Personalized Marketing: Everything You Need to Know
Many of today’s marketers consider personalized marketing to be their modern holy grail. Marketers want to serve ads, content and products to consumers that is “just for them”. Eighty-six percent of consumers say personalization has an impact on their purchase decisions and 69% of companies say personalizing the customer experience is a top priority.
We know personalization is important, but what is the right way to define it and how can that give us the best results? This article is here to help by assessing the strengths and weaknesses of three types of personalization: interaction personalization, transaction personalization and continuous personalization (we used definitions found here for inspiration).
Interaction personalization is basic, cordial and almost ubiquitous today. Transaction personalization has reached maturity in improving conversion, but has also failed to maintain the best relationship with customers in many cases. Continuous personalization, on the other hand, has evolved into the biggest opportunity marketers have today, based primarily on automated, real-time, interactive technology. Combining all three of these in a way that is tailored for your brand can yield the very best personalized marketing strategy for you.
“Interaction Personalization” is the personalization of basic interactions with a customer over the course of a customer relationship. This could be something like adding the customer’s name to a marketing email, referring to them in a cordial or intimate manner, or bringing up topics that are explicitly relevant to them, based on an explicit interest or time-dependent action.
This is the most basic and well-recognized version of personalization. At this point in time, there are also few if any barriers to using it. The only cases where marketers should be delicate about how they use people’s names or other basic information is in impersonal channels and in select industries where formality can be considered essential to conducting business.
If you’re marketing in an industry that handles sensitive data or high value transactions (think healthcare or financial services), then getting a little too familiar with first names on a frequent basis may put a customer off. As for putting a first name in prominent positions like a subject line, it’s best to save for unique occasions – as with any effective marketing tactic, any overuse will likely cause its positive effects to wear off on your customers.
Aside from that, interaction personalization does not imply that consumers should see their name stated back to them on a public channel. If you see a display ad or walk by a billboard and see “your name here” effectively shown on the ad, you won’t appreciate that kind of personalized marketing – you’ll probably be creeped out.
The same goes for individual disclosures or interest in content. Unless you are truly determined to get someone to interact with messages that are personal in nature, you don’t need to go outside of one-to-one channels like email, direct mail, phone, messaging or in-person interactions.
Interaction personalization can also be applied to actions related to marketing and other activities your customer takes part in. These could include:
- Requests for feedback and referrals based on previous interactions with your brand (“Thanks for visiting our Houston location Ted, want to tell your friends?”)
- Anniversary, commemorative, holiday or reminder messages (“We appreciate everything you’ve done as a customer this past year…”)
- Birthday discounts or seasonal promotions directly related to a previous purchase (“You bought this fitness tracker last fall, get another 30% off our latest version for your birthday!”)
- Informative content or newsletters based on explicit customer interest. If a user expressed an explicit interest in content, then the interaction is more a formality than a promotion (“Hey Sally, you requested information on when our zero-fee day trading accounts would finally be open – well, here’s our latest update!”)
In order to use interaction personalization in a tasteful and constructive way, you need to be conscious about how individuals might feel comfortable being addressed from messages or interfaces that are fundamentally impersonal. In most cases, consumers still feel different when they communicate with businesses compared to other individuals – outside of channels like messaging, at least – and this means you need to treat consumers with the degree of formality and deference that fits your offering and industry, as well as your brand’s style.
Personalized Marketing Transactions
“Transaction Personalization” can refer to personalized actions that lead to a transaction. This is based on a customization tool or, more commonly, on predictive or programmatic methods that encourage consumers to make a purchase.
This can be everything from a “build your own car” tool to a retargeting campaign based on website behavior to website content personalization or cart abandonment. It could also be based on correlating the advertising or email messages you send to consumers based on demographic, social or other characteristics that you identify as increasing their likelihood to make a purchase.
Overall, a lot of transaction personalization methods are really effective. Some brands claim 13x ROI from retargeting. Website personalization can hit returns of 3x or more. Predictive email marketing is supposed to exceed 44:1. These all sound like great numbers, and sometimes they are real, but no hustle is perfect (not that they’re hustles, of course). You can use transaction personalization to get immediate results, but without constraint, you may ultimately turn consumers off in the long term.
Ads on sites unrelated to your products are 11x more likely to discourage purchases. About the same number of consumers see online ads as intrusive (just under 20%) whether they see them 1-3, 4-5 or 10+ times. You may be getting higher purchase rates on audiences in the short term, but reducing awareness and engagement and ultimately shrinking your customer base in the long term.
To correct the problems with this approach (or at least make it more efficient), marketers should take a page from the root idea of “transaction personalization”. When someone is customizing an offer on a website or in-person via a service representative, they’re making disclosures about what it is they want. If they’re browsing, they’re only implying their interest in something, they’re not actually telling you they’re interested.
With this in mind, the most effective way to think about personalizing transactions is to center it as close to individual consumers as possible, rather than on as broad an audience as possible. Some useful examples could include:
- Message matching: when your users visit your website, see an ad afterward and then click on a landing page, the overall messaging and value prop are consistent.
- Dynamic text replacement in places like search ads: with this, you can make sure that you’ve used information directly from a search term to speak to a customer in the most relevant way possible.
- Make related products or services consistent with what a user sees on a website: if your user is browsing for black jeans and then also browsed for a biker jacket, but then gets an email promoting flowery hats to them, you’re probably giving them an irrelevant experience that leads them to tune out future messages.
- Location-based messaging within loyalty programs: location based SMS or push notifications are one format of transaction personalization that tends to creep consumers out the most. Highlighting locations within the context of a loyalty program, however, can increase the likelihood a consumer will visit that store. This doesn’t just work for the Starbucks and Nikes of the world. Any brand with a loyal following can use location to create more intimacy with consumers without creeping them out.
- Focus your retargeting ads to social channels your audiences prefer: If you’re a beauty brand, you know you’ll stick to Instagram. Facebook might have one crowd for CPG retargeting, Twitter might work for media companies, Snapchat or TikTok (when they open things up) for anyone going Gen-Z. Form often follows function with social platforms, and user responses to ads are amplified or diminished by the relevance of the content that surrounds them. Anchoring down on where your best customers interact is just one of the better ways to do Transaction Personalization.
On a certain level, campaigns with these specific use cases can also help in generating engagement. Deep down, however, generating the highest possible conversion means you need to offer differentiated experiences. That’s where continuous personalization comes in. While brands have done it in one form or another for a while, doing it with new solutions in real-time is beginning to offer the most possible return for marketers and their brands.
Continuously Personalized Marketing
“Continuous Personalization” refers to ongoing customization of products and service, as close to exactly what the consumer has expressed a desire for at any given time. This effectively means “giving people what they want when they want it.”
In a service context, this is based on the free-flow of ideas that comes in conversation when someone is telling a representative what they expect. Effective salespeople – whether in-store, over the phone or online – have the same effect. These service-oriented approaches, including human agents, make it easy to respond to consumer needs as they come up. Consumers also always appreciate both their relevant expertise and their personal touch.
At one time, maybe 10 or so years ago, continuous personalization was not so different from some of the predictively personalized messages we think about today. If a brand or marketer had data on multiple unique interactions and transactions with an individual customer, they would be able to personalize new offers to a degree that a competitor who didn’t know about those transactions simply couldn’t.
At that time, thinking about ways to create this feeling through real-time interactions without a human representative (either online or in-person) were simply impossible – nor were interactions generally used to learn about the consumer in a comprehensive way.
If personalized marketing should achieve any outcomes, it’s these: the feeling that we’re really being listened to and understood. The feeling that a brand will respond to exactly what we need with exactly what we want, and the feeling that those responses could come in any form, be they products, services, content, promotions or anything else we can imagine.
In truth, a marketing funnel should work this way, but it never does. The messages you send through your marketing funnel, however personalized, will always be one-way. The consumer can only respond in real-time through three choices: clicking, converting, or (usually) ignoring. Usually, you’ll try to get consumers to tell you what they want. This customer feedback management process usually helps this along, but it’s also rarely done in real-time.
So, for all the faults of other marketing channels, the limits and challenges they provide, what are the real channels that are going to allow brands to offer this kind of personalized marketing to consumers, no matter where they are, what they’re doing or when they’re doing it?
Messaging and voice are the answer. We’ve already talked about how to use smart speakers, as well as the general possibilities of conversational AI, but what does an example of these solutions actively personalizing a marketing function look like in action? Well, put simply enough: the right AI can naturally interpret and generate language that responds to an individual user, conversation design can guide consumers through recommendations, content and more, and conversation conversion optimization can maximize the efficiency with which each conversation reaches your desired outcome.
So, where can these solutions create continuously personalized marketing? Below are a few examples:
- A user has browsed for shoes online. A conversational ad appears on Facebook, allowing them to review different types of shoes a brand offers – whether from messenger or a landing page. As they interact, they learn more about the brand, while the brand gets valuable first-party data about what products interest them.
- The user decides to browse the brand’s website. They begin to consider multiple types of shoes, but they don’t know what style might fit them best. A virtual sales advisor appears in the corner, offering them help to gain a recommendation.
- As users engage with the sales advisor, they reach a recommendation, but don’t know whether they want to buy. The user asks the virtual advisor “this has a comfortable sole, but will it wear out quickly?” The virtual advisor might respond: “No, the material is space-age foam composite, designed to last through at least one year of heavy daily use.” (you may not believe it, but it’s actually now possible with modern conversational AI)
- Reassured the user makes the purchase, but ultimately there’s a problem with their order. The user returns to the virtual advisor – “where oh where is my order?” they ask. “There was a delay, but it should be shipped shortly – is there anything else I can help with?”
- With the user’s issue contained, they now have an established relationship with the brand. The brand can proactively reach out to them, personalize messages and ads based on declarative data, or recognize them on their next site visit, offer a new recommendation, collect feedback or otherwise pick up right where they left off.
This back and forth is beginning to gain traction among consumers. Brands have an opportunity to continuously personalize their marketing in ways never before possible. In order to make the most of it, real-time messaging and voice solutions driven by real AI are essential to this new way of doing business. What’s more, all the information you generate out of continuously personalized marketing can easily be used for interaction and transaction-based personalization as well!
The Best Personalized Marketing Strategy
Continuous personalization is an ideal state for any personalized marketing strategy, but not to the exclusion of other ways of getting personal. The quality of personalization you provide depends on how much attention you’ve paid to the consumer, with a mind for how to limit irrelevant marketing as much as possible. This means that interaction, transaction outcome and continuous personalization all play a part. The way in which those are involved come down to taste, tone and the ability of a brand to not overstep or over-assume in the transaction and interaction personalizations it continues to use.
New channels can always do things like improve consumer engagement and reduce advertising cost, but to maintain their success, marketers need to think about increasing their commitment to using preferred channels through an entire customer experience. Personalized marketing plays a crucial part in this – contact Automat to learn exactly how.