiency when you want to buy just specific traffic based on sentiment attributes or aiming for a special landing page e.g., a bank can use these methods when converting the most potential customers on a mortgaged calculator landing page, etc.
With the privacy regulations in place e.g., EU General Data Protection Regulation (GDPR), CCPA, or Personally Identifiable Information (PII), personification can help marketers to overcome the negative impact of these regulatory instructions on targeting and making the digital experiences relevant to the audience.
Key takeaways for your business
For smaller businesses personalization may be too demanding on resources and would not bring sufficient ROI, so it is better to skip complex personalization/ personification. However, you can focus content, use its flexibility, and target niches with simple and easy-to-use tools like Mailchimp. In the meantime, you can educate yourself on how to properly build your databases and avoid some painful mistakes made by your competitors.
When you are already running a larger business or enterprise, focus on using one CDP or DWH, strive to create a single customer view, and then start your personification or personalization. When you are considering going deeper into your data it is a good idea to start with a data assessment service. Try to be simple and effective, choose a few channels where you will exceed clients' expectations, rather than doing everything with low impact. Prepare personas and customer journeys for your business. Do not over-complicate your personalized campaigns and closely monitor your ROI.
Focus on data and reporting. Calculate your technological debt. Work on your employees’ digital maturity. Connect with external data professionals, so you can discover your weak points. You should use both your clients’ personification and personalization to achieve better benefits. Proper data management helps you to beat your competitors on the market and grow the market share of your business.
If you would like a free consultation regarding the personalization and personification challenges in your company, we offer a four-hour consultation from one of our customer analytics consultants. Get in touch with us here.