Personalization Demystified: Enchant Your Customers By Going From Good To Great

Consumers’ expectations of the “right” experience is always changing. What firms did years ago to establish relationships and provide value will no longer cut it for today’s consumers. Firms must view every digital and physical touchpoint as an opportunity to add relevance and value for consumers, effectively personalizing every interaction to every consumer every time. Whether or not a company has a formal strategy in place, personalization should be a critical component of every firm’s overarching business strategy.

Forrester defines personalization as the ability to tap into customer data and context to create a relevant, consistent, individualized experience for each customer, ultimately guiding customers to more desired and profitable customer journeys.

Many firms have had a customer-first focus for years, but creating a formal personalization strategy is still a new endeavor for most. According to the 372 personalization decision makers we surveyed, 65% report their companies implemented personalization strategies within the last year or are still in the planning stages of their strategies.

But firms already have big plans for how and where they’d like to utilize their personalization strategies. Firms plan to use personalization to increase satisfaction, improve relevancy, and acquire new customers (see Figure 1). However, few companies have yet to leverage personalization for more in-depth initiatives, such as identifying customer segments, improving brand advocacy, or forming more accurate predictions about specific customer segments. Many are still early in their personalization journeys, focusing more on the low-hanging fruit rather than the goals that could help their organizations stand out against the masses.

By and large, individuals in organizations are not incentivized to work together toward common and connected goals, and that results in personalization strategies that are incredibly siloed. More than half of firms (57%) are handcuffed by siloed and disconnected approaches that constitute multiple personalization strategies that individual departments or teams create and manage independently. And while most firms report marketing and customer experience (CX) departments are most commonly responsible for personalization strategies, an average of five groups are reported to be involved. These siloes can lead to miscommunication and missed opportunities for a refined strategy.

While the disconnect between firms’ understandings of what they think consumers want and what consumers actually want is arguably the biggest roadblock, firms also face a handful of internal challenges that don’t make this endeavor any easier. Firms can better round out their approaches to personalization with improvements to data management and technology innovation and a reevaluation of metrics.

DATA WOES AND TECHNOLOGY LIMITATIONS

While firms have no shortages of data, they often fail to do the work of creating data strategies that turn data into insights and insights into action. In fact, four out of firms’ top five technology challenges are centered around data (see Figure 6). From data management to utilization, firms feel lost. They say they’re capturing data, but they feel it might be the wrong data to correctly inform their decisions. As such, firms feel challenged by what to do with the data they collect, how to integrate it, and how to leverage it to its fullest extent.

It’s not that firms aren’t collecting data. They most commonly utilize transaction data (49%), demographic data (41%), prior purchase data (38%), and survey data (37%) to inform their customer profiles. But firms are only using an average of six data sources to inform these decisions, which means most are missing opportunities to pull additional insights. While firms may be collecting other types of data in other places like customer preferences, physical location interactions, or campaign response data, they have yet to funnel it into understanding their customers.

What’s more, 55% of firms feel technology limitations inhibit their ability to execute on personalization strategies. As it stands currently, firms are using a swath of technologies, and many plan to make changes to their tech strategies over the next year (see Figure 7). Areas that currently have the lowest incidence of implementation (AI/machine learning and advanced analytics) are promising endeavors and drive the most future planning and investment going forward.

SUBPAR METRICS

It’s not just data that firms struggle with - the ability to track and measure success is also a hindrance. Only 30% of firms feel they have the right metrics in place to measure the success of their strategies, and just 26% say the metrics they track offer them good insights into the success of their programs. What is causing this lack of confidence in their metrics? And why aren’t the insights good enough? Again, this comes back to lacking a comprehensive data strategy that clearly defines and aligns the firms on the connective tissue between the data and the insights they can generate. This is imperative for all levels, from head executives to customer-facing employees. The entire organization must be singularly aligned.

The good news is that firms are beginning to look beyond the nonactionable Net Promotor Score (NPS) to gauge customer satisfaction. They are starting to look to customer satisfaction scores, purchase frequencies, customer lifetime values, and items per transactions. But the bad news is that very few firms feel they are effective in tracking these metrics (see Figure 8). Many firms still feel inexperienced enough in these areas that they have yet to figure out how to optimize their efforts.