3 Takeaways from Harvard Business Review’s Age of Personalization Survey
During the first Retail Personalization Index, 57 points was enough to crack the top 10. However, that score the second time around would place a brand in 45th place. From one Index to the next, our biggest takeaway was how much more brands are prioritizing personalization. The Harvard Business Review (HBR) Analytic Services confirms it.
In research sponsored by Mastercard, “The Age of Personalization: Crafting a Finer Edge,” HBR surveyed 600 business executives in various industries about personalization. Here are three key takeaways:
Before: Personalization Is Table Stakes
Retailers are now much more sophisticated about personalization, mostly because they have to be. According to HBR’s survey, 90% of business executives agreed that customers expect organizations to know their interests and anticipate their needs. And 81% believe personalization tactics will be an important driver of revenue and profits, while more than half say they already are.
Personalization has become table stakes. It’s no coincidence that the top performers on our Index are also widely recognized as market leaders in their respective verticals. Two-time winner Sephora has built such customer loyalty that 80% of Beauty Insiders refuse to consider a competitor, according to 1010data.
One thing that kept Sephora at the top is their extremely relevant recommendations. That’s important for a beauty brand, which inherently carries many products that look interchangeable at first glance. But it’s equally important for any brand, which marketers are realizing.
Product recommendations are the most popular use case. Of those executives whose organizations already deploy personalization, 52% use it for product recommendations. That’s slightly more than email (49%) and in-person customer experience (48%) and significantly more than online customer experience (36%) and apps (30%).
During: How Organizations Deploy Personalization
When companies personalize their communications, how do they do it? While 38% of the executives HBR surveyed believe web analytics are the most critical, 53% say the same about predictive analytics. But for the vast majority of respondents (70%), the technology most powerful for personalization is customer data analytics.
Half the executives inform their personalization strategies with internal data only. Meanwhile, 39% leverage their Net Promoter scores and 38% look to third-party data and external surveys. Only 20% use clickstream data to inform personalization.
The overwhelming majority of respondents admit they find it difficult to keep up with digital change, which those relatively low numbers reflect.
After: Personalization and ROI
Of those who already prioritize personalization, 64% believe their personalization strategies have had an impact on performance; 19% say it had a big impact. However, seeing where it’s made an impact is trickier.
Companies gravitate toward product recommendation-centric personalization because recommendations are popular with customers. They’re also popular with executives because they consider product recommendations’ ROI to be the easiest to attribute.
HBR found that only a small minority of companies can calculate a formal ROI for personalization. By 2020, 40% of the executives surveyed expect to be able to calculate ROI for product recommendations; 38% already can. The in-person customer experience is seen as more measurable than online (34% vs. 22%) though 35% of respondents expect to measure the latter by 2020.