Digital Marketing & eCommerce Innovation Blog

Digital Marketing & eCommerce Innovation Blog

Why True Personalised Marketing is Difficult to Achieve

Many publications have heralded personalised marketing as the next big thing in digital marketing. Targeting consumers with products that will be appealing to them according to their account history and preferences has already been realised by several large companies, notably Amazon and Netflix. However, marketing personalisation that goes beyond traditional notions of CRM systems and email marketing requires a large amount of data and constant analysis, which makes it tricky to produce in its true form.

The Definition

Personalised marketing refers to any campaign which looks to advertise products or create content that is uniquely tailored to an individual. There are many examples of personalised marketing in offline marketing, and digital marketers are looking to reap the benefits of this strategy online.

In online retail, personalised marketing tends to refer to suggested products that are based on a user’s historical purchases and personal information, and this can help to drive consumers through the sales funnel. Personalised marketing can also refer to the process of personalising online content to an individual either on site or with an email campaign.

Personalised marketing needs to go beyond simplistic CRM systems. Marketing Week has said that companies simply referring to consumers by their name cannot be considered to be adequately doing personalised marketing. Consumers are in agreement with this, as 63% of them say that they no longer consider this tool to have any effect.

The Problems

While personalised marketing has the potential to significantly increase revenuepost-purchase retention rates are said to benefit massively from these strategies – there are many issues with how it can be effectively rolled out. Here are two of the major issues that make true personalised marketing hard to achieve:

Scarce Data

 

One of the problems that marketers are faced with when attempting to utilise personalised marketing is scarce data. Considering the 80/20 rule, while some loyal consumers will provide companies with a large backlog of data, most consumers will not have had enough interaction with the company to supply the data needed for personalised marketing to be effective. Only 16% of marketers are able to collect real-time data and use it to deliver personalised marketing. Part of the reason for this is that the data is of poor quality.

Furthermore, data mined for the purposes of personalised marketing cannot be substituted with customer survey responses. While compiling information on user behaviours, Netflix found a large discrepancy between what users said they liked and what they actually watched, and Vice President of Product Innovation Carlos Gomez Uribe commented that:

“Viewing behavior is the most important data we have.”

 

The actual user experience is not reflected in what customers report, which means that there are no shortcuts in terms of gaining an understanding of consumer behaviour. Although profiles indicating preferences can show aspirational interests, ultimately there is no substitute for historical purchase data.

There is also no guarantee that brand loyalists will provide usable data. A retailer survey by Yes Lifecycle Marketing also showed that the main problem for retailers is targeting valuable consumers. 52% said that their biggest challenge is “identifying and engaging [their] most valuable customers”. This shows that retailers are struggling to target even those who can be considered brand loyalists.

Rollout and Execution

 

Even when the data is collated, another problem that marketers are faced with when looking to utilise personalised marketing is how to use it, as the “digital creepiness” of personalised marketing is an issue for consumers. Part of the problem with personalised marketing is understanding how much is too much. If the marketing strategy is not pushed hard enough, ROI could be relatively low. Conversely, an overly-intrusive campaign may meet the wrath of perturbed consumers uncomfortable with corporations using their personal information to boost sales.

However, consumers have been found to appreciate marketing personalisation on site. 60% of consumers said they are comfortable with their information being used if it contributes towards their shopping experience on site. Amazon is traditionally seen as the industry yardstick against which all other personalised marketing strategies in retail are measured. After championing suggested items, Amazon is now moving into personalised videos based on algorithms which analyse browsing behaviour.

The caveat is that Amazon can do this because it has massive amounts of data and a platform that doesn’t focus on a particular industry – you can buy anything and everything, and there are plans in the work to enter the automotive industry. In theory, companies with smaller budgets cannot compete with this level of marketing personalisation. The perception among marketers is in accordance with this, as 88% believe that their personalisation is not up to the same standard as that of their competitors.

In spite of this, there are plenty of examples of companies using personalised marketing positively even if the budgets are nowhere near those of the likes of Amazon. These include well-planned email campaigns and location tracking, but no two campaigns are the same, which is the crux of the issue. While marketing personalisation is possible, it will likely require a large amount of investment, A/B testing and evaluation in order to gain a comprehensive understanding of what the consumers want. Overnight success is never guaranteed, and even if a personalised marketing campaign is an instant hit with consumers, short-term successes won’t necessarily translate to an overarching understanding of the consumer base which will help the company on a long-term basis.

Conclusion

Marketers need to accept that if they are to employ marketing personalisation that it will require a sizeable investment of both time and money. However, when used correctly, marketing personalisation can be an extremely effective tool in the retail industry.

Are you interested in how personalised marketing could help your business? Get in touch with us, and let’s discuss how we can work together to achieve your personalisation goals.

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