Personalization: The State of the Art and Where to Start
September 13, 2017
This month, Sailthru introduced its first-ever Retail Personalization Index, an in-depth research report that dives into the personalization strategies – and results – of 100 well-known retail brands. It’s also designed to provide inspiration and resources for brands that are just starting to personalize and those looking to advance their strategies. In this interview, Sailthru Vice President of Marketing Jason Grunberg talks about some of the Personalization Index research results, and gives an insider’s view on why brands needs to personalize, and the misperceptions that can prevent them from doing so.
Why did you create Sailthru’s Personalization Index for retailers, and what does it measure?
The Retail Personalization Index helps us identify which brands are personalizing and to what end. It gives us a way to compare and contrast retailers’ progress in personalization.
We’re trying to create a common language around what personalization is. You can get a group of four marketers into a room and have a conversation about personalization, and everybody can walk away thinking “Well, that was a super-insightful incredible conversation.” But in reality, the odds are very good that when each mentioned “personalization,” they were talking about different things.
One marketer could be using field insertion to include a customer’s name in an email. Another could be adding recommendations based on what other people have bought. The third one could be adding somebody’s name to a push notification. The fourth could be thinking about an omnichannel connected experience that gets the brand closer to the customer. And they could all be right.
How do you define personalization, then?
I define personalization as a strategy, not as any particular tactic. I think that’s where the confusion comes from. Personalization is many different things, and you can be constantly advancing it.
I view personalization as creating a connected continuous experience for an individual, rather than for a wide swath of customers or a segment. It is about being relevant and contextual to an individual in specific circumstances. In that context, I think all brands can agree on a definition, but when the conversation is focused on tactics, what is right will change from brand to brand.
What are some of the more common misconceptions about personalization?
For starters, personalization is not something that just has to do with marketing. There are multiple departments that are involved in doing it well. Your organization is either committed to a customer-centric approach or they’re not. Personalization is a manifestation of that organizational goal.
I think another misconception is that personalization is creepy. More retailers are starting to think about embedding personalization in the customer experience, and not calling it out specifically as personalization. The customer should only notice that the experience is better. If you’re scared about personalization being creepy, you’re doing it wrong.
If you could highlight only one thing from this study, what would it be?
What really matters is how much retailers are doing across channels to connect the customer experience. If you get a great personalized email, and then you get to the website and it’s not relevant to you at all, there’s a breakdown in the experience.
I wanted to see a far greater level of cross-channel personalization at the individual level. What we found is that relatively speaking, the vast majority of retailers are very, very far behind.
Why do you think there hasn’t been more progress?
Many retailers have separated customer experience improvements from personalization. I think that is dangerous. There are a number of retailers who say, “Personalization is fantastic, we’ll get to it once we get our customer experience right.” I don’t see how you can get the customer experience right without personalizing.
Take shopping cart / basket improvements. Many retailers continuously test to find incrementality in this specific area of the experience, but by not thinking about what personalization can add they are missing out on potential improvements in conversion rate and even the ability to increase basket size. Why not add recommendations for “completing the look,” time-based and personalized discounts to drive urgency for that individual, or other approaches?
Why do brands need to invest in personalization?
This is about business solvency. When deployed correctly, personalization is proven to increase lifetime value and retention. It even gives you a way to acquire customers that are most similar to your top-performing customers.
There is a need to build relationships with people. That’s what made retail successful originally—the idea that keeping your customers over the long term would result in a high value coming from them.
When I think about how I buy things and how I engage with brands, I can be very fickle and get very annoyed, even with the brands I’m most loyal to. I buy a lot from J. Crew, so they know what interests me. I still get catalogs from them that are 90 percent women’s clothing or children’s clothing. As a consumer, I don’t want a brand to waste my time. As a marketer, I hate seeing brands waste their marketing spend in efforts that are akin to panning for gold.
What surprised you about the Personalization Index research?
These are not yet household brand names, like Amazon, Walmart, or eBay, yet they ranked higher than these brands which are known for offering an exemplary customer experience. If JustFab had relaunched their mobile app the brand would have taken the top position in the index.
Sometimes mid-market retailers say it’s hard to make personalization a priority. JustFab’s results show that you don’t have to be huge, and that it pays to buy personalization technology at any size despite what CTOs may prefer.
How, exactly, did JustFab achieve such a high ranking?
A lot of retailers say they can’t personalize because they don’t have the data. But when a new user comes to the JustFab website, they are presented with a style quiz that asks them to choose among multiple different style inspirations. So they’ll be asked which photo best embodies who they are during the day or at work or for the red carpet. That gives JustFab the data they need to start personalizing immediately.
Once somebody is actively engaging, JustFab can learn about their preferences over time, and can offer better recommendations based those preferences, seasonality, and other factors.
If a retailer isn’t personalizing significantly, where should they start?
When it comes to personalization, whether you treat it as a strategy or as a tactic makes a huge difference. So start there. It’s not just about doing one new thing and testing it. If you’re looking at personalization as a strategy, you plan for continued execution and evolution over time. You think about the possibilities of what’s next and what comes after that. You have a resource-level conversation with your C-suite and your counterparts to make sure that you have a clear runway for constant integration and improvement.
That’s totally different from, “Oh, I want to put recommendations on this part of the website.”
Also, you want to look beyond your own department. What do you want to do as far as execution goes with your customer service team, and how does this impact the sales team? How does this impact the tech team and the analytics team, or the business intelligence team? What does this look like for the different channel owners within marketing? The idea of customer experience improvement really is massively cross-functional, and personalization needs to be treated the same way.
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